MONTREAL – Quebecor Inc. saw first quarter profits dip, but revenues climb by 4.5% as it staggers under the weight of investments in its new wireless service and the Sun News Network.
The Montreal-based media company said Thursday that net income attributable to shareholders was $34.3 million for the three-month period ended March 31, 2011, down 1.7% from $34.9 million in the same period last year. Revenues topped $990.5 million, up 4.5% from $948.1 million, while operating income increased by 1.3% to $294.3 million.
"Quebecor posted revenue and operating income growth in the first quarter of 2011 despite the impact of major investments in new products and services in 2011 for the purpose of protecting and expanding our markets, without affecting our financial position," said president and CEO Pierre Karl Peladeau, in a statement.
Videotron added 28,600 new subscribers to its mobile telephone service, 15,500 customers for its cable telephone service, and 11,500 new Internet customers this quarter. It lost 3,000 basic cable customers but recorded a 24,100 customer increase for its digital TV service.
Its 4G network, which launched last September, now covers 90% of Videotron’s service area and is available to more than four million people in Quebec. The company reported 143,600 subscriber connections at quarter end, including 86,100 new connections and 57,500 migrations from the mobile virtual network operator (MVNO) service.
Peladeau said that Videotron’s new wireless service has exceeded customer targets, but acknowledged that it has negatively impacted net income in the first quarter of 2011.
“In the first months following a product launch, the revenues generated by the new product are not sufficient to cover the higher expenses, including amortization charges in the case of the 4G network”, he said. “The impact is particularly evident in the first quarter 2011 comparative figures for adjusted income from continuing operations.”
Click here for more on Quebecor’s first quarter results.
