Péladeau confirms he won’t bring change to Quebecor

After analyst speculation about whether Quebecor Inc.’s returning CEO would affect the strategic direction of the company, Pierre Karl Péladeau confirmed on a conference call Wednesday that his return won’t alter Quebecor’s plans. “With the last 16 years, we’ve been following the same strategy…in the combination of content and distribution,” Péladeau said on the call with analysts reporting the company’s fourth quarter earnings. “I think we’ve been able to enhance and position our telecom distribution platform very well because of the great content that we were able to provide. We will continue the direction.” This confirmed analyst expectations that the company would continue to operate as normal. Péladeau rejoined the company last month after heading it for 14 years, between 1999 and 2013, and then leaving to enter provincial politics. And despite an almost immediate stock drop on the announcement of his return — which had one analyst saying investor concerns were “overdone” — the company returned to report higher earnings. For the three months ended Dec. 31, the Montreal-based company reported higher revenue and net income Wednesday than the equivalent period a year ago. Revenues for the 2016 fourth quarter were up 2.6 per cent, or $26.9 million, to $1.05 billion compared to the same period in 2015. Net income for the quarter was $143.4 million, compared to a loss of $22.5 million in the same quarter last year. The company saw a balance of wins and losses for its Videotron division this quarter compared to the same quarter last year, with a revenue gain of 3.6 per cent to $803 million. Revenues for the cable television division saw a decline of 2.8 per cent to $256.2 million and landline revenue declined six per cent to $104.8 million, both partly due higher discounts and to subscriber losses. The company lost 4,800 basic cable and 12,000 cable telephony subscribers, compared to a loss of 9,000 in the comparable quarter for the former and 13,200 for the latter. Total cable television subscribers sat at 1.69 million, down from 1.695 million the previous quarter. That was offset by revenue gains in Internet and wireless, with the former jumping 3.8 per cent to $248.5 million and the latter up 23 per cent to $137.1 million. All numbers are comparable to the same quarter last year. The company attributed the revenue gains for wireless to increased number of subscriber connections and higher net revenue per connection, while higher per-subscriber revenues and rate increases contributed to Internet gains. Videotron added 16,700 new Internet subscribers against 8,700 in the same quarter last year, for a total subscriber count of 1.6 million. Aravinda Galappatthige, an analyst at Canaccord Genuity, said in a Wednesday note that the Internet numbers are encouraging “given the heightening competitive activity. However, the results are starting to reflect the broader trend of cablecos winning share vs the Telcos.” On the wireless side, the company gained 26,200 new subscribers for the quarter for a total of 893,900, though the new adds came in lower than analyst expectations. “The lower-than-expected wireless net additions likely reflect the balancing of subscriber growth and profitability in a competitively intense and seasonally strong quarter,” Drew McReynolds, an analyst at RBC Dominion Securities Inc., said in a Wednesday note. Average revenue per user (ARPU) was up 5.5 per cent to $51.96 versus $49.23 in the same quarter last year. “We continue to see room for wireless growth as high-tier handset offerings and a quality network rollout should help close the gap with incumbents,” Desjardins Capital Markets analyst Maher Yaghi said in a Wednesday note. The company’s over-the-top Club Illico service brought in 36,200 new subscribers for the quarter for a total of 314,700. In total, the company added 62,300 net new subscribers for all segments in the quarter compared to the equivalent period the previous year, which includes its Internet, cable television, OTT and cable and mobile telephony services. The company did not disclose details about the future of its new IPTV product on the conference call, while competitors Rogers Communications Inc. and Shaw Communications Inc. revealed previously that they are using Comcast Corp.’s X1 platform. On the media side, revenues slid 1.5 per cent to $266 million as advertising declined 13 per cent. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Péladeau confirms he won’t bring change to Quebecor

Broadcast | March 15, 2017

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