Videotron says cord-cutting stable, eying IPTV to grow TV ARPU

Quebecor Inc.’s Videotron said it won’t force the migration of its cable customers to its new IPTV product, though it expects the new service to grow its television average revenue per user (ARPU), Videotron CEO Manon Brouillette said Tuesday. “We are not going to rush to migrate our customers,“ she said on a conference call with analysts following the release of the company’s first-quarter results, noting that the illico TV New Generation interface, launched in 2012, is still relatively new. “We’re not in the same necessity other players in Canada, who are very late in technology, so we have that opportunity to monitor and customize the migration.” She added that the company “definitely” expects TV ARPU to increase with the new service, and said the impact of cord-cutting is stable. “The OTT are not affecting us too much,” Brouillette noted. TV subscribers, which stood at 1.63 million, were down from both the previous quarter at 1.64 million and a year ago, when they numbered 1.68 million. Cable TV revenues were down one per cent over the year, to $248.7 million. The company said that was “due primarily to the impact of the net decrease in the customer base and a decrease in video-on-demand and pay-per-view orders, partially offset by increased revenues from the leasing of digital set-top boxes and higher per-customer revenues, due in part to increases in some rates.” However, the company did add 21,800 subscribers to its Club illico over-the-top (OTT) service in the quarter, for a total of about 383,400 customers. Brouillette noted in the press release that the company made several original feature films, and that its “ultimate objective is to quickly bring this new content to all of the group’s platforms, including premieres on Club illico.” Videotron added 23,300 wireless subscribers in the quarter for a total of 1.05 million, and saw a 13.2 per cent increase in wireless revenues over the year for a total of $125.8 million, which it said was driven by subscriber increases. It also reported increases in internet subscribers, adding 8,100 in the quarter, which contributed to a 4.4 per cent increase in revenues from the first quarter of 2017 to $261.6 million in 2018. The company said that increase was “a result of higher per-subscriber revenues, reflecting, among other things, the favourable impact of the product mix and increases in some rates, as well as customer growth, partially offset by a decrease in overage charges.” Subscriber numbers overall were softer than analysts expected, according to notes from National Bank, Barclays Capital and RBC Capital Markets. Telecom revenues were up 2.3 per cent from the previous year to $823.4 million. Overall revenues for the quarter edged up 0.5 per cent from a year earlier, to $1.01 billion, while net income was $75.6 million, up from $20.7. Like other telecoms, Quebecor also switched to the IFRS reporting standard and restated previous results to comply with the new standard. As part of those changes, it said it is no longer reporting monthly average revenue per user (ARPU), which it said was inconsistent with the new metric and it has replaced the with the average billing per user (ABPU). Wireless ABPU, which is calculated by “dividing the average subscription billing for mobile telephony services by the average number of mobile during the applicable period, and then dividing the resulting amount by the number of months in the applicable period,” was $53.25 in the first quarter of 2018, up slightly from $52.64 a year earlier. The company said in its results that increase “largely reflects the impact of ‘bring your own device’ plans.” Media revenues were down 5.9 per cent, to $173.2 million. It noted that its broadcasting revenues fell 3.2 per cent, due to lower advertising revenues at TVA Network and lower subscription revenues for TVA Sports. Quebecor also said Tuesday it had reached an agreement with the Caisse de dépôt et placement du Québec to purchase the remaining 18.5 per cent of shares the Caisse holds in Quebecor’s media division for $1.54 billion in cash and $150 million in convertible debentures. The deal, six years in the making, will see it hold 100 per cent of the shares in Quebecor Media. National Bank analyst Adam Shine said in a Tuesday note that the deal comes “a little sooner than expected in 2018 and at a rather reasonable price point.” It’s expected to close in June 22, he noted. “We view this news as an important milestone for the company which will soon fully control QMI and, in the process, set in motion a collapsing (long-awaited clean-up) of the corporate structure,” he said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Videotron says cord-cutting stable, eying IPTV to grow TV ARPU

Broadcast | May 9, 2018

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