Quebecor reports Q3 profit and revenue up from year ago as Freedom drives growth

Quebecor Inc.’s purchase of Freedom Mobile earlier this year continues to drive growth as it works to solidify itself as Canada’s fourth national carrier, chief executive Pierre Karl Péladeau said Thursday.

The Montreal-based telecommunications company reported its third-quarter profit rose compared with a year ago as the acquisition of Freedom by Quebecor’s Videotron mobile service helped drive revenue higher.

Péladeau told a conference call with financial analysts to discuss the company’s results that Quebecor recorded 89,000 wireless net additions in the third quarter, which was 53,000 more than in the third quarter last year.

“This impressive performance is clearly the result of Freedom’s improving network … and more competitive market positioning, all of which were only implemented midway through the quarter,” he said.

The company reported $209.3 million in net income attributable to shareholders for the quarter ended Sept. 30, up from $178.4 million a year earlier. Quebecor said the profit amounted to 91 cents per share, up from 76 cents per share in the same quarter last year. 

Revenue for the quarter totalled $1.42 billion, up from $1.14 billion a year earlier. Revenue from the company’s telecommunications segment shot up by $287.9 million or 30.6 per cent partially reflecting the effect of Quebecor’s Freedom acquisition in April.

The $2.85-billion purchase of Freedom from Shaw Communications Inc. was a condition of Rogers Communications Inc.’s takeover of Shaw to ease competition concerns surrounding the larger merger.

As part of a list of requirements laid out by Industry Minister François-Philippe Champagne, Videotron must offer plans that are at least 20 per cent lower than those of its competitors and spend $150 million to upgrade Freedom’s network.

Freedom announced in May it would offer a $50 monthly plan, its first with national coverage, that includes unlimited calls and texts as well as 40 gigabytes of data usable throughout Canada and the U.S.

Last quarter, the carrier added 5G capability for customers with plans that cost $45 per month or more in the Toronto, Vancouver, Calgary and Edmonton areas along with select cities across Ontario, B.C. and Alberta. It said it is planning 5G rollouts in other markets that are still to come. 

Péladeau said Freedom’s churn rate — a measure of subscribers who cancelled their service — is starting to come down, thanks to “all the initiatives taking place since the acquisition.” He called that “a trend that should accelerate as we are committed and focus on improving quality, service performance and lowering prices.”

Last month, Quebecor also announced it was extending coverage across Canada for customers of its Freedom, Videotron and Fizz brands as it launched its mobile virtual network operator service.

“The quality of our network has really resonated, I would say, with the customers in Ontario and the rest of the country,” chief financial officer Hugues Simard said.

“That really turned on the momentum.”

Quebecor said its adjusted income from continuing operating amounted to 88 cents per share, up from 75 cents per share in the same quarter last year.

Its wireless mobile phone average revenue per user was $37.60, down $2.29, or 5.8 per cent, from the third quarter of the prior year, mainly due to a change in the customer mix, including the dilutive impact of Freedom’s prepaid services.

On the company’s media side, Péladeau said Quebecor continued to see “a very difficult advertising market that shows no sign of improving any time soon.”

The company’s TVA Group announced last week it was laying off 547 employees — nearly a third of its workforce — as part of plan that involves overhauling its news division, ending its in-house entertainment content production and optimizing its real estate assets.

Péladeau said companies like Quebecor require regulatory relief and tax credits that “more adequately and equitably reflect the conditions facing broadcasters and producers in the television industry.”

“The fact is that not only has nothing changed, but the situation is now worse than ever,” he said.

“A lack of consideration for our industry, coupled with the mounting challenges it confronts, has forced us to take unprecedented action.”

This report by The Canadian Press was first published Nov. 9, 2023.

Companies in this story: (TSX:QBR.B)

Sammy Hudes, The Canadian Press