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spk10: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Quebecois, Inc.' 's financial results for the 2021 third quarter conference call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecois, Inc. Please go ahead.
spk06: Good morning, everyone. Ladies and gentlemen, welcome to this conference call. Joining me to discuss our financial and operating results for the third quarter of 2021 is Pierre-Carles Péladeau, Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast. Access details are available on Quebecor's website at www.quebecor.com. The recording will be available until the 2nd of February of next year. 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 regulatory authority. Let me now turn the floor to Pierre Carles. Merci, Eric. Good morning, everyone.
spk11: As we announced last quarter, we are moving ahead with our plans towards the expansion of our telecom services across Canada, thereby creating a real competitive dynamic and bringing to Canadians the benefit of technological innovation, superior client experience, and lower prices. The first step towards our objectives of becoming the fourth independent wireless provider in English Canada became a reality in July with our investment of nearly $830 million in the acquisition of 294 blocks of spectrum in the 3,500 MHz band across Quebec Ontario, Manitoba, Alberta, and British Columbia. Our investment of $357 million for 119 licenses in Quebec will enhance an already solid spectrum base acquired throughout the last decade, starting in 2008 prior to the launch of our facility-based wireless operations. These licenses will be used for the deployment of our 5G platform, which is already in operation in Montreal and Quebec City. The remaining investment of $472 million is dedicated to the acquisitions of licenses in the main regions of the aforementioned provinces. On this topic, I have to say that we were surprised by TELUS's court initiative against the Government of Canada to try and block the award of these licenses to Vidéotron. That being said, we were relieved, although not surprised this time, that the Federal Court clearly told TELUS that its claim was without merit and denied and do not raise a serious issue. This is the paragraph two. And I still quote, the decisive factor is the public interest in fostering greater competition in the market for mobile home services. And this is the paragraph four. It is sad to realize the length to which TELUS and Bell will go to delay, block, and to ultimately squeeze out, at all costs, any efforts to create healthy competition and ultimately lower the prices Canadians pay for mobile services. We continue to call on governmental and regulatory authorities to issue the licenses and, more generally, ensure that their long-standing competition policy and objectives are backed by concrete actions forcing the incumbents to actively cooperate and take the necessary steps so that Canadians are not left paying amongst the highest telecom prices around the industrialized world. I would also like to comment on our recent court action against Rogers, our longtime ally and partner in building a joint wireless network and connect. To remain on the legal side of business and keeping in mind that the sub judice rule as well as the respect owed to the courts, I will not comment any further nor I will answer Any questions regarding this matter? The only thing I wish to share is that over the last year, as described in the claim, we've always strived, through the Network Steering Committee, to find answers and solutions to the various change requests, demands, and other asks from Rogers' new managers. But every time we met Rogers' requests, they came back with further and higher demands. And since Rogers felt comfortable to state publicly that we failed to meet the investment asked to improve our joint network to benefit our customers, I myself feel comfortable to say that it's far from the truth to say the least. As you know, Vidéotron has been recognized for many years as the most respected telecom company in Quebec. Could this be possible without having our clients at the center of everything we do? We always acted as a true partner to Rogers and tried to avoid the unpleasant publicity of a public recourse. negotiating a suspension of the time limitation period of three years, according to the law, to give ourselves a chance to settle our differences, but to no avail. Given the current events at Rogers, we now understand why our discussions were not a priority and sincerely hoped that when the air clears at Rogers, we may have a chance to engage in a constructive dialogue with open-minded individuals. Turning to operational matters, we launched Vrai, the first French language video subscription platform dedicated to exclusive unscripted lifestyle, documentary, and entertainment content. In just a few weeks, we recorded 17,000 subscribers and over 200,000 views. We will offer 40 original productions this year and over 100 original Quebec productions by the end of 2022. Along with the success of Clu de Dico, which is dedicated to series, movies, and youth programs, this new platform will enhance and complement our content offering. We are expanding our collaborations with local producers, and we will continue to significantly invest in the production of new local content, thereby strengthening our leadership position as the largest catalyst for original French productions in Quebec. Speaking of Club D'Eco, our very own successful... OTT. We launched our programming two weeks ago with a record number of new majors' original series and an exceptional 2021-2022 lineup featuring leading figures of Quebec culture, such as Patrick Sénégal, Florence Nombré, and Sophie Dera, sorry, as well as Philippe Falardeau and Xavier Dolan. Finally, bringing all of these investments together, We also unveiled Qube, a new digital platform that brings all of Quebecor news and entertainment content together in one place. Available on the web and via a mobile app, Qube is a unique showcase with a vast quantity of multi-source, multi-format content where users will have access to millions of items, including text, music, video, and audio in a single environment, live and or on demand. Once again, on the forefront of innovation and anticipating market demands and trends, CUB will further reinforce one of Quebec's most important competitive advantages against our national competitors. Our unmatched ability to produce and deliver unique, differentiating news and entertainment content. On the B2B front, we're pleased to announce that D2E3 Business teamed up with Xtelia, a Quebec-based technology company, to offer a wider range of connected object solutions to accelerate the digital transformation of cities, municipalities, government organizations, and businesses across Quebec and provide them with solutions for waste management, water management and quality, smart parking, environment management, and noise pollution. Videotron also recently landed a major contract for IoT services with the STM, which is the Montreal Public Transit Authority, further strengthening its leadership position in Quebec. Moreover, in September, Vidéotron and TVA Sport announced their partnership with Trois-Rivières Lyon, which is a new team with the ECHL. The new Trois-Rivières arena is now named the Colisée Vidéotron, and TVA Sport is the exclusive optional broadcaster of the Trois-Rivières Lyon own games. This partnership demonstrates our continued commitment to Quebec's sports and entertainment industry supporting and promoting the next generation of Quebec athletes, as well as contributing to the economic development of Quebec regions through investment that benefits local communities. I will now review our operational results, starting with our telecom segment. On the wireless front, we posted 41,000 net ads during the quarter. Despite the continued aggressive competition from a loading and renewal perspective, especially towards the end of the quarter, we were able to keep our turn flat year over year and once again captured the largest share of growth ads by far with 37% of the market our best performance ever, and with our Vidiotron and Fizz brands coming in first and second position respectively, according to a Lege Marketing survey. Consolidated wireless app proof for the quarter declined 1.6%, or 83 cents, versus 2020. This decline is explained in large part by the diluted impact of of BYOD model at FIS, combined with a decline in roaming and data usage revenues. Redutron recently enhanced its value proposition regarding the equipment installer plan by launching in September the take-back credit program option, allowing customers to further benefit from reduced monthly phone payments. In broadband, We're pleased to report another strong quarter with a growth in internet subscribers of 22,500, 2,000 more than during the third quarter last year, and a 2.1% or $1.13 internet RFU growth. In the quarter, more than 100,000 edX installations were completed, bringing our total ELIX subscribers to over 1 million as of September 30, 2021. Our ELIX TV continues to help lower our TV turn rate and mitigate our TV subscriber decline, which was 13,400 in the quarter, an improvement of more than 2,000 compared to the third quarter last year. We continue to promote ELIX self-installations, and we are very satisfied with the results as far. We have already surpassed 100,000 self-installations since the launch in March 2021, and are pleased to report a 93% overall customer satisfaction rate. This program has proven to be very successful, and we will continue to improve it to maintain the current satisfaction rate levels. In our media segment, advertising revenues continue to increase, particularly in our television network, where they came in higher than the same quarter of last year, but also 22% higher than the same quarter in 2019, which is, as you know, pre-pandemic. BBA consolidated market share reached 38.2% for the quarter, strengthening our leadership position in the Quebec market with such hits as the French version of Masked Singers and the Stanley Cup Finals Hockey Games. Building on our number one franchise, we continue to increase our investment in content, a strategy that is reflected in our fall programming, with a wealth of new shows, original production, and exclusive content for our digital platforms such as TVA+, which continue to grow and build on its strong popularity. Our array of content is broader and more diverse than ever and is available on multiple platforms to reach more Quebecers on a daily basis and bring them together for major television events. Our film production and audiovisual services segment also perform very well with eye demand from mega productions such as Paramount Picture mega production Transformers, Rise of the Beast, and also from major online streaming players. Mail services are increasingly being recognized and used by international clients, placing us in the enviable position of being able to take advantage of the current market growth and plan for expansion of our facilities with the upcoming constructions of MELS IV. Our virtual stage services continue to draw the attention of producers with greater numbers using the technology to facilitate shooting certain scenes or creating advertising. I will now let you review our financial results.
spk06: Merci, Pierre-Cal. Quebecor's revenues were up 3% in the quarter to $1.15 billion, and EBITDA was up by more than 1% at $520 million. Third quarter revenue growth from our telecom segment was flat as compared to last year, as the growth from internet access and mobile telephony up 6% and 8% respectively, with counterbalance by reduction in mobile equipment with more BYOD than in Q3 last year, and also the stabilization of the growth in Helix equipment sales, which drove most of the top line increase in prior quarters. Our telecom segment EBITDA boasted a decline of 1% compared to last year as a result of a $19 million unfavorable impact, the impact of a $19 million one-time item in the third quarter of last year. Without the impact of the 2020 one-time item, our telecom EBITDA would have grown by 2.6% in the quarter. Our overall EBITDA margin remains strong at 51% for the third quarter, still one of the highest in the Canadian telecom market. Our media segment recorded revenues of $191 million, a 21% increase, and an EBITDA of $37 million, a 47% increase compared to the same period last year. In our media segment, TVA Group continues to benefit from the improvement of activities from almost all of its sectors, as evidenced by the 26% and 52% respective increases in revenues in EBITDA during the third quarter. Quebecor reported an net income attributable to shareholders of $173 million in the quarter, or 71 cents per share, a $32 million increase compared to the same period last year. In addition to the EBITDA improvement, this increase is also explained by the gain on valuation and translation of financial instruments related to our convertible debentures. As well, as to the restructure initiatives that were put in place during the core. Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments, came in at $176 million, or 73 cents per share, compared to an adjusted income of $173 million, or 69 cents per share, in the same quarter last year. For the first nine months of the year, Quebecor's revenues were up 6% to $3.37 billion, and EBITDA was up 3% to $1.47 billion. Revenues from our telecom segment grew 4% to $2.78 billion, and EBITDA increased 2% to $1.41 billion for the same period. Telecom capex spending, excluding spectrum, was down $18 million for the quarter as compared to the previous year. mainly due to the timing of some of our investments. On a year-to-date basis, CAPEX spending is comparable to last year, with continued deployment of the LTEA, LTE Advanced, and or 5G rollout as planned. Our cash flow from operations for the third quarter of 2021 increased by $20 million, or 6%, to $366 million, once again demonstrating the resilience and strength of our business model, as well as our continued operational and financial discipline. Cash flow from operations from our telecom segment grew $11 million, or 4% to $337 million. TVA Group's cash flow from operations grew 44% to $29 million in the quarter. As of the end of the quarter, our net debt to EBITDA ratio was 2.80, up from 2.76% reported at the end of the third quarter of last year, still one of the lowest in the telecom industry competitors in peers in Canada. Despite the redemption of Videotron's 5% senior notes and Quebecor Media's 6% and 5.8% senior notes in July, we had $2.3 billion in available liquidities at the end of the third quarter. With growing free cash flows and strong credit profile, Our liquidities are giving us the flexibility to continue and invest in strategically important growth projects, such as mobile telephony, investing in content, and continuing to invest in studios. During the first nine months of the year, we purchased and cancelled 7.1 million Class B shares for a total investment of $226 million. Since we initiated our NCIB program 10 years ago, approximately 47.7 million Class B shares have been purchased and canceled. We thank you for your attention and would now like to open the lines for your questions.
spk10: All right. So just as a reminder, to ask a question, you can press star 1 at any time. And the first question comes from Jérôme Dubreuil from Desjardins. Please go ahead, Jérôme.
spk07: Bonjour, tout le monde. Thanks for taking my question. First question on the media front, good results. Just looking to see how... How recurrent are the good results in terms of film production? I know this business can sometimes be lumpy, but I also think you've made significant investments in that business. Can we expect such good results going forward as well?
spk11: Well, thank you, Jérôme. I guess that looking forward, it's not always an easy exercise. as we will certainly have the opportunity to talk a little bit more, but I expect, you know, questions regarding the telecom environment. And I would say that, you know, in the broadcasting industry is also quite competitive. Obviously, you know, we're getting out of a situation where, you know, pandemic was certainly not the best environment. As you know, the advertising revenues were... certainly not in the best conditions given that most of the retail businesses were closed and significant businesses were not performing. But we need to say that in front of us, we have two main competitors, Bell, which with a specialty channels lineup and Generalist are much more in a better position than the previous owner. In fact, these are the kinds of representation we made in front of the CRTC. They have a national platform in English and French, which we do not, and that also provides the capacity for them to move forward. The good thing, and it's been also used by our competitors, and Radio-Canada is one of them, which is the second one I was referring to earlier, is that we have many platforms. So if we are investing, and this is we do, as an example, and I mentioned it in my presentation, in Clibidico and or in Vrai, which is our new OTT documentary platform, this also, you know, will give us the opportunity, you know, rebroadcast this content on the other platforms. So we are multiplying the amount of vehicles which we are able to use to generate advertising and keep our audiences as much as possible. So this is something that we've been doing for many years already, and it's been copied by Radio-Canada with their 2.TV Extra, which, you know, for us, it's quite... It's a big question mark because I didn't know that the national broadcaster will compete against private networks on a no-TT basis. To me, this is distribution where Radio-Canada should be a broadcaster. In fact, we made our presentation during the Radio-Canada Renewable Audiences. We expect the decisions to come forward and figuring out what the CRTC thinks about this. So we look forward to continue to expect a competitive environment, but we certainly have a leadership position, and we will continue to invest to make sure that we remain number one on this segment. Sorry for the long answer.
spk07: No, that's fine. And then second, on the back to school, do you feel that you had the full benefit out of this or this was still not a normal year? Just trying to assess here if your net ads could be better or similar next year just related to back to school.
spk06: Jérôme, no. This was a fairly active and fairly competitive back to school. You know, we're quite pleased. I mean, you know, 41, you know, in wireless. I mean, you know, historically, it's a good quarter in terms of loading for us, but it's one, you know, in terms of, you know, a vacuum that is slightly a bit more challenging, you know, with a lot of students back and, you know, taking in, you know, lower price points. And we had significantly more bring your own device BYOD this quarter, 74% compared to 66% last year, same quarter. So that also contributed to that. So I think all in all, in terms of activity, I'd qualify it as very competitive. So pressure on the average invoice but we're fairly pleased, you know, with our loading. You know, we did very well. We did very well against competition, you know, in terms of growth as in our market share. So it was very busy and very competitive, but we feel that we, you know, we came out of it, especially with FIS, which accounts for most of our growth on the right side of this equation.
spk04: Merci beaucoup.
spk10: Next question comes from Jeff Fan from Scotiabank. Please go ahead.
spk02: Thank you. Good morning, everybody. This is a question for Pierre-Carl. You've obviously been very vocal about the national expansion, but I think the market is sitting back looking at the various obstacles that you still have. You mentioned the lawsuit against Rogers and Quebec. Spectrum, yes, there's no injunction, but you still have a court case next year. I think the MD&O cost is still not clear. So how can investors gain some comfort that you're making a good investment decision here? Can you just kind of shed some light on that? you know, the thing that you're looking at to ensure that you're making the right investment decision? Thanks.
spk11: Good. As you know, Jeff, you know, the CRTC provides what I would call, you know, favorable conditions. In fact, you know, probably we can say the most favorable condition ever. Out of the decision this summer, you know, what we call 2021 slash 130, MVNO is now regulated and the incumbents would need to open their network to new competitors. As you know, we started our wireless business in 2006 with Rogers Network as an MVNO. We participate in 2008, well, we make representation in 2008 to make sure If government was looking to have competition, the best way to do so will be to provide certain conditions, one of which, probably the most important, would be to set aside a spectrum during the auction, also mandatory roaming, and a few other conditions. The late Jim Prentice understood this situation and then therefore decided as a minister to open the auction with those conditions. We participated, we bought the entire 40 megahertz in Quebec, and we started to build our own network. Through all those years of building our network, providing one of the best services, we've been able to achieve a significant portion of the market share. Fortunately, that was able to provide a growing in terms of revenues and EBITDA, that if we were not to have this segment of business, I don't know, you know, obviously we cannot redo the timeframe, but, you know, 10 years later, I think that we should conclude that this decision, which was at the beginning probably questioned, was then therefore delivering some significant amount of growth and EBITDA. What is the plan in the rest of Canada? With the MVNO regulated environment, the statutory to be made, with our acquisition spectrum, we have all the assets to be able to provide a good service. In terms of investment, as you know, we already have an invoicing system. We already have call centers. We already have our digital platform. We have all the assets necessary, you know, to provide a decent commercial proposal. And, you know, you don't need to go very far. And you guys, which are following, you know, the telecom industry, know very well how competitive the marketplace is in Quebec when we compare with the rest of Canada. Sorry about this, but, you know, this is... So, next, I would like to give you an example, and you can go on. on my Twitter account for more illustrations, but last week in many newspapers, so if you go to see on October 28th, so last Thursday, you'll see that in the Vancouver Sun, in the Edmonton Journal, in the Calgary Herald,
spk09: in the National Post, in the Ottawa Citizen, that you'll have an ad of Bell, which is proposing 20 gig for 80 bucks.
spk11: This is the same ad. And you go into Montreal Gazette with the same ad for the same proposal, 20 gig, you're finding it at $65. This is the most recent example. But it's been like this for many, many times. So we look forward to be able to piggyback on a very lucrative market. And when I'm looking about the results of Rogers and the quarterly results of Bell, with their significant amount of new at the prices that we're seeing, I guess there's room for us to grow there at a decent investment price. And as you know, we have seven years to build our network. Seven years in a technological environment where we're seeing, you know, new perspective, which is bringing innovation interesting opportunities to reduce the cost of building a network. All those items, for me and for us, is providing favorable conditions to move forward and expect growth.
spk09: Elsewhere, they're there where Quebec, which is, I would say, a quite mature market for us.
spk02: Just a quick follow-up. It sounds like you're talking about a capital light expansion using MD&O first. Are you saying you don't need to pursue freedom in order to address your national expansion opportunity?
spk11: Well, you know, obviously, this is a very important matter. It's and maybe you have more insight than we do, but we get problems to understand what's going on with Rogers and Shaw, and we're figuring out what will be the outcome of everything. But we're not going to open our play here, and certainly, again, I would say that we consider that we have there also all the proper tools and means to be the best acquirer for freedom. So what is interesting is that we have many alternatives, and this is what we should conclude for the moment.
spk09: Fair enough. Thank you. Thanks, Jeff.
spk10: All right. Next question comes from Tim Casey from BMO.
spk04: Please go ahead. Thanks. Good morning, too, from me. Just following up on Jeff's question, Chair Carl, should we assume then that you'll be launching FIS imminently, no matter how the freedom, any remedies related to freedom play out, and no matter how MD&O discussions proceed? And is that what you're signaling to the market here? And just... An accounting question for Hugh. Regarding working capital, it's been a huge use so far this year, and I know that's related to handset acquisition and EIP and whatnot, but just wondering if you expect that to swing in Q4 or more likely in 2022. Thank you.
spk11: Yeah, well, thanks, Tim. We unfortunately don't control, you know, the different actions that are taken by the incumbents to stop and to reframe our capacity to offer a proposal to Canadians in the different areas where we acquired Spectrum. We've been seeing, once again, that they're completely allergic to competition. You know, when you start suing the government of Canada in a regulated environment, your Spectrum comes from the ministry. I mean, it shows how allergic you can be. Is this a great move? Well, you know, you have your own take on this. I have my own. Will they appeal the court decision, you know, of last week by the federal court of 10 days ago? Will they continue to delay in court, you know, the delivery of the licenses by the minister? All this we don't know. We also are in front of the CRTC with the more technical discussions regarding how should we connect the different networks, how should also have access to, again, those are technical, but the fallback, the roaming, obviously also all the tariffs and the tariffification will be a matter of discussion and eventually arbitration in front of the CRTC. So in a nutshell, we expect not being able to do it next week and probably not next month. But as soon as the CRTC and the other governmental authorities will move and make sure that competitions will be brought for Canadians, we're ready to move.
spk06: Tim, on your working capital question, I certainly expect the pressure on working capital to continue, stabilize but continue, for all the reasons you brought up. They're the right ones, obviously the EIP program. and us building inventory on many components because of lag times increasing. So I would certainly, I think it's going to stabilize a little bit. It is stabilizing, but I certainly expect it to continue on to at the beginning of 2022 for sure. Thank you.
spk09: Thanks, Tim. A nice question comes. Yes, sorry.
spk10: Morning, Vince. Yeah, next question comes from Vince Valentini, TD Securities. Please go ahead.
spk08: Yeah, thank you. Good morning to you as well, Pierre Crow. The first question, the $18.8 million, can you clarify, Hugh, is that all in the wireless segment, or would some of that be in Videotron wireline as well?
spk06: No, it's all in wireless, Vince. It's a reversal of AWS licenses that we had accrued for. for a couple of years and our regulatory department finally told us that that was a mistake and we didn't need to accrue for that because we wouldn't have to pay for these licenses. So it was 100% reversed last year in the wireless business.
spk08: Thank you. So if we take that headwind or one-time item into consideration, The typical question you get on wireless EBITDA growth, I assume it's negative year-over-year given that $18.8 million?
spk06: Actually, no. EBITDA growth is small, but it still is positive for the quarter, even accounting for this.
spk08: So Videotron excluding wireless is down a few percent year-over-year then?
spk06: Right. I mean, it's pretty flat. I mean, EBITDA, you know, for us, it depends how you allocate certain, you know, certain network costs. But, I mean, you know, even accounting for that, you know, we're looking at flat and, you know, slightly positive on the wireless side. Flat on the wireline and slightly positive on the wireless.
spk08: Okay. And I hate to make you put on your history cap, but If you go back and adjust last year by $18.8 million, it would mean that Q3 2020 telecommunications segment EBITDA was down about 0.6% versus Q3 2019. That seems to be out of line with the trend we saw throughout other quarters in 2020. Was there something unusual way back in 2019 that caused EBITDA to drop in Q3 last year?
spk06: Yeah, we had another. This is the second year in a row of a one-timer, Vince. You know, we also had a reversal of about 20, actually, yeah, just slightly over 20 million in the third quarter of 2019 as well. So last year was pretty, you know, I think from an operational standpoint, the You know, the results of Q3 of last year were pretty much in line. It's just we honestly got a bump in the third quarter of 2019. Gotcha.
spk08: Okay, that helps explain it. Thank you. And my last question, sorry to go back to the same topic on the wireless expansion, but I want to ask this in a slightly different way just to be absolutely clear on this. I think I asked a similar question on the last call. If there's another... buyer of freedom and therefore another fourth carrier that exists in most of the rest of Canada, would you still intend to go forward as an MVNO and then build out a network over seven years and effectively be the fifth player entering the market? Or is your plans contingent on seeing what happens with the fourth carrier before you decide on being number five?
spk11: Vic, we appreciate your assumptions, but, you know, I think that it's not going to be possible to answer quite, you know, we'll find out, you know, in due time about what's going to happen. And it would be, I would say, inappropriate, you know, to answer things that we don't know what's going to happen. Can you tell me if the Rogers transaction is 100% done? I guess that some people would possibly think that that could be a different outcome. I don't know. So for me, speculating on what's going to happen is not useful.
spk08: Okay. It's totally fair, Carl. I agree with that. I guess implied in your answer, though, is you are going to survey what does happen as we do get more facts over the next several months as opposed to, you know, plow forward no matter what. You're almost acknowledging in your answer that things could change and we don't know how the world's going to unfold and you need to assess as we go along. Is that not a fair interpretation? Absolutely. I guess that you're right. That's all I'm trying to get at. It's a dynamic situation and we're all learning as we go. So appreciate that, Culler, and I'll pass the line.
spk09: Thanks, Chris.
spk10: All right. Next question comes from David McFadgen from Cormark Securities. Please go ahead.
spk00: Thank you. A couple of questions. So just following along the line of questioning regarding wireless expansion across Canada, I'm assuming, well, I shouldn't assume, would you wait until you have a bundled product before you decided to go across Canada with wireless? And if so, I'm just wondering how that might impact your rollout because I know of an internet reseller and he was delayed for two years by the incumbent to be able to resell their products. I'm just wondering if they could do the same with you and just really slow down your rollout.
spk09: Good morning, David.
spk11: I guess that will continue as my predecessors have been doing before. I don't think that it's appropriate to give us our strategy, our marketing strategy and the different products that we will launch, but you certainly identify the different things that are available or possible. So I guess that what we should say is that enhance our possibility of moving forward in the capacity to grow our revenues and basically also justify even more than ever our requirement to move forward outside of our historical Quebec base to continue to grow the company.
spk00: Okay. And just another question, just on the mobile ABPU in the quarter, like if you look at Q2, it was pretty much flat. It declined a little bit. Again, Q3, I thought we sort of had hit the inflection point between the various ABPU profiles between FIS and Videotron, and so I was just wondering if Did that reverse a little bit, or is there some other factor that's caused the mobile app to decline about 1% in the quarter?
spk06: David, the main issue on AppView are more BYOD. It's more promotional activity, so pressure obviously on pricing, more increased percentage of growth from fizz, so increased dilutive effect. And also, you know, as I said earlier, generally speaking, you'll remember, I mean, you know, the back to school is not a typically more challenging APU quarter for us. You know, last year we lost, you know, 4.3% on APU. And also, you'll notice that our equipment sales are you know, are down this, you know, this quarter. So that's also part of the FPUs, you know, so RPU is a little bit less impacted by that. So I think generally speaking, these explain that. I don't think it's a reversal. I think we're still moving, you know, we're still moving towards the same, you know, stabilization that we've been talking about for some quarters. and are certainly improving from the minus four and minus three that we had been living for the past few quarters before last quarter. So, you know, that's sort of what I would tell you on that view for the quarter.
spk00: Okay. And then maybe just a question on CapEx. Can you give us an update on what you expected this year? And if possible, can you tell us what you expect for next year, obviously excluding the wireless spectrum purchase?
spk06: Stability is the name of the game in CapEx, David, for us. You know, we're going to come in exactly where we've said we would for this year and are expecting also a very stable CapEx environment for 2022. Okay. All right. Thank you.
spk00: Thanks, David.
spk10: All right. Next question comes from Matthew Griffiths from Bank of America. Please go ahead.
spk05: All right. Thanks for taking the question. I'm sorry to ask another one on this national expansion issue, but correct me if I'm wrong. From what I heard you say, are you going to try to engage in, once the terms and conditions are set, are you going to try to engage in negotiations? with one of the national providers before you go about trying to maybe acquire Spectrum from whatever source that might be and launch the network? Or are we to assume that you may invest capital in Spectrum and other items and then down the road start to enter negotiations to see what the actual kind of cost of the operating the facilities-based MD&O might be?
spk11: Matthew, did most of the spectrum have been acquired already? I guess that right now it's in a pause phase where, again, TELUS has been suing the government, forbidding them to issue the licenses. We'll find out the outcome of that. We expect, as the first decision has been unfavorable to TELUS, that we'll be able to move forward. But certainly this is a condition to be an NBNO and we look forward to have the conditions. We should say that I already sent letters to the different CEOs of the incumbents telling them that we would like to entertain discussions and negotiations regarding their access to the network and basically the answers that we received is that we look forward to continue the regulatory process which is you know basically saying under between the lines stay tuned and you know keep us in the lineup and the delay mode so we look forward to have the proper decisions made by the regulatory authorities namely the CRTC and the CRTC will be able to move quickly. As again, I mentioned earlier, we don't control this, but we will certainly do the proper representation in front of the CRTC and also, I guess, in front of the new government, which is not completely new. In fact, the industry minister is still Champagne, and he's aware, and he is the one that was occupying this function before. And I guess that everyone is looking at Ottawa to have more competition, so we're also enjoying a favorable political environment.
spk05: Okay. And just maybe to follow up, so is it Quebecor's position that the 3.5 gigahertz spectrum that you have is sufficient to run a competitive network? And maybe just to follow up to on the self-install rate, if I understood correctly, about 10% of Helix has been self-install. And I just wanted to ask, you know, if that's meeting your expectations as you benchmark around the industry, do you think that there's room for improvement? And is this, this is like a source of, you know, potential margin improvement as these self-install and self-help kind of things can be expanded. How is that progressing generally as a bucket of potential kind of margin enhancement at Videotron?
spk06: On the self-install, Matt, we're actually higher than 10%. We're growing higher than 10% on the Helix front. The two main drivers on margin at this point on which we're pushing as hard as we can are the self-install and the digitalization of the you know, of the whole client contact experience. And so we're continuing on that. I mean, we're not happy, to answer your question, we're not happy with, you know, being in the, you know, 10 to 15% range. We are happy that it's growing quite fast, but, you know, we need to do, you know, we still need to do quite a bit of work on that, but it will be definitely one of the, you know, one of the big drivers, one of the big levers of margin improvement going forward, as well as what I said, the digitalization and also the simplification of our technological set of platforms and systems, which are being modernized and ultimately leading to a much simpler and a much cheaper maintenance and support type of agreements going forward. So we're working hard on all these fronts for margin improvement.
spk11: On Spectrum, Matthew, we think that we have enough Spectrum to start our business. Obviously, if we were to add more, it will be happier, but we think that we have enough for it to start with. As you know, the auction was quite competitive. We saw incumbents complaining that they paid too much for their spectrum, but I guess it's their own responsibility of doing this. There will be another auction taking place in the months to come, so that will give us also another opportunity. I think that what we should say is that we need to balance everything, and again, regarding competitiveness of the auction. I think that we were at the right place, paying the right amount for the right size regarding our business plan at the beginning and where we're coming from and where we would like to go.
spk05: All right, good. Thank you very much.
spk10: All right. And the last question we currently have in the queue comes from Drew McReynolds from RBC Capital Markets.
spk09: Please go ahead. Drew, please go ahead. Your phone may be on mute.
spk01: Sorry. I appreciate squeezing me in here. Just one follow-up. You for... Thank you for the stability comment on CapEx in 2022. I think that's appreciated among investors in Quebec Core. I just wanted to drill down into what that implies in terms of the 5G kind of deployment or roadmap for 2022. Obviously, there's a ton of moving parts to wireless and to network sharing arrangements and all of that. But if you could just give us a little sense there, that'd be great. Thank you.
spk06: Yeah, I mean, stability on all fronts. I mean, we started, you know, Drew, we started on the, you know, the four or four and a half G or LTE advanced, call it whatever you want. I mean, we've been, you know, we've been upgrading that and have started along, you know, quite some months ago. And we'll continue. And 5G, we've always said, you know, of course we will be there, but it's going to be, in our case, an incremental, from a CAPEX standpoint, it's an incremental program, which does not destabilize, you know, everything we're not talking about that are, you know, that are destabilizing any of the wireline programs in place and the, you know, and the, you know, the other, you know, big guy, you know, big ticket items that we have in our CAPEX program. You know, we have reprioritized, you know, many projects on which we had been working and focusing on, you know, revenue generating and growth generating programs, which allows us to, you know, use some of the puts and the takes to make sure that we, on the whole, you know, keep our CapEx program, you know, pretty stable. So I think, you know, focus on LTE Advanced, continuing to invest in 5G, but also on the modernization of our systems that I talked about. So I think we're focusing on the right programs, and there was opportunity for us to, to clean up a few things and to be a little more disciplined in our investments, and I think this is what is showing now. Thank you.
spk09: So that was the last question. Thank you all, and looking forward to talk with you in the next quarter.
spk10: Ladies and gentlemen, this concludes the Quebecois Inc.' 's financial results for the 2021 third quarter conference call. Thank you for your participation and have a nice day.
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