Quebecor ‘not worried’ about COVID-19 impact on capacity

Quebecor Inc. says COVID-19 is not expected to have a “material financial impact” on the company and is not worried about its impact on network consumption and capacity. Quebecor held its quarterly earnings call as the TSX plunged 1000 points in early trading on Thursday, amid fears of the economic consequences of the COVID-19 virus. Quebecor’s share price dropped by 7.6 per cent on Thursday, despite the company raising its dividend by 78 per cent. CEO Pierre-Karl Péladeau told analysts that Quebecor was “monitoring the situation” and taking necessary measures to prevent the virus spreading to its employees and the public. He said a worsening of the situation in Quebec could impact its sports and entertainment segment, but the virus was otherwise not expected to have a material financial impact. “This is something also that we addressed yesterday in the Board of Directors and according to all the efforts that we’ve been doing, I think we’re in the proper situation to manage the issue,” Péladeau said. Asked by BMO Capital Markets analyst Tim Casey about whether COVID-19 was prompting any changes to network engineering given the number of people expected to work or study from home, Videotron CEO Jean-François Pruneau said network usage for 2019 and the start of 2020 had been below “what we planned, expected and budgeted” and said he was “not worried at all about the impact of the virus on network consumption and capacity”. Asked by Desjardins analyst Maher Yaghi whether Quebecor expected the government’s 25-per-cent wireless price reduction target for mid-range plans would also see prices drop in Quebec, despite prices being lower in the province than elsewhere in Canada, Pruneau said he didn’t know what impact the policy would have on Quebec pricing, but said reductions were most necessary in B.C., Alberta and Ontario. Under the government’s policy, the big three incumbents are expected to reduce the prices of bring your own phone plans with between 2 GB and 6 GB of data by 25 per cent inside two years. “I don’t think Quebec is the target, but that being said I truly don’t know. In the past we’ve led the market in terms of pricing, I don’t think it’s going to change… it all depends how the big three is going to react in terms of the province of Quebec,” Pruneau said. In an analyst note, Canaccord Genuity’s Aravinda Galappathige said “close consideration” needed to be paid to relative market shares in the province when/if the incumbents began to follow the price cuts directive, notwithstanding the relative low wireless pricing compared to the rest of the country. “We suspect that a significant cohort of Videotron’s subscriber base resides in this category and a meaningful price reduction (mainly around the 6 GB level) by incumbents could impact market share strength,” Galappathige said in the note, noting Videotron had had up to 30 per cent of the new wireless subscriber adds in Quebec in recent quarters. In the fourth quarter that ended on Dec. 31, Quebecor’s revenues were up 4.5 per cent compared to the same quarter last year, increasing to $1.14 billion, driven by a 4.9 per cent increase in telecommunications revenues, as well as a 5.1 per cent surge in media revenues. Quebecor’s net income rose over the period to $150.3 million, compared to $120.6 million on the year before. Videotron added 41,800 new wireless subscribers in the quarter, up from 33,100 subscribers compared to the year before, for a total subscriber base of about 150,000. Its average billing per user (ABPU) was up 0.3 per cent on the previous year, rising to $49.99. On internet, the company added 3,000 subscribers to take its total to some 480,000 subscribers, a reduction from the 7,000 subscriber growth in 2018. Its Club Illico TV platform base stood at 438,889 at quarter end as it added 15,800 new subscribers in the period. In media, an 8.1 increase in subscription revenues caused mainly by an increase in revenue for specialty channels offset a $3.3 million decrease in advertising revenues. — With reporting by Adam Langenberg at alangenberg@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Quebecor ‘not worried’ about COVID-19 impact on capacity

Broadcast | March 12, 2020

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