Quebecor Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Quebecor Inc.' 's conference call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor Inc. Please go ahead.

Good morning, ladies and gentlemen, and 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 and the full year 2020 are Pierre Calterado, our President-in-Chief Executive Officer, and Jean-François Pruneau, President and CEO of Videoton. You will be able to listen to this conference call on tape until May 26th of this year by dialing 877-293-8133. access code 48006- and playback access code the same, 48006-. This information is also available on Quebecor's website at www.quebecor.com. I also want to inform you that certain statements made on this 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 regulatory authorities. Let's now start with our CEO, Pascal Pineda.

Merci, Hugues, and good morning, everyone. We're together today to review the fourth quarter and the full year 2020. So responding to the two ways of COVID-19 pandemic, which first took us by surprise, we quickly adopted the prudent, diligent, and disciplined approach to manage the varying impacts on our different businesses and resiliently continue to deliver comparatively superior results and performance, fulfilling our mission to keep Quebecers well-connected, informed, and entertained. Reviewing our financial results for the last quarter and the year, we demonstrated our resilience and our prudent cash flow management in all our business segments. we generated more than $345 million in cash flow from operation in the fourth quarter, up 33%, and $1.3 billion for the 2020 year, an increase of $168 million, or 15%. In light of these results, and following our plan to gradually increase dividends to represent 30% to 50% of our net free cash flows, I'm happy to report that Quebec War's Board of Directors declared yesterday a quarterly dividend of $0.275 per share on both Class A and Class B shares, up from $0.20, a 38% increase. Turning to operational matters and studying with telecom, Diderot managed to successfully navigate the highly competitive industry and promotional last few months of the year to maintain its market-leading market shares of gross wireless ads and a very strong growth in broadband subscribers, underlining, once again, our ability to compete against our main competitors as well as the resellers based on our superior products and unparalleled customer experience. Since continued to fuel our wireless growth, both in wireless and wireline, where, along with ELIX, which reached more than 677,000 Internet and video subscribers in just over a year, it decisively confirmed Vidéotron as the leader in telecom services in Quebec. The impact of the pandemic was, of course, much heavier on our media segment. with a significant slowdown in advertising revenues across platform, but also a reduction in programming, content, and production costs. The postponement of content and sports rights, as well as the receipt of government subsidies, which all in all, carried down to a net improvement of our media profitability. Our sports and entertainment segment was obviously, and unfortunately, for all intents and purposes idle for the last quarter and for most of the year but is working hard at planning the restart as much as we can and ensuring that we're ready as soon as events are once again allowed. On the regulatory front, we just learned this morning that the Supreme Court of Canada will not hear our appeal regarding the CRTC's decision on internet wholesale rates. While we're disappointed with the court's decision, does not change the fact that the CRTC must review its 19, sorry, its 2019 order and provide cable carriers with reasonable and fair rates, as we are the ones investing heavily in telecom infrastructures, which, among other things, allow the deployment of high-speed internet underserved areas. We're also awaiting the CRTC's decisions regarding MVNOs, as well as some form of action with respect to the CBC Radio-Canada operatory behaviors in advertising rates and content acquisitions. Speaking of anti-competitive practices, it would be remiss not to point out, once again, that our main competitors continue to block competition by, among other things, unduly delaying access to telecom infrastructures. With our growing list of allies, including many small regional competitors who are struggling to expand their networks, we are asking for quick action on this front. Bell said on Tuesday that the issue has been solved. From our perspective, this is once again just public posturing because we're far behind from seeing significant progress in the field. Let me be clear. We always have been vocal advocates of competition, as long as it is fair, equitable, and beneficial to all stakeholders, which is exactly what we did in wireless in Quebec. As confirmed by the recent ICED report on wireless prices, which shows that Quebec is the only province in the country to have achieved the target of 25% price reduction set by the federal government. We will continue to offer better pricing, better products, and continue to deliver good profitability because of our hands-on management, our clear vision, our proven business model, and our unparalleled desire to win. I will now let you review our consolidated financial results.

For the fourth quarter, Quebecor's revenues were up 1% to $1.1 billion, and revenues from our telecom segment grew 4% to $941 million. Quebecor's EBITDA was up 7% to $527 million. Our telecom segment recorded EBITDA growth of 4% to $482 million, and our media segment recorded an EBITDA of $46 million for a $10 million favorable variance, mostly due to a significant decrease in costs at TVA Sports from the postponement of the 2020-2021 NHL season to earlier this year in 2021. We reported a net income attributable to shareholders of $160 million in the quarter, or $0.64 per share, compared with $145 million or 57 cents per share reported in the same quarter last year. This increase is mainly explained by the EBITDA improvement. Adjusted income from continuing operations excluding unusual items and gains or losses on valuation of financial instruments came in at $165 million or 66 cents per share compared to $160 million or 63 cents per share reported last year. For the full year, revenues were up 1% to $4.3 billion and EBITDA was up $73 million or 4% to almost $1,953,000,000. Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments came in at $595 million for the year or $2.36 per share. compared to $581 million, or $2.27 per share, last year. Our cash flow from operations for the year 2020, as Jackal pointed out, increased by $168 million, or 15%, to $1.3 billion, once again demonstrating our resilience and strength of our business model. At the end of the quarter, our net debt-to-EBITDA ratio was 2.68 times down from 2.91 times reported at the end of the fourth quarter of last year, and the second lowest amongst the telecom peer group in Canada. I would like to point out the success of our recent financing, where Videotron issued $650 million of senior unsecured notes in the Canadian market, yielding 3.125 or 3.18%, which is the lowest coupon rate in this market. This issuance, in addition to our liquidities of more than $1.9 billion, positions us favorably for the upcoming spectrum auction and the maturities of our notes, the next ones being 2022 and 2023. In 2020, we purchased and canceled 6.5 million Class B shares. Since we initiated our normal course issuer bid program 10 years ago, Approximately 40.7 million Class B shares have been repurchased and cancelled. Finally, as Pierre-Claude said, Quebec Horse Board of Directors declared yesterday a quarterly dividend of 27.5 cents per share on both classes of shares, representing a 37.5% increase. I will now turn it over to Jean-François to review our telecom segments operations.

Good morning, everyone.

As we continue to be confronted with a second lockdown, the health and safety of our employees and customers remain our highest priority. That is why we help customers stay connected with loved ones during the holidays by suspending data caps on all broadband plans. Also, from mid-December to the beginning of February, despite the lockdown and the mandatory curfew, while the vast majority of our stores remained open, they were so for essential services only. The balance of our employees continues to work safely from home. This fourth quarter marks the launch of our 5G network, an important milestone in the deployment of this new technology. While the deployment of several new sites will continue throughout 2021, we are confident that this will bring Quebecers closer to one another, enhance the competitiveness of businesses, and support Quebec's economic development. In addition, I'm very proud to highlight that PHIS tops Leger 2020 WOW Study ranking, offering the best online experience in telecommunications. PHIS also figures in the top 10 ranking for best online experience, all sectors combined, far ahead from our competitors. In the quarter, despite softer economic conditions, we posted a solid operating performance with a growth of 43,000 RGU's essentially doubling last year's performance. In Waterline, broadband services grew 27,000 customers, nine times more than last year, and TV declines were 7,000 lower than last year's. To that effect, Helix continues to gain traction and take rates exceed our expectations. We now count more than 678,000 video and broadband subscribers to the platform. Whether it is on gaining new clients or migrating current clients, Helix clearly helps us to mitigate TV declines, increase broadband penetration, upsell services, and bundle packages, and finally, contribute to lower churn rates. In the quarter, we also initiated a no-to-install pilot for Helix. And this new option is about to be commercially launched, allowing our customers to get our product more safely, more rapidly, and to be more autonomous. Our Helix platform continues to evolve in order to meet consumer changing needs. For instance, concrete solutions like Helix Instant TV, our app-based TV distribution product, are targeted to address actual consumer trends and preferences while being more flexible and more cost-effective. We also remain committed to delivering the best Wi-Fi technology and performance for our customers And as such, we have just introduced a new Helix Gateway based on Wi-Fi 6, providing enhanced coverage as well as higher speeds for connected devices. Home automation and advanced digital security were also launched during the fourth quarter. Using our ElixFi app, our customers can manage their Wi-Fi network, connected devices, and smart home equipment such as smart lights, switches, and thermostats. The app also enhances the digital security for Alix customers' Wi-Fi network by protecting it against malicious sites and phishing. In the fourth quarter, we posted a strong performance on wireless services with 29,000 net ads and a growth of 151,000 lines for the full year. Similar to September, year-over-year performance for Fizz was impacted in October as 2019's performance was boosted. by customers rushing in before the previously announced termination of the discount pricing. Furthermore, once again this year, we have witnessed very aggressive Black Friday promotions, mainly from Bell. Finally, and as we observed in the first lockdown, market activity was rather slow in this second lockdown, more specifically during the usually busy holiday season. After seeing all this, I am particularly pleased to report that once again, we led the market with a 27% share of gross ads for this quarter. Consolidated wireless ABPU for the quarter decreased 2.6% year-over-year. The loss of overage and roaming revenues explains 75% of the overall decline, while the dilutive impact from a greater BYUD and FIS customer base explains the balance. Videotron Mobile and Fizz, however, exhibits respective year-over-year inbound ABPU growth, which votes well for the future once we have cycled our base. Finally, monthly churn rate came down from 1.4% to 1.2% in the quarter. Despite productions halted for a few months in 2020, ClubEco was able to launch 20 original productions throughout the whole year, seven of them during the last quarter. We are starting off the year with a strong lineup of new programming featuring several original productions starring the best Quebec actors, directors, writers, and crews. For instance, today we launched Patrick Sénécal présent, a first series for the well-known writer. Mid-January, we also launched the documentary Cult religieux, which is already one of the top, or one of the most, sorry, viewed content on the platform. Finally, our OTT app, had a well-deserved makeover and will now be available across Canada through platforms such as Apple TV and Chromecast. Turning to our four-quarter financial results, we are proud to report a 4% growth in revenues to $941 million, driven primarily by growth in wireless and broadband services and equipment sales. EBITDA grew a solid 4% and amounted to $482 million. For the full year, we posted revenue growth of 4% to $3.6 billion and EBITDA amounted to $1.9 billion for a 3% growth. In 2020, we posted a strong free cash flow growth. During the quarter, we generated $317 million in cash flow from operations, $69 million higher than last year. For the full year, we generated $1.3 billion in cash flow from operations, for a growth of 13%. Capital expenditures, including acquisitions of intangible assets, amounted to $165 million in the fourth quarter and $596 million for the full year, which was lower than the pandemic-related revised guidance. In 2021, in the context of the continuing buildup of our 5G wireless network, wireless network extensions in rural areas and other strategic projects, we expect to spend between $600 million to $650 million in TAPEX, excluding the acquisition of wireless spectrum licenses and the upcoming 3500 MHz spectrum option. I will now turn it over to Pierre Cal for a conclusion. Merci, Jean-François.

So, looking ahead to another year impacted significantly by the unpredictability, and outside forces, we will maintain our financial discipline, rigorous management, and our focus on delivering superior results in all of our businesses segments. These times call for assured leadership, and Quebecor is proud to continue to assume its role as Quebec's leading corporate citizen, providing unfailing support to our employees, clients, partners, and Quebec population through numerous programs, contributions, measures, and events for all Quebecers who live, have been, and are still being made difficult by these unprecedented times. So I thank you for your attention, and we'll now open the lines for questions.

Operator? Operator? Of course. So we already have a few participants queued up. Just as a reminder, if you want to ask a question, please press star 1. And the first question comes from Jérôme Dubreuil from Desjardins. Please go ahead, Jérôme.

Merci. Bonne journée tout le monde. So first question, regarding your wildlife business in Ottawa, what kind of success are you seeing in this market with the many operators present? And do you expect this market to be a material source of future growth? And second, we've heard from certain peers that there could be a catch-up in terms of working cap contribution in 2021. Do you expect this as well? Thank you.

Okay, so I'll start with the Ottawa market. Obviously, in the Ottawa market, we cannot bundle services. So, you know, when we when we do our marketing to future customers, it's obviously an obstacle. So we definitely don't have the same kind of success that we have in this market just related to this. And on top of that, as you mentioned, Jerome, the market is definitely more competitive because there are more operators and more brands in that market. So it obviously plays out. As for the future, we're going to be trying to take a different look at that market. We think it's still... It's still a market that is attractive to us. And obviously, don't forget that people are living and yet to know. They usually work in Ottawa, so it's important to have a strong network in that market, and we'll definitely continue to do so. But we will look at creative ways to approach this market because we obviously don't have the same tools.

Working capital. Yeah, working capital, no, we don't expect any huge swings at the beginning of this year. Thank you.

All right. Next question comes from Drew McReynolds from RBC. Please go ahead, Drew.

Yeah, thanks very much. Good morning. Just on the internet net ads, Jeff, you alluded to obviously being strong and up nicely over a year. You know, there's the view out there with BC accelerating fiber, that that's going to kind of chip away at multiple cable codes here. Just would like to get an update on kind of the fiber expansion and your footprint and the dynamics there. And then secondly, you know, tying this into Helix, can you drill down a little bit in terms of, you know, how Helix is, you know, perhaps helping you with kind of renewed internet momentum, if that's the case? And then third, just last one here for you, I think we've chatted about this in the past, but when I look at your balance sheet, obviously in better shape relative to most of your peers, you know, continue to generate a lot of free cash flow, et cetera, et cetera. I mean, the profile here is very different than it would have been a decade ago. Maybe update us on just an investment grade rating desire here, if that is the path forward. Thank you.

Thanks, Drew, for the question. With respect to our broadband performance, obviously Helix plays a major role. And don't forget also, you know, Fizz, we've launched – You know, I brought them services at Fizz, and obviously Fizz contributed to this success. But with Heal, it's what we see currently. It's a major shift in awareness of the product, of the awareness of the functionalities and the advantages that go with the product. You know, the Wi-Fi experience is much better than... than, you know, our competition. And obviously the HelixFi app where, you know, on a single app, you not only have your Wi-Fi network to manage, but you also have the home connected equipment and everything all, you know, combining in the same app. So those are many functionalities that obviously contribute to our success in broadband. And churning this down with Helix, So obviously when we talk about net growth, it certainly helps on the net growth side because churn is down when people are using Helix. As far as our fear, if we can call it that way, with respect to fiber expansion from our main competitor, there's no market where the overlap is such in Canada. We have the highest overlap market in terms of fiber and coax, or HFC, and Quebec is the most overlap market. So our estimate is that Bell has already covered 90% or 85% to 90% of the market in terms of fiber. Not necessarily fiber to the home, I admit. Probably 65% of that or close to 65% of that is fiber to the home. So it's a very much, you know, overlap market. So if we are able to have that kind of success, I don't think it's an additional, you know, five or 10 or 15% of overlap or five or a home overlap that will, you know, be critical to us. Absolutely not.

On the, yeah, on the investment grade question, Drew, as I've said, you know, in the past, you know, our position is that for all intents and purposes, we are investment grades. I mean, the Our metrics are there, not only leverage, but all the other metrics that are looked at very carefully by the rating agencies. And some of the outside forces and things, such as the regional position and some regulatory uncertainty and things like that, we are addressing. And we just feel that, you know, we are investing great. I won't speak for the rating agencies who obviously need to update themselves on results and things like that. But we're working hard with them. And it's, as we've said in the past, I mean, we certainly believe that we're there. And we'll see, you know, we'll see where they come up. Thank you both.

All right. Next, we have a question from Jeff Fan from Scotiabank. Please go ahead, Jeff.

Hi, thank you. Good morning. Hope everyone is well. I've got a few here. The first one, just on the new features, Jeff, that you talked about regarding your broadband security, et cetera, do you expect or do you assume that these will eventually drive ARPU growth related to your internet as you look further out. And just to clarify, are these features based on the Comcast X1 platform and whether there's any impact on costs or margins as you roll these products out? The second question is just on CapEx, the 600 to 650 million for next year or for 2021, What's the implicit assumption there regarding your 5G rollout? Are you going at it in a gradual pace, or is there some acceleration through 21? I wonder if you could just give us some color on that, because it seems like one of your competitors is going pretty fast. And then the final question is probably more strategic. When we think about Quebec Core, I mean, in the last decade or so, wireless has driven tremendous amount of growth. your wireline market share and internet continues to pick up. As you kind of look forward the next several years, I mean, where are the growth opportunities going forward for Quebecois? Are we talking about adjacent businesses, adjacent geographies? I'm wondering if you can just kind of speak to that at a very high level. Thanks.

Thanks, Jeff. With respect to the broadband features, Yes, they all come, and home-connected features, I should say. Well, they all come from the X1 platform, so Comcast X1, obviously. In terms of the potential for increasing ARPU, obviously there is potential for increasing ARPU. But as of now, for us, it's more a question of making sure that the Quebecers will adopt those features, will adopt our products. To us, as we speak now, it's more acting like a churn reduction strategy rather than, you know, increasing our food. That being said, there's going to be a point, obviously, where adoption is such that there will be ability to improve our food. And we also have, obviously, the opportunity to pick up some margin on equipment. You know, we can obviously sell equipment or own connected equipment throughout our channels, through our channels. So... So that's certainly some potential for picking up some margins there. In terms of 2021 CapEx guidance, yes, obviously it assumes that we are continuing on deploying our 5G network. It's going to be, I would say, more heavy or heavier this year than it was last year. But our plan is more a gradual plan rather than going full steam with 5G. To us, We understand some of our competitors are going more full steam than we are, but the use cases are not clear to us yet, so we definitely prefer to be more prudent. It's been good for us in the past not to be dispersed and being more prudent, just on the investment costs, as an example, where equipment costs might be going down and whatnot. But we are taking more of a gradual pace with respect to our 5G investments.

On your last question with respect to growth, Jeff, I mean, our position on that, I mean, there still is, I understand our growth has been very strong on wireless, and as you can see, continues to be in wireline. I mean, there's still quite a bit of runway for us in Quebec, and we're focused on that, and we will continue to deliver very strong growth in our minds in Quebec because the opportunities are there. That being said, you know, as we've said, will also be opportunistic. If either regulatory or other events create opportunities for us, then we'll certainly look at them and consider them and analyze them. But at this point, we're very much focused on getting the maximum growth that's still allowable to us in our home markets.

Maybe I should maybe add that you were right to mention, you know, that our growth for the last over 10 years has been fueled by our wireless business. I remember in 2003, you know, when Fido went, my recollection, I think it was the CCAA, that we would be interested right away. But the ratio was over seven times. So I guess that it was probably not possible at that time. But despite the fact of this situation, we thought that wireless would be the future, and then therefore, you know, we negotiated an MVNO deal and afterward a facility base after proper representation in front of the government to be able to get some set-aside spectrum and build our own network. So today, I guess that probably maybe the opportunities are less obvious, but certainly our balance sheet is of... of us, providing, you know, if something is presenting, growing our business in our industrial activity, and therefore, you know, we would be in a good position. And don't worry, Quebec will not buy Transat.

That's great. Good to be here. Thank you very much. All right. Next, we have a question from Matthew Griffiths from Bank of America. Please go ahead, Matthew.

All right. Thanks for taking the questions. I just wanted to ask or go back to the 5G issue, and should we assume that, you know, given the success you've had with BYOD, and that still seems to be driving growth for you guys, that your competitors are going to have to probably be the ones to feed the market with devices and that your 5G will probably at least lag by, call it two years, once those 5G devices are in the market and maybe off of a financing contract. And then separately, I want to touch on margins. It seems like you have, through Fizz, through Helix, you know, a lot of levers that you can, you know, potentially drive higher margins. And I was just wondering, you know, how much room do you see for margin growth and how much is going to have to be reinvested back in the business if we look ahead over the next, you know, call it a year or two? Thanks.

Okay.

With respect to the 5G plan, and obviously I will not go into specifics because of competitive issues, but I think it's fair to assume that in any new technology, we tend to be more prudent. Our competitors, maybe they have more leeway, but we tend to be more prudent because we want to make sure that when we do the investment that it's going to pay off. So in terms of 5G, we know that the future is 5G, but it's just a question of finding the right use cases at the right time and investing on the right pace. So assuming that the 5G rollout will be completed later than our peers, and I don't know what's the deployment plan for our peers, but I think you have to assume that we are prudent in the way that we're making our investments. And if devices, 5G devices costs come down or equipment, network equipment comes down or whatever, in terms of costs, obviously it's gonna be beneficial to us as well. And on top of having the right use cases and the right profitability expected from the investment. In terms of margins, you're right to mention that we have many levers. And you're right to mention that there might be other opportunities or potential for improving margin. When we look at our wireless business, we definitely see an improving margin business here. We're getting more and more scale. Our market share in Quebec is at about 21% of the home market. So we're more scalable than we were in the past, obviously. So that has a benefit to the margin. Our FIS... business model is a very high margin business model because it's all digital and very autonomous from a customer perspective. So it certainly drives margin expansion on that front as well. So I'm still seeing some potential for margin expansion. That being said, with the Comcast business model, we've switched from a CapEx model, where we were developing everything in-house, to you know, a licensing model where, you know, we incur, you know, costs in the P&L. So that will obviously act as a counterweight, I would say, to my comments about margin expansion.

I will add on the 5G issue is, you know, obviously, you know, we can understand that the competition can try to posture themselves on technology. But what we can say is that, you know, before 5G, there was 4G, LTE, LTE Advice, Advance, and then before that was 3G. So I guess that what we should say here is that Navidotron has always been able, you know, to offer the latest technology, but not only the latest technology. I think it's a matter of balance because you need to offer the good product at the good price with the good service. And this is the experience that we've been providing to our customers, and this is the experience that we will continue to provide to our customers and basically driving our capacity to continue to grow in terms of RGUs and in terms of profitability. Thank you.

All right. Next, we have a question from Vince Valentini from TD Securities. Please go ahead, Vince.

Thanks very much. I want to go back to a couple of points we addressed before. First off, Pierre-Carl, very interesting that you mentioned the FIDO situation from many years ago and your debt leverage at that time precluding you from getting involved. FIDO was obviously a national wireless carrier with a pretty heavy presence in BC of all places. You were mentioning that. Does that signal that if the right opportunity came up that growth into wireless outside of Quebec would be something you'd consider?

Well, certainly I would think that it's completely premature to have conversation or discussion on that because there's no such thing like the capacity to operate in this direction. So I guess that kind of conversations or required assumptions that are not met, so I guess that doesn't work to talk about it.

Okay. On the CapEx, the 600 to 650 for this year, Hugh or Jeff, whoever wants to, can you unpack that a bit in terms of the regulatory environment? I think last year you were explicit that you were holding back on some investments until you had some clarity on both the MVNO and I think the third-party internets. files from the CRTC, so does this 600 to 650 still have some of that reservation in it that you may start to increase your spending once we get certainty on those files? And the second aspect of the CapEx is, I get that you're going gradual on 5G, but does that mean that the pace stays the same every year, or could we potentially see an uptick in 5G investment in 2022? and beyond versus what's in this guidance for 2021.

Okay.

With respect to the regulatory assumptions or the assumptions about the regulatory environment on which our CAPEX guidance lie, I think it's fair to assume that we're working off the same assumptions. The reason why last year we've reduced our capex guidance at the beginning of the year, remember when we post our first guidance, we talked about the regulatory environment, especially the uncertainty around the regulatory environment. And those assumptions, I think, stick today. So we've posted the same kind of prudence with respect to our capex investments. In terms of the 5G rollout, obviously this year 2021 will be heavier than 2020 because 2020 was quite light. And is it gonna be constant? Probably not constant. I think our assumptions maybe next year are not ticked, but it's nothing that would be material. It's nothing that we will not necessarily be able to finance through some other projects that are completed. I wouldn't expect or I wouldn't bet on an increased CapEx guidance for next year because we're in the middle of this 5G rollout.

That's comforting to hear. Maybe I can sneak in one or two more operational type questions. You talked about the competitive environment in Black Friday. More recently, we've seen some of the stores start to reopen in Quebec. I know when The stores reopened the first time around, like last August. Some of your competitors seem to get a bit aggressive with their promotions to try to load up on customers while they could. Do you have any thoughts, Jeff, on the sort of current pricing and promotional environment? Are you seeing any early stages of that type of rational behavior again in wireless? No.

Well, two things I'm going to say about that. Well, first of all, stores were essentially closed for acquisition of customers, let's put it that way, for the whole month of January. Well, starting in December and ending, in fact, on February 8th. So the market activity was quite slow. Remember, and I told that last year at the beginning of the pandemic, When the market is slow on the wireless side of the business, because we're a net gainer of market share, it's obviously detrimental to us. So for January, you're going to have to expect it to be quite the same. And it's true to admit or to affirm that last year when stores reopened, the operators got crazy. I would not mention or I would not say that it is right now as crazy as it was before. But I think it's the same kind of reaction that we're quite seeing this year as well. There's very aggressive promotions out there. We're not playing and we don't want to play that game. You know, at 21% market share right now, we don't think that we have to play that game. We can still attract customers at a fair price, so we're not chasing customers at any price. And I think you can see that from our EBITDA performance. You know, I think it's quite clear that we're not chasing at any price, and we will continue to do so. And guess what? We still maintain our leading market share in terms of share growth, even though We're not chasing customers with crazy prices. So I think we are on the right path to balance between customer acquisitions and EBITDA growth.

Yeah, I would agree. Your results show a good balance, Jeff. Congratulations on that. One last one on the Internet file. People have asked a bit about broadband ARPU and some of the auxiliary services, but I'm not sure we've hit right to the core of it yet. Internet subs are up 4% year over year, and your revenue is up 3.4%. So your ARPU is actually slightly negative. Most carriers in North America are seeing the ability to get better broadband ARPU, whether it's actual price increases or it's people moving up to faster tiers. Is there some problem here in the market, or is this just a delay, and we hopefully can see some better broadband ARPU traction in 2021?

Yeah. Well, first of all, in 2020, back in March 2020, you remember that our price increases take place in March of every year. And last year, we have not increased our prices on broadband. So obviously, we don't have that kind of lift for the whole year. So obviously it impacts our EBITDA or our crew growth because we don't have the lift from our usual price increases. This year in 2022 and 2021, we have increases our prices on every single service or every single product. So you're going to see a price increase on broadband, and obviously it's going to help. On top of that, don't forget Fizz. Fizz is a lower price service. because of a different business model, it's still attracting the same kind of margins, but the hundreds of percent digital model is a lower cost model and we can offer the service at a lower price. And obviously as we've experienced and we continue to experience on the wireless side, there's gonna be some impact from our base increasing on fees at a lower price. So that's gonna act again as a kind of way to our price increases. And I will complete by talking about Helix. Rather than positioning Helix as a, I would say, a premium product. I'm not saying it's not a premium product. It is a premium product. But in most of the cases, would a premium product command a premium price? We've decided not to use that kind of strategy. For us, it's more like, right now, a churn reduction model rather than a ARPU growth model. Rogers and Shaw, I know that they've used a different strategy when they launched their X1 based product. It's not the strategy that we've used. So as people are migrating to Helix, we're not collecting more RQ because they're migrating, except it's obviously they go on higher speed services. But for the product itself, we're not commanding a higher price. So we've decided to be more accessible with respect to that product, to accelerate adoption of the product, to accelerate churn reduction to our TV and broadband services. And I think it shows up in our results.

That's great. And just to level set everybody on the call, the rate increases you talked about, are these going through in March? And is there any dollar amounts that you can talk to yet?

It's March 1st, and I would say it's about 4%.

Thank you.

All right. Next up, we have a question from David McFadgen from Cormark Securities. Please go ahead, David.

Yeah, a couple of questions, if I may. usually give us an indication of the wireless EVA DAW growth year-over-year in the quarter. I was wondering if you could do that. Secondly, you know, I know your share of gross ads is still quite strong at 27%. It's down a little bit from where it was the previous two quarters. I'm just wondering, is that more a factor of the Healers pricing going up or is it just more increased competitive intensity? And then lastly, just on the dividend, so it looks like you're going to be about for 2021 anyways, based on my model, you're going to be about in the midpoint of your target range of the 30 to 50%. So just wondering, you know, looking at 2022 and beyond, would EBITDA growth sort of be in the five to 10% range or sorry, would the dividend growth be in the five to 10% range or track EBITDA growth? Thanks.

Okay, with respect to wireless margin growth, or EBDA growth, I should say, that was about 20% in the quarter, David.

With respect to your 27% share of growth stats, which is lower than what we've exhibited in Q2 and Q3, you're right, it's lower. But if you look at our past year's experience, Q4 is usually lower in terms of share of growth stats because it's a very heavy promotional period. and we're trying to be disciplined in the way that we act on that front. So it's usually lower. And if you combine that with, you know, the month of October that's been worse this year for Fizz because of last year's, you know, people or customers rushing in because of the price increase that was due at the end of October, and you combine that with the COVID, you know, I would say that explains why we get a lower share of growth up this quarter.

On the dividend side, David, as you know, the Board of Directors is responsible for having the decision, so we cannot override, I would say, the Board. This is why our policy was mentioned or was disclosed. which we will continue to apply. Certainly there's some recommendations, but my lecture of the board is, it's a board which will always follow prudent perspective and balanced perspective. So obviously there's an attention for the shareholders, but also for... there is significant attention from what you've been seeing, you know, for the last two decades at least, you know, and we would like to continue to grow the company. So we need to have a proper balance sheet that will be able to provide growth and, at the same time, balance to an appropriate return to ourselves.

Okay. All right. Thank you.

I think that we have the last question, Operator, from you. Adam. Adam, yeah.

Yes, indeed. Yeah. Last question. The cue comes from Adam Schein from National Bank Financial.

I thought Tim Casey would have a question.

Okay. Thanks a lot. Okay. Two quick questions. Hi, Adam. Hi there. Two quick questions for Jeff. One, just maybe a little color as to any traction finally in the Appetiti market, which was an area that you really were trying to you know, finally penetrate. And the second one, you know, if indeed wireless EBITDA growth is 20%, it sort of looks like the rest of telecom actually reverted back to positive growth. I think you touched earlier in one of the questions on, you know, some platforms like Fizz Internet, which provides some lift in internet savings. But can you also talk about Any other savings in terms of maybe benefits from digitization or evolving restructuring efforts that continue to perhaps re-engage on margin expansion in the non-wireless side of the business? Thanks.

Okay.

Well, in terms of the IBTB market, it's a very strong market for us, indeed. You know, when we launched, we were very, very successful, and you're probably aware, and I think we've been very vocal publicly, that Dell was restraining us with respect to our growth by putting in place some procedures that were, you know, I would say anti-competitive. But people were waiting for us, you know, and it wasn't monopoly, essentially. in Rouen and Val d'Or more specifically. So people were waiting for us. They were paying too much for their service. They were not getting the right kind of service that they were looking for. So it's very successful. I think on the top of my mind, I think in the Rouen and Val d'Or, we probably have 3,000, 4,000 subscribers in that region. And we also have in Amos, where we did the acquisition. And Amos, in total, I believe it's about 5,000 subscribers over there. So it's a very successful market. We continue to be very aggressive with respect to our promotions because people were looking for us and want to make sure that they know that we're there. So I think it's still going to continue for the whole 2021 year. With respect to wireline margins, yes, it's true. It's a combination of a few things, and obviously the platforms, like I said earlier on the call, but obviously there's always some initiatives that we put in place to cut cuts here and cut cuts there, some restructuring here, some restructuring there, digitalization, you're right. It helps on a few fronts. So I think that it's a combination of a few factors. There are still some initiatives that we are working on, and I think it's a good sign for the future. And I want to come back, if I may, on the Abitibi solution scenario. You know, in Hawaii and Valdal, as you know, we're not using our own infrastructure. We're using Dell's infrastructure, and we had some problems with respect to accessing the infrastructure and making sure that we could install customers. Even though things are going better than they were in the beginning, we still have a few customers in the backlog. And it's still an issue for us, and, you know, obviously we want to work with whoever to make sure that this backlog is reduced very, very quickly. But, you know, Bell is still trying to stop us or at least restrain us.

I guess just one very quick last question, Jeff. You know, some people might question some of the strength on Internet and wonder, you know, if some of it was coming in terms of reseller market share gains or, you know, extraction from there. Can you maybe just talk to that dynamic just briefly?

Well, yeah. You know, it's hard to say. I think it's more a question for them than for us. I don't know, depending on the decision, what they're going to do. But so far I can say, in 2020 at least, it's pretty clear that the right service, the right network, is offered by the cable codes, not by resellers. And I think it should be recognized by everyone. It is recognized at least by customers, it looks like it. And I think it will continue that way. That being said, I don't know what's going to be CRTC's decision, and I definitely don't know what's going to be the TPIA's or the resellers' reaction to that decision in the market.

I think the question was more specific to the Internet strength in this particular quarter, Jeff, and whether it was a disproportionate amount of sort of poured-ins from resellers as compared to sort of market share growth and other opportunities.

I understand, and the answer is no. There was no disproportionate coming in.

Great. Thanks a lot. Appreciate it.

May I add on the reseller situation? I guess that, you know, François and I were in front of the Permanent Committee of the Industry House of Commons this week, and we had the opportunity to reemphasize the fact that given the situation that we've been facing in front of the pandemic, I think it's important to mention the fact that the network was robust enough to be able to face the significant increase in terms of demand. And the result of that is that the telecom operators have been invested in their network to be able to make sure that we will face, in that kind of situation, certainly not a lack of offer that would make some problems with our industry with our customers so I would say that the proof of the pudding is the eating and I think that the government had been acknowledging this situation and yes again we've got nothing against the resellers but we need to make sure that we'll compete on equitable and fair grounds And our understanding is that the government right now and the CRTC are in the proper mode to understand all this, which should be favorable for the continuation of investment in our networks in the future.

Great. Thanks for that, Pierre-Claude.

Do we have a last question? Yeah, I think it's Tim. Tim Casey from BMO. That's right. Go ahead. Please go ahead, Tim.

Thanks. Thanks for squeezing me in. Just a couple of wireless KPI questions. JF, you gave us some churn numbers for Q4. Can you give us a churn number, remind us what it was in 2019 and full year 2020, and what your expectations and assumptions are for 2021 as, you know, there'll be some sort of market reopening there? And you also talked about the ARPU decline. I think you said 25% was dilution from FIS and the remainder was roaming and overages. I always thought you were not very exposed to roaming. Maybe if you could unpack that a bit for us and what you're assuming will happen with market reopening and the impact on ARPU. you know, in the context that certainly, you know, it seems that any recovery is going to be later in the year. And lastly, just quickly on M&A, you did a couple of tuck-unders recently, a live theater and a music label. Are you still going interested in more of those type of assets on the sports and entertainment side? Thanks.

Okay, thanks for the question, Tim.

In terms of the churn rates, you know, 1.2% in Q4 of 2020 was 1.4% in Q4 of 2019. For the whole 2020 year, I don't have the number on the top of my head. Let me see. It was 1.1%, you know, obviously skewed by the pandemic. You know, obviously there was a, you know, when I'm saying that market activity is down because of the pandemic, you know, from a churn perspective, we also benefit from that. So 1.1% for the whole year. In terms of next year, you know, I think the trend is set. And we've been setting the trend, you know, for a few years now. It's going down years after years because people are getting more comfortable with our service, you know, the pricing and everything. And, you know, we're essentially the right operator for this business model in Quebec. And with the bundling of, you know, many, many services and put fizz in the mix and all that kind of stuff. So I'm definitely optimistic about the continuation of this decline in terms of the churn rates. With respect to ARPU and the roaming, you're right. If you compare ourselves to other operators, on an absolute dollar basis, we're not talking about the same kind of numbers. But when we talk about ARPU, it's more of a relative basis to our base. So, you know, for us, roaming is mostly on the commercial side. I mean, on the business-to-business side that we are getting hit these days. And obviously, we can't wait for traveling to resume and, you know, business people to go in Toronto and New York and Chicago.

On the... Audiogram question, Tim. Yes, we're very happy with the acquisition of that label, one of the largest independent, if not the largest independent of Quebec-based music at this point. You know, and we'll continue to be on the outlook as we've done for the past few years, you know, whether it's for video content, tuck-in acquisitions or music or, I mean, anything that really feeds our ecosystem, as I'm sure, you know, as we've talked about in the past, that feeds our stable of properties and content in all senses of the word, whether it's video, whether it's eventual, whether it's music, and that feeds, you know, the pipe in our various, and then gives us a very strong competitive advantage in our various distribution platforms.

Thank you, Sam. I think thank you all. I guess that we're at the end of the list. So thank you for your attention. Thank you for being there. And we'll talk to you next quarter.

Ladies and gentlemen, this concludes Quebec Corps' Inc. financial results for the fourth quarter and full year 2020 conference call. Thank you for your participation and have a nice day.