Quebecor cuts back capex plans for 2020

Quebecor Inc. is dialing back its capital expenditure projections for the upcoming year, owing to the financial uncertainty created by the COVID-19 pandemic. "In light of the potentially material impacts resulting from the COVID crisis on the overall economy, and our business for the weeks and months to come, we prudently cut back on our capex program for 2020," said Videotron CEO Jean-François Pruneau on a Thursday afternoon quarterly earnings call with analysts. "Although uncertain, closure of business, job losses, and lower economic activity probably leading to a recession will likely result in more suspensions, and/or downsize of service plans, and slower revenue growth and higher costs resulting from our customer caring initiatives," he said. Asked by RBC Capital Markets analyst Drew McReynolds to quantify the capex reduction, Pruneau did not provide specific numbers, instead saying that "it's more likely that we're going to be at the low end of the range rather than the high end of the range." Later in the call, Pruneau said "we're proactive here rather than being reactive," when it came to the cuts. The reduction of projected capital expenditure at Quebecor stands in contrast to statement's from BCE Inc. leadership in that company's quarterly earnings call a week ago, when CEO Mirko Bibic said that the company was committed to maintaining its targets, despite the pandemic. Quebecor CEO Pierre Karl Péladeau also pointed out that the company performed better on its debt to earnings before interest, taxes, depreciation and amortization ratio than its main rival, Bell. "I would honestly never had thought back in 2001 … that one day we would have a lower ratio than Bell. But yet, here we are," he said. The company's revenues for the quarter were up $28.2 million to $1.06 billion, for a rise of 2.7 per cent from the first quarter of 2019. The results represent the first three months ending March 31, two weeks after the COVID-19 related lockdown began. Net income was down to $131.6 million from $189 million in the same period last year. (The higher number a year ago, the company says, resulted from its sale of its 4Degrees Colocation Inc. data center operations for $261.6 million in January of 2019.) In wireless, the company added 39,300 subscribers, just slightly down from the 39,800 it added in the first quarter of 2019, for a total of 1.37 million at the end of the quarter. Mobile revenues increased $18.8 million to $160.2 million, a 13.3 per cent increase from the $141.4 million in revenue the company posted a year ago. Péladeau also boasted that Quebecor's wireless subscriber growth was almost twice that of Bell's growth of 19,595 wireless subscribers in the quarter reported last week, "even though they have a national footprint, and we are only in Quebec," he said. Mobile average billing per user was down slightly to $51.60 from $52.50 a year ago. Pruneau told analysts that the decrease in ABPU was primarily due to the proportion of bring-your-own-device customers as a share of new additions. McReynolds wrote in a note published Thursday morning that the company's results showed "solid wireless performance despite more challenging environment late in the quarter." In home internet, Quebecor added some 8,600 subscribers, just up from the 6,300 they added in the first quarter of 2019, for a total of 1.74 million. Revenues for internet service held steady at $277.5 million, a 1.4 per cent increase from the $273.6 million reported in the same period last year. In television, Quebecor lost 19,700 subscribers in the quarter, up from the 14,700 they lost in the same period of 2019, for a total of 1.51 million subscribers. Revenues were likewise down 4.9 per cent, to $233.1 million from $245.2 million in the first quarter of 2019. Some of the losses in home television were offset by additions to Club Illico, Quebecor’s over-the-top streaming service, which added 12,400 subscribers, up from the 10,900 added in the same period a year ago for a total of 471,700 at quarter's end. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Quebecor cuts back capex plans for 2020

Broadcast | May 14, 2020

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Quebecor cuts back capex plans for 2020

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