Quebecor Inc. (QBRA) Earnings Call Transcript & Summary

Good day, everyone, and thank you for standing by. Welcome to the Quebecor Inc. Financial Results for the Fourth Quarter and Full Year 2023 Conference Call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor Inc. Please go ahead.

Ladies and gentlemen, welcome to this Quebecor conference call. My name is Hugues Simard, I'm the CFO. And joining me to discuss our financial and operating results for the fourth quarter of 2023 and also the full year 2023 is Pierre Peladeau, our President and CEO. Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast. Access details are available on our website at www.quebecor.com. The recording will be available until May 22. As usual, I also want to inform you that certain statements made on the call today may be considered forward-looking, and we would refer you to the risk factors outlined in today's press release and reports filed by the corporation with the regulatory authorities. Let me now turn the floor to Pierre Peladeau. Good morning, everyone. First off, I have to say what a landmark year 2023 was for us at Quebecor. And the Canadian telecom industry, 2023 will go down in history as the key turning point when we disrupted and changed the wireless landscape in Canada as the fourth national operator, finally blowing 2 pieces, the quiet oligopoly of the big 3 competitors as we did in Quebec more than 10 years ago. And in the media sector, we were the first to recognize that we needed to execute a complete rethinking of how to operate media activities in a globally competitive and strategically challenged new reality. We are proud of our accomplishments this year and perhaps even more satisfied with the strength of the basis we have now put in place to support our growth for the long term. Much hard work and competitive sparing remain ahead, but we are clearly on the right track to continue to succeed. Of course, the defining event of our years was the completion of the acquisition of Freedom Mobile that took place on April 3. The impact are already being felt in the market and the direct benefit of all Canadian consumers in only 9 months short despite the expected warm-welcome from the incumbent operators, we immediately announced our intention to offer a more competitive mobile telephony environment. We then proceeded to, first, increase by 10% domestic data packages to all existing Freedom customers; second, freeze prices on all existing plants for all current and future customers; and third, launch on July 27, our 5G services and significantly improve our network connectivity through nationwide coverage, seamless end up affordable international mobile plans. With that wider and faster 5G service coverage, Freedom reaches more than CAD 12 million in Greater Toronto, Calgary, Edmonton and Vancouver area as well as in other cities across Ontario, BC and Alberta. We will, of course, continue to roll out in new markets over the next months. In addition, we will progressively add further improvement in the Freedom offerings such as attractive multi-services bundles and a smoother digital user experience. Of course, we expect systematic interference from the incumbents as we have been used opportunity for too many years, and we expect to have to call upon the CRTC and ISA to intervene and accelerate the process of bringing in an additional telecom provider to shake things up for the benefit of all Canadians. Capitalizing on the new regulatory and MVNO framework, we announced just a few days ago, the launch of our MVNO service in Winnipeg as well as in a number of other cities. With a phased expansion plan over the next month that will make our services available to millions of additional Canadian consumers, giving them access to more choices, lower prices and better service. As we became the 4 major wireless carrier in Canada, expectations were high. The government and regulatory authorities want to see more competition, more investments and lower price. As clearly demonstrated by December, Canadian monthly Consumer Price Index, the CPI, the impact of Quebecor strategy and action on Canadian wireless service prices are undeniable. Since April 23, when we do at home, acquired Freedom Mobile, wireless prices have declined by more than 27% and from December '22 to December '23, the wireless services CPI decreased by more than 26%. These results clearly confirm that we have not only delivered on our promises, but we have surpassed these high expectations by combining the Donohue expertise and successful track record in Quebec with Freedom, highly skilled and Agile, Inc. True to our commitment to offer Canadian consumers more choices by continuing to build a viable and high-performance wireless network. Donohue announced late last year a $299 million investment to acquire 305 blocks of spectrum in the 3,800 megahertz band at the latest Science and Economic Development Canada's auction. This strategic and measures addition brings our total investment to just over $1 billion in the 3,500 and 3,800 megahertz band, putting us in a favorable position for our continuing 5G deployment. With the acquisition of Freedom, we managed a record 200,000 and 300,000 wireless net adds in '23, bringing our total mobile customer base to 3.8 million customers. As expected, we have witnessed a significant increase in competitive and promotional intensity over the Black Friday and holiday season. Despite that, we posted a fourth quarter record of 66,000 net additions, due by a strong performance by all our 3 brands, Videotron, Fizz and Freedom, the latter as a result of the new improvement and benefit implemented in only 9 months. We have achieved this growth despite the medium and fierce retaliation strategies from the incumbents who didn't hesitate to offer their packages at much lower prices in Quebec in a clear, but I should say, unsuccessful attempt to slow us down. As expected, annual wireless ARPU decreased by $1.72 and at 37 and 44%, mainly attributable to the diluted impact of free prepaid services, fit lower ARPU as well as the overall competitive intensity I described earlier. I should mention that contrary to our competitors, we have not changed our ARPU calculation, either by a definition quick or customer based-exclusion. To the benefit of all Canadian consumers, we expect to remain aggressive so that more and more Canadians can enjoy our great mobile services and benefit from our efficient and customer-oriented approach. Churn rates on postpaid customers increased by 0.3% this quarter, strictly due to freedom addition and importantly, all our brands experienced lower churn in Q4 '23 versus Q4 '22. We said we had a plan to reduce churn. And again, we deliver, posting the best churn performance in the industry. Excluding Freedom, our churn rate would have improved by 10 basis points compared to the same quarter in '22, demonstrating the strong performance of our 2 brands, Fizz and Videotron, in the Quebec market. More or less revenues increased by 84% during the year to $2.05 billion and wireless EBITDA reached $833 million, up 65%, of course, due to the addition of Freedom Mobile revenues as well as increases in service revenues and equipment sales. On the wireline front, we continue to generate revenue growth, and more importantly, managed to increase our cable revenues and gross margin as compared to last year in the face of particularly of style revaluation measures taken by our long-time competitor who offers Internet and bundle packages at an all-time low price that are 40% below the prices for the same package outside of Quebec. How long will they maintain this almost shameful austerity between their own customers? I will not venture an answer as these repeated behaviors seems to be how they choose to offer me. But I can help. But wondered why Bell is so terrified by the new CRTC FTTP rates of approximately 70 excluding consumption, when they are offering the same service at a much lower monthly rate more than $30 lower in some cases. So, despite this fierce environment, our broadband services customer base increased by 6,000 net adds in the fourth quarter of '23 for a year-over-year growth of $25,000. We continue to be very disciplined in our pricing strategy, and this translates into a remarkable Internet ARPU improvement of $0.57 in '23. We will continue to focus on pricing optimization and strategic positioning of our brands to preserve margin to overcome the diluted effect of fin and lower plan mix and to maintain our profitable growth trajectory. While our competition only talked about speed or the illusion of speed, I should say, there's one reputation for the quality of its customer experience is unquestionable. To '23 Val-d'Or received several distinctions of that front. Too many to go through them all, but highlighting the recent Legend survey in '24, where Val-d'Or offered the best in-store experience in Quebec. In addition, Caisse, place first for online experience in Canada telecommunication industry for the fifth year in a row according to the same Le Caisse. These distinctions attest to Videotron unique and rigorous relationship with our markets and our clients. As we continue to grow and expand across Canada, we are committed to raising the bar and bringing the same stellar standards of service, performance and experience organic. Turning now to our Media segment. Our '23 results were severely impacted by a very difficult advertising market that shows no sign of improving anytime soon, a significant decline in studio business to the actors and rider strike in the U.S., and a static regulatory environment that continues to put us at disadvantage in our fine against the web giants and the national broadcaster. Val-d'Or experienced a decrease of $49 million in revenues and $25 million in EBITDA for the year as compared to '22, leading to a negative EBITDA of $5 million. As you know, the audio visual and media landscape throughout the Western world is undergoing profound and unprecedented changes as a result of the globalization of television viewing driven by the proliferation of on-demand digital broadcasting platforms and the tectonic shift in advertising spending to the Web Giants. These are no short-term changes, but the long-term trend that is reshaping the broadcasting ecosystem and forced us to take unprecedented actions to rethink how we will operate our media activities in this new reality. VIVIA has historically been a beacon for Quebec culture language and news. We have a duty to preserve it and ensure its sustainability. The difficult yet necessary measures we announced last year are changing the way we do business to withstand the market pressures and to face the competition. We are refocusing our activities, reducing our operating costs and concentrate on the strength that set us apart and make the Quebec television network. We will continue to invest in original Quebec content and to bring all Quebec's reliable coverage of news and major sporting events. As a matter of fact, the positive impact of our continued significant investments are clear with group [indiscernible] increasing in viewing market share by 0.2 in viewing market share to reach 41% at December 31 or in sole than of our competitors. As we adapt to the new market reality, we remain the undisputed reference for news and entertainment in Quebec. Finally, our Sports and Entertainment division maintained its momentum with revenues and EBITDA of $213 million and $23 million, respectively, for the year. Major shows that the Videocon Center and Guise, Chana, Twin and Michele Satu were great successes in the last quarter. Before turning to you for the financial review, I would like to point out our continued balance sheet discipline. As demonstrated by our ability to repay more than $400 million of net debt and bring our net debt-to-EBITDA leverage ratio, down from 3.6% to 3.4% in just 9 short months since the acquisition of Freedom Mobile. Our clear intent is to continue to de-lever over the next months to get our investment-grade rating and to sustain a leverage ratio in the low 3x area contrary to our incumbent competitors who continue to enjoy IG status and operate with a leverage ratio at least 0.3x higher than ours with no tangible signs of improvement. I will now let you review our detailed financial results.

On a consolidated basis in the fourth quarter of 2023, Quebecor reported revenues of $1.5 billion, up 27% and EBITDA of $565 million, up 17% and adjusted cash flows from operations of $396 million, up 10% from the same period last year. Our Telecom segment generated $399 million in adjusted cash flows and an 11% increase compared to the same quarter last year. EBITDA also increased 17% to $559 million. Revenues reached $1.3 billion or 35% increase compared to the same quarter last year. In addition to Freedom Mobile, which accounts for most of the increase, our Videotron and Fizz brands continued to deliver growth in both wireless and Internet service revenues. Telecom CapEx spending, excluding the acquisition of spectrum licenses, was up $45 million in the quarter and $80 million for the full year as compared to the same periods in 2022. This variance is essentially due to the integration of Freedom Mobile as we remain on guidance for 2023 for key initiatives such as LTE Advanced and 5G, network extensions and geographic expansion in all markets. For 2024, we will remain disciplined and strategically continue to invest on 5G technology, new revenue growth opportunities in targeted areas and maximizing return on our investments, maintaining our competitiveness and staying committed to our strategies. Our Media segment recorded revenues of $205 million, a 5% decrease and EBITDA of $14 million, an 8% decrease compared to the same quarter last year. Our Sports & Entertainment segment revenues grew 4% to $56 million, and EBITDA was down 1.5% to $2 million in the quarter. Quebecor reported a net income attributable to shareholders of $146 million in the quarter or $0.63 per share compared to a net income of $143 million or $0.62 per share in the same quarter last year. Adjusted income from continuing operations, excluding unusual items or gains or losses on valuation of financial instruments, came in at $168 million or $0.73 per share compared to an adjusted income of $159 million or $0.69 per share in the same quarter last year. For the full year, Quebecor's revenues were up 20% to $5.4 billion, and EBITDA was up 16% to $2.2 billion. Total annual revenues from our telecom segment reached $4.7 billion, representing a 25% increase, while EBITDA grew 17% to $2.2 billion in the same period, an improvement of $317 million over last year. EBITDA margin stood at 48%. And on the OpEx side, the increase of 29% this year is due to the consolidation, of course, of Freedom Mobile as the cost containment initiatives on Videotron and Fizz continuing to delever. Telecom segments finished the year in record figures with $1.7 billion in adjusted cash flows from operations, a 16% increase compared to last year and EBITDA margin stood at 48%. As of the end of the quarter, Quebecor Inc.'s net to EBITDA ratio, net debt rather to EBITDA ratio remained stable at 3.39, still one of the lowest of all of our competitors and telecom competitors and peers. In the 9 months since the closing of the Freedom Mobile acquisition, we repaid more than $400 million in net debt and already brought down our leverage ratio from 3.6 to less than 3.4%, as Peladeau mentioned earlier. We intend to continue to de-lever, as we've said, to get our investment-grade rating and continue to operate in the low 3s. Available liquidity of more than $1.9 billion at the end of the fourth quarter and our growing free cash flows will allow us to continue to improve our already very strong balance sheet. In 2023, we purchased and canceled 260,500 Class B shares for a total investment of $7.8 million. Finally, in light of these results and following our plan to gradually increase dividends to represent between 30% and 50% of our net free cash flows, I'm happy to report that Quebecor Board of Directors declared yesterday a quarterly dividend of $32.05 per share in both Class A and Class B shares, up from $0.30, an increase representing a reasonable 28% payout going forward. We thank you for your attention, and we'll now open the lines for your questions.

All right. [Operator Instructions] And the first question comes from Maher Yaghi from Scotiabank.

I will not ask you to discuss your views on the new fixed wireless relaunch that Rogers announced this morning, but probably not the best place to discuss this publicly. But I will ask you on your own investments in wireless network deployment, can you discuss what your priorities are in 2024 in terms of wireless network deployment, specifically on the 3.5 gigahertz spectrum? And can you share with us any views on your CapEx budgets that you expect to spend in 2024, either for wireless or for the company on a consolidated basis? And also as a follow-up, we are seeing more intense pressure, competitive pressure. You mentioned that in your prepared remarks across Canada affecting margins for all the players. How should we think about margins for Quebecor in 2024 as you continue to focus on gaining market share outside Quebec?

Thank you, Maher. A lot of questions this morning. So I guess that there were 3 questions. I'll try to find out Well, the first one, a, I guess that you're not going to be surprised that I will tell you that we do not plan to do much of our deployment strategy, what we can say, obviously, and this is a relation that what we've been doing and what we said also in our speech, that we will continue to do so. We will continue to make sure that we're offering the best service and the best product to our footprint. We certainly help by the fact that the MVNO regulation is now up to state. Obviously, again, we would not be surprised to see blockage any sort of things that are incumbent the incumbents will put in front of us. We've been used to it, and we've been used to continue to fight. And at the end of the day, making sure that our plan will succeed. So, basically, this is the overall strategy. I would be able to tell you other also maybe, this is something else that we address. And this is something we look forward to put forward as we've been seeing PPIs in the province of Quebec, [indiscernible] during the last years. This situation changed dramatically after the acquisition of most of the TPIAs by either Bell, Asma and Cogeco. But this is not the same thing that we're seeing elsewhere. And we look forward to be able to propose as a wireless operator also services on a bundling purpose. And so, we look forward to implement those to offer and to improve our proposal to the Canadian market in the very near future. On the CapEx side, I think that we should not expect major changes. I think that what we said and we will repeat to say it is, we consider ourselves disciplined and we will continue to do so. It's not something that we consider a saving. And we're always considering CapEx of importance to continue to grow. But also in the meantime, we make sure that what we spend is properly spent and is spent for the purpose of servicing our customers better and wider. On the margin, I will let you get to the explanation.

On margin, May, we've said and we said this even before the acquisition of Freedom that we were expecting our view to come down. It's not only we're expecting are we expecting it, but we're in the heart of it. And it is a more competitive market is what we got into with our eyes fully open, and we expected that. And in order to be able to continue to grow margin, we always said that we had an advantage that very few of our competitors have is our long-standing cost culture, I'll call it. I think you will agree that compared to any of our competitors, we have been over the years, and this is not recent. We have been very, very disciplined, I'd even say, tight operators on the cost front. And we certainly intend to continue and use that advantage to make sure that we can continue to grow margin in an environment of pressure on the top line. More specifically, don't forget as well that there are opportunities and synergies that are still having been fully reflected in our results from the Freedom acquisition, obviously, as we are continuing to integrate and to develop the business and to invest in it and to really continue to improve the culture to our high standards of cost management that I just talked about. So, margin is where we believe that we are positioned very, very well compared to our competitors. But I think we have to be recognizant of the fact that the revenue market will remain competitive. And we certainly intend to remain competitive, but we think we can continue to perform better than anybody else in that type of environment.

Next question comes from Jerome Dubreuil" from Desjardins Bank.

First question for me is on a comment I made at the end of the prepared remarks. You've been saying you said that pro forma the dividend increase that gives you a dividend payout of approximately 28%. Just running the quick math here. It gives me a free cash flow sort of guidance of $1.70 billion for next year, that would be higher than what we expected. Can you confirm that?

Yes. I mean this is what we're expecting. I mean, on cash flow, I think you will agree with me, Jerome, that we've been delivering the goods. And again, this is not recent. And even more so since the acquisition of Freedom, while continuing to invest. And with some, as we see in Q4 with some impact on EBITDA through increased advertising and branding and investments in our retail network and our call centers and all of that in a very competitive fourth quarter as it's historically always been. We managed to generate significant cash flow and to repay $400 million of debt in 9 months alone. So, we believe based on my comments on margin, for example, and our discipline going forward in CapEx that Peladeau talked about, where we see a moderate increase for next year based on more sort of a stability leaning towards a moderate increase next year. that we will generate, we will continue to generate these very impressive cash flows that will lead us to investment grade and to continue to delever. So, yes, I'm comfortable certainly with the number that we've provided.

Obviously, there's a lot of measures to highlight whatever it's higher EBITDA revenues, ARPU turn. I would say that one we could consider the most important for us is our capacities that generate cash. So, what kind of cash are you generating to be able to pay your interest to pay your income taxes to pay your capital expenditures. And at the end of the day, bring at the bank to reduce your debt and your debt leverage that will give you the possibility to improve the relationship or the return that you're offering to your shareholders or obviously, helping your balance sheet to make sure that it will be in a good position for capitalizing any source of opportunities that may become. So, when we're looking at our numbers, we see some of our competitors that are basically paying 100% of their free cash flow and dividends. And at the end of the day, instead of seeing their debt being reduced they're increasing and their ratio also. So, I guess that this is certainly not the way that we would like to proceed. And we will continue to have a balance between the different elements that we need to serve at the end of the day, dividends, interest and capital expenditure to make sure that again, a platform that we're building will service our customers the best way at the lowest prices to maintain the margin as higher as possible.

And then if I could just squeeze a second one in here. I'm just trying to triangulate these comments with the margins we're seeing in the quarter. If you can just maybe try to explain the seasonality of the Freedom business, maybe in the quarter, Q4 profitability of freedom versus what it would be in other quarters, please?

Yes. Yes, as I mentioned in my comments, to [indiscernible] Q4, especially since it's a recent acquisition, you can't just use, and I guess you're typing as you're talking to me, right? So, my point is, you can't just use Q3, for example, because I think we'll all agree that Q2, which was our first quarter with Freedom was non-representative. We were just getting our hands on the business, and we didn't make any particular waves. But certainly, you can't use Q3 as a proxy for Q4, where Black Friday is now, of course, as you all know, not only a day, but it's almost a month and then which morphs very quickly into Christmas and Boxing week. And it's the highest promotional time of the year. And when you're the price leader like Freedom, it is obviously a time of year where you lose your pricing advantage. And we've been, I think, quite transparent about this that we feel as we are continuing to invest in the business, growing improving our network, improving our customer service, being more creative in terms of packages and what we offer our clientele that we need to continue to offer a price advantage to be able to continue to gain market share. And in Q4, quite frankly, it is less possible for us as all of our competitors becoming extremely promotional, and we lose that little bit of a better. So, it's been historically even at Videotron as we were growing, you'll remember that it was historically a time of year where we didn't do all that well in net adds. And I'll just make a comment on net adds as we're going through. When I think 66,000 in the quarter is actually very good when you compare our base to some of our competitors. And when you compare, we did 14 last year. It was pre-Freedom, of course, but I don't remember that Freedom did all that well either in Q4 of last year. So, anyway, where I'm going with this is that Q4 is the time of year where you lose that little bit of advantage. So, you have to invest more. You have to invest more in advertising, which we did in branding. You have more operational costs that are associated with that. And lastly, but perhaps more importantly, the handset subsidies. It's the time of year where a lot of handsets, as you know, leave the stores. And we take a onetime hit that is higher than usual. And certainly, when we compare our negative equipment margin in the quarter and especially at Freedom because a lot of handsets came out there. We have more of a negative margin in the quarter. But it's nothing unexpected and it's seasonal, and it's accounting-wise, it's a onetime hit. So, I think the margin and the performance both in EBITDA and in net adds in the quarter, if I may say so, I think we managed to reach that equilibrium that we were seeking in terms of continuing to gain market share in an increasingly promotional time while maintaining while trying to minimize the impact on margin and continue to grow. These would be my comments.

Next question comes from Vince Valentini from TD.

I apologize if you kind of answered some of these things. But so you normally give us telecom segment CapEx guidance or budget for the upcoming year. Have you given that number?

No, I have not given that number. As Jaka mentioned, like a spike, I believe we finished the year at 536 or just slightly under 540. So, a slight increase on this. We're probably looking at the 600 area for 2024.

So, you can increase your CapEx slightly and still get to somewhere close to $1.07 billion in free cash flow? I'm just trying to reconcile that. That would make it seem like there's very little spent on wireless handset subsidies or restructuring costs or working capital or any of those other -- forget about EBITDA, we can predict that on our own, but all those other items below EBITDA. You have no concerns about any of those line items that would hold you back from getting above $1 billion?

Well, I don't know if I'd go as far as saying I have no concerns. I mean we're in a tough market, as you know, but I would put it differently. I would say that I believe in our ability to generate this free cash flow. In the past, we've been in this situation before, Vince, as I'm sure you remember, and we've been able to deliver. And I'm confident that the $1 billion number in free cash flow is far from being unreachable.

If I can red drilled down on something else related to margins and costs in the fourth quarter. Your answer seems to imply most of the bit of the deceleration in wireless EBITDA growth that we saw was just seasonal marketing costs and handset subsidies and all that, which I think is quite justified and easy to understand. Is there any impact from roaming fees? I mean you offer free roaming in the U.S. and Mexico and now 81 other countries. Is this not becoming a material line item in your OpEx as well?

Well, I mean it's there for sure. As we offer rolling packages that are obviously a lot more generous than they were in the past, yes, there is some loss of that revenue. So, it's not huge, but it definitely is there. Yes. That's a good point. It's one of the things that I could have I could have talked about. But you know what, yes, the reverse side of what we did, though, is that, it certainly gave us some significant momentum in gaining customers and it was a bit of a different twist as I'm sure you'll agree. You can play on price, but you need to find other levers, and that was a pretty good one, which resonated with customers. So, yes, I mean, a little bit of giving up a little bit of revenue, but we still think it was a good decision. Yes. And also another point, don't forget that international roaming charges are much lower than the Canadian ones, right? So we've talked about this before. So, less of an impact on that front.

Last thing then somewhat related to that, if your networks improved, you're giving away these extra perks like roaming and maybe this is more for Pierre Karl. Are you satisfied with $36 ARPU? And you said in your opening remarks, you expect to remain aggressive. I mean, we obviously don't normally see carriers keep their Black Friday pricing continuous right through basically the end of February where we're at now. Is this just some sort of temporary plan to get sales momentum going? Or do you think this is the right level to have $29 offers out there and your ARPU at 36%. Are you happy with that? Or is this temporary in your view?

So we need to put this in perspective. First of all, when we arrived at Freedom, I guess they were kind of a limbo situation for the last 1.5 years. And I'm not sure completely also with the mindset of Shaw was considering for this wireless business. So, we arrived and what we can consider being a very good transaction in terms of price paid, EBITDA accomplishment then starting operating it. For whatever reason, the investment made was pretty short because of the environment where they were coming from, it was a priority for us to try to implement and we will continue to do so because it is a reason of our success in Quebec. So, to implement the culture that will bring customers first. And this is why we went forward with the 5G deployment with price fees in recognition of the support of our customers. To continue in this direction, and I'd like to focus, and this is why this is a moving target, and we cannot fix this ARPU forever. And the moving target will be our capacity to deliver multi services to be able to offer more aggressive bundles in terms and what will be the response of the competition in the territories we are servicing. On top of which also, as we mentioned, we just started a business a service in Winnipeg, larger in Manitoba that will bring additional services and not they anticipate what will be the reaction of our competes. Will the reaction be the same as what we've been seeing in Quebec? I mentioned this, where we're seeing prices in bundles that we've never seen before and where the difference is very, very important, but we are able to continue despite this strong pressure to service our customer because our customer service experience and expertise, which is highly appreciated by our customers, and we look forward in the bundle proposal that we're going to offer to make a difference. So the situation that we're living here was certainly the exported quote in the different markets that we intend to service in the very near future. So then, therefore, is the ARPU for wireless makes sense, make strictly sense, I would say, less and less in the future.

Next question comes from Stephanie Price from CIBC.

Just a follow-up to Vince's question. Just curious if you could talk a little bit about the time line to bundled Internet offers for the Freedom brand. It looks like Kudo and Virgin are offering Internet bundles, but Peladeau has stopped its home Internet offer. Just curious if you see a strong demand there for Internet bundling within the flankers.

Well, first of all, I think that we are in a good position technologically to do so. With the acquisition of Ben India, we already have the experience of PPIA. We need to make sure that the stack joining with Freedom will be accomplished. Certainly, also, I think that we should highlight the technology that we need broad in the table, and this is one of the reasons why we thought it will be a good idea to acquire it. It's what the television features are bringing to the company. So, putting all this, I guess that on the technology front, we have what is appropriate to move forward. The part of the equation that we don't control, and we highlighted it the kind of blockage that we will see and we will met with the network operators that we are forced to connect to. We expect this will go slowly. I don't know if I can use that word. But you know what I mean, unfortunately, in the past, this is not something that we experienced. As an example, when we decided to be a PPI on the Bell monopoly footprint in DCB, and we were forced to go in front of the CRTC many times for at the end of the day, be in a position to offer our service. But we lost between 9 and 12 months today. And I guess that this was certainly not a good thing to do for Bell, but we took a significant portion of the marketplace so much that we are now intending or we are in the process to build the network or to overbuild the Cablevision platform, which is a Dell platform in ETB. So, therefore, obviously, growing from a TPIA to a network operator. So, if we look forward to keep this in mind, we are a facility-based company that had been built like this even in the whole time of the canyon. And we intend to remain the same. And this is why when we started in 2006 as an MDO operator, we participated in all the representation to make sure that we will get access to spectrum. We built the platform, the convinced I said, which, I said at that time was only industry to make spectrum reservation for new entrants. We win that game in today from no wireless operator we are other than our friends and Maritimes, the only new operator in wireless for which also with, I would say, favorable regulation that we will be able to offer abundance. Obviously, we experienced significant success in Quebec offering bundles, and we look forward to do the same. And again, that means that do not mean that we should not be able also to operate as a stand-alone wireless operator. As we've been doing it, not completely true because we also offer Internet. But as we've been doing it for the last 4 years with our fifth brand and for which we think and we should say that we were quite successful. This is something that we look forward to replicate in the other areas. So, in a nutshell, to answer your question is, we're ready to go. And what we're seeing is opposition from the incumbent to be able to connect to the network.

And maybe just one more from me. You mentioned this there. Just curious what you're seeing in terms of the Fizz beta program in English Canada. Has the rollout been as it's expected? Has there been any response from competitors? And how do you think about any cannibalization of the Freedom base?

Well, this is always a little bit of cannibalization. But at the end of the day, the question is, would you prefer to get your customers being lost to your competitor are keeping them? But I would say that with Fizz ,what we experienced in Quebec was certainly offering a service to a bucket of [indiscernible], digital savvy people, younger people that would prefer to be serviced by a digital environment, the no call center, having probably a lower price. But on our side of the equation, the lower price or the lower margin is compensated by lower cost. So, at the end of the day, it brings us in terms of free cash flow, a very interesting input. So, again, we cannot completely anticipate what's going to take place. But we see certain areas probably more open to this kind of service to what we can call traditional services. That does not mean that we will not continue to offer self-install that will help our cost base. This is something that we've been doing in Quebec, and we look forward also to implement this in a more traditional way.

Next question comes from Matthew Griffiths from Bank of America.

If I could, I just wanted to maybe circle back for a moment to the CapEx question. And if you could give any color on the split between maybe your cable investments in the coming year and wireless, particularly I'm thinking about the comments Pierre call made about rolling out wireless to new markets. And if there was any context you could provide around those rollouts? Obviously, you don't want to name them, but if you could, how material of an addition to your addressable market are these rollouts? Are they relatively small, which would be in line with the no change in CapEx guidance? Or perhaps they're larger than I might be thinking? That would be helpful.

Thanks, Matt, for the question. On the rollouts, I mean, no, the rollouts are significant. The rollouts are significant through our MVNO agreements, which gives us a good lever on CapEx, as you know. So I think we have to be just a little bit make sure a very large improvement through MVNO doesn't necessarily translate short term into a much higher CapEx increase. So, I think we're in the right position to increase our coverage area significantly in Ontario and Alberta and BC while still being quite disciplined on the CapEx. On the CapEx to answer your first question, I mean, the priority is network improvement, for sure. And we talked in the past about densification, about making sure we address the backhoes and the issues within our own coverage areas, and this is where we're continuing to focus our investments. And so, I won't give you the specific split as we never do. But that's certainly where our priority would be in terms of CapEx. But I think there really is no dichotomy between our expansion plans and our CapEx guidance.

And maybe just on churn, and I apologize if I missed it, but I believe you provided some color on churn ex Freedom, but what was wireless churn in the quarter? And in other words, 2/3 or so of the way through the first quarter, how have you seen churn kind of evolve after that period where the industry overall really experienced elevated levels? Has it remained seasonally higher than you would expect? Or has it reverted back to previous years churn levels on the wireless side?

Matt, our churn is actually down in Q4 in all of our brands and our 3 brands. Overall, of course, Freedom having a higher churn. Obviously, when you do the average, it dilutes and it increases the overall churn number. But every grant, even Freedom has started. You remember, I'm sure you will remember, we talked about that saying we have to have our eyes on the turn and we needed to put in place a number of steps. We referred to that many times to be able to continue to -- some of the black spots and some of the network issues we talked about, some of the customer service issues et cetera, et cetera, to make sure that we address churn. And you know what, we did it because Freedom's churn is already down sequentially. And to us, this is huge. And ex-Freedom also to answer your question, we said that our Videotron and Fizz brands together churn was down 10 basis points. So we're continuing to bring down turn as well in our home market. And we see this as very important. And as a clear indication that our customers are increasingly resilient or increasingly hard to steal from us as we are improving our service and our network, as we said we would. And that's going to be the name of the game because ultimately, that's where we're positioning ourselves. We're the price leader, but we need to improve the technology front and the service front. And I believe that the churn numbers that we're already showing are proving that we're on the right track on this.

Next question comes from Sid Dilawari from Cormark Securities.

Just firstly, just on wireline, relatively stronger net adds there in recent quarters. You've talked about heightened price competition from one of your largest fiber competitors. Can you maybe speak to some of the moving parts that drove the relatively stronger subscriber loading during the quarter and just the competitive environment in general on the broadband side?

Yes. Actually, yes, our performance was really good on. I have to say, guys, that I'm still here about the underlying assumption that our performance on wireless isn't good net adds isn't good. We actually think it's pretty good at 66,000 when we did 14 last year and free didn't do a heck of a lot. But anyway, I'll set that frustration aside, I'll answer your wireline question. where we did way better than last year, and it's a hugely competitive market. We've talked about this. Pierre Karl talked about this in his opening remarks. I mean, we have a main competitor that is crazily competitive offering prices in Quebec that for the same package is 40% to 50% higher in Ontario and elsewhere in the country. And we are still managing on the basis of our strong service because quite transparently, we are not responding or have not been responding on price and because we believe that we have way more to offer. And we are very strong on retention and being able to keep some customers. And that's why our performance has been quite interesting in wireline net adds. But to answer your second question, I mean, I'd be lying if I said that the overall promotional and competitive environment is easing in Quebec. It's not, but I think we're showing that this is, we've been competing with Bell and wireline for quite some time. And it's ebbed and flowed. And right Yes, of course, I'll admit that right now we're in a tough spot with them, and they're particularly aggressive. But we've been successful in the basket against them. And we will continue to be successful. They're bringing down the overall value of the market, but we believe that even so, we're even better placed than they are to compete in that type of environment, and we will continue to succeed. We've been in this, as you have said, for so many years. So, we're quite used to it.

But if you look at our performance, and the competitive performance, but we highlight the fact that the side very competitive, it's even getting more competitive. I don't know what should be the conclusion other than to say that they are not successful, and this is why we continue to reduce their prices? So, maybe they should ask themselves, are they doing something good. And when you are looking at overall numbers, we've been seeing the improvement lower than previous quarters. I remember the 23,000 net addition in video, which is lower than what they used to have. We don't know the split between Ontario and Quebec. But maybe it talks by itself. So, we're used to it, we will continue to make sure that we are offering the best service, the best proposal, and we are doing it efficiently and widely and not spending our money in things that don't make sense and don't get us an appropriate return.

Just one last one for me. You typically disclose wireless EBITDA and maybe you did in your prepared remarks, I apologize if I missed it, but I think the growth in wireless EBITDA was 65%. Are you able to disclose the amount of wireless EBITDA during the quarter?

Yes. I can disclose the EUR 220 million in the quarter from memory. I'll just check my number right now to be sure, yes, 220. Yes, 220 in the quarter in terms of wireless EBITDA.

So last question comes from Drew McReynolds from RBC. it looks like Drew dropped off, and we have Meraki from Yes.

I needed to go back, sorry, it's fascinating just when you talked about churn being down sequentially on your brands on wireless. When we saw a significant increase sequentially for the incumbents, I mean, at the end of the day, don't you think that the experience that we saw in Q4 will probably highlight that it's less likely going forward that we'll see that kind of significant competitive dynamic happening again because having higher churn for incumbents, but not able to bring you down is not profitable for anyone? So I go back maybe to say the experience we saw in Q4 doesn't give you pause in terms of that at the risk that this will occur again is less probable.

Maher, you're asking existential requests. Should we anticipate, again, what's going to take place. I get that maybe we can consider that our competitors are very nervous, but us coming in the marketplace. What we're seeing is sometimes strange and were reactions, I think they are going to the private council to fight the CRTC decision for the government is certainly adding in an environment where they would like more competition. You certainly heard the Prime Minister calling some decisions, garbage decisions. We're seeing other players going in front of the Federal Court of Appeal to ask the competence or the question what the CRTC are doing. We see our nitration process for the MVNO clarification process being challenged also by the incumbents, where we all know that the roaming prices in Canada are one of the eyes, if not the highest in the world. And we all know what roaming prices cost in the U.S. cost in Europe, and they're still maintaining that kind of situation. Last week, we were in front of the CRTC. Also, I was interested Incendo, which is the industry committee for the sand. It was quite interesting to see, they were all analysts, all and am seeing a company challenging the big 3. I've never seen that in my length. And I've been there a few times. So, things will happen. And will this have an effect on churn? There's probably going to have an effect on term. How can we qualify the marketplace in Canada? We're certainly helped by immigration but more and more being in a mature business is also a churn in market. It's a business of churn and providing the best price with the best offer and the best product will give you the capacity to increase your RGUs. And this is the business we're in, and we intend that we will continue to grow our EBITDA by adding a better ARPU with better service for a higher amount of Canadians, a higher amount of customers. This is how we've been building our different businesses in Quebec from the Internet access to wireline telephony and finally, in the wireless business for the last 10 years. I guess that there's no magical recipe other to offer the best thing to our customers, and we look forward to do this for the new footprint that we're now being implemented since the acquisition of the Freedom Mobile. So, this is the last question. Thank you, Maher, and we look forward to talk with you guys at the next conference call. Thank you very much, and have a nice day.

Ladies and gentlemen, this concludes the Quebecor Inc.'s financial results for the Fourth Quarter and Full Year 2023 Conference Call. Thank you for your participation, and have a nice day.