Quebecor Inc.

Good day, everyone, and thank you for standing by. Welcome to the Quebecois Inc.' 's financial results for the third quarter 2023 conference call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecois Inc. Please go ahead.

Ladies and gentlemen, welcome to this Quebecois conference call. My name is Hugues Simard. I'm the CFO. And joining me to discuss our financial and operating results for this third quarter of 2023 is Pierre-Claude Péladeau, our President and CEO. As usual, 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. And the recording will be available until February the 7th. As usual, I also want to inform you that certain statements made today on the call 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 authority.

The conference is no longer being recorded. Is that a problem? The conference is now being recorded.

Very good. So we have good news. We're being recorded again. Thanks for listening. Thanks, Tyler.

All right, so Pierre-Cal, up to you.

Merci, and good morning, everyone. I would like to start by addressing last week a sad announcement. Due to universal structural changes in the media and television landscape, I, as interim president of Groupe TDR, announced and initiated the major restructuring of our broadcasting activities. I would like to reiterate our thanks and support for the more than 500 colleagues who will depart the company in the upcoming months. Their personal investment will be fairly rewarding. Again, thank you. On the regulatory front, we are happy that the CRTC has announced its long-awaited decision on FTTH wholesale rate which will foster and enhance competition in Quebec and Ontario, but it will be essential to ensure that these rates continue to be reflective of Bell's true cost. As we have pointed out several times in the past, there are many instances where Bell sells its own service well below their supposed cost. We hope that the rates that Commission will approve on a final basis, we'll consider the fact that Bell continues to offer its 1.5 gig access Quebec at a retail price of $65, while Bell has filed to the CRTC a $108 rate for the same access. Before turning to our operational results, I am happy to report today A very good financial performance in our third quarter, where Quebec on a consolidated basis generated $482 million in cash flow from operations, an increase of 20% over the third quarter in 2022, and EBITDA of $624 million, up 21% from last year. We do it all with the addition of freedoms improved its cash flow from operation by 19% to $454 million, and its EBITDA by 20% to $590 million in the quarter, while maintaining the best margin in the industry. Whereas our main competitor is borrowing to pay its dividend, thereby continuing to increase its leverage ratio, our capacity to generate growing free cash flows enable us to pay a decent dividend, to reimburse more than $250 million in debt in the quarter, and thus keeping lowering our debt EBITDA ratio. I will now review our operational results, starting with our telecom segment. Upon closing the acquisition of Freedom Mobile on April 3rd of this year, we clearly announced our intention and quickly set about establishing a much more competitive mobile telephony environment across Canada. While continuing to invest in our network to keep improving its quality and performance, we introduced seamless end-off roaming, which immediately improved our user experience and further enhanced network connectivity through nationwide coverage and affordable international mobile plans. And in addition, we added 10% more domestic data to all existing Freedom subscribers and froze prices on all existing plans for current and future customers. On July 27th, we then launched 5G services, offering faster network access to more than 12 million Canadians in the Greater Toronto, Calgary, Edmonton, and Vancouver areas, as well as in other major cities across Ontario, BC, and Alberta. This 5G rollout will progressively expand to other markets over the next month, as is the case for deuteron 5G deployment in our own province of Quebec, which is proceeding as planned. Capitalizing on the new MVNO regulatory framework, introduced last year by the CRTC, as well as on its recent rates decisions. We just recently announced the launch of our MVNO service and the extension of the service areas of our Vidotron, Fizz, and Freedom Mobile brands throughout Canada. This Fizz expansion will make our service available to millions of additional Canadian consumers, thereby giving them access So more choice, better service, and lower prices. Speaking of lower prices, we could not be prouder of the most recent Statistic Canada Monthly Consumer Price Index, or the CPI report, demonstrating the clear impact of Quebec War strategies on the decline of wireless service prices in Canada. Between September 22 and September 23, The CPI rose by 3.8%, but the wireless component of the index fell 12.9%. Since April 23, when Dutronc acquired Freedom Mobile, wireless prices have declined by almost 20%. Clearly, we are delivering on our commitments to Canadian consumers. Lower prices for these most essential services must be a breath of fresh air for Canadian families who are facing rising prices on all fronts. It also shows that there is a sizable market opportunity for us with a product of equivalent quality at a much lower price, which generates significant EBITDA and cash flow. While on the topic of wireless, we recorded 89,000 wireless net ads in the third quarter, 53,000 more than in the third quarter last year, and 40,000 more than in Q2 this year. This impressive performance is clearly the result of Freedom's improving network, spend connectivity, and more competitive market positioning, all of which were only implemented midway through the quarter, and also due to the strong performance of our 100% digital breadth FIDS in connection. As expected, wireless ARPU decreased slightly, which is mainly attributable to diluted effect of Freedom prepaid services. Turn rate on opposed paid customers increased 0.1% this quarter, again, due to Freedom diluted effect. That said, Freedom turns rate is starting to come down with all the initiatives taking since the acquisition, a trend that should accelerate as we are committed and focus on improving quality, service, performance, and lowering price. Wireless revenues doubled in the quarter, and wireless EBITDA reached 232.5 million. Turning to broadband, we posted 5,000 net ads this quarter, excluding third-party resellers, in a very competitive market where our competitor keeps offering lower internet prices in Quebec than in the rest of the country. Year over year, growth reaches 80,000, which includes the acquisition of 61,000 Vmedia and Freedom Mobile customers in Q3 22 and Q2 23, respectively. Despite this very competitive environment, we continue to be very disciplined in our pricing strategies, which, as translated in Internet ARPU, improving 38 cents over the last year, allowing us to overcome the diluted effects of FINS and the lower plan mix.

Through price optimization, improved brand positioning, and church turn management,

And with continued mitigation of customer decline in traditional services, we continue to generate growth in our online services revenues. In a market characterized by ongoing cord shaving and cord cutting, we managed to slow this trend down in television for its sixth consecutive quarter by optimizing the positioning of our brands and the pricing of our Illico and Illix platforms thereby improving ARPAN. Most notably, we managed to keep our television revenue stable despite these strong market pressures. D'Autron's reputation for the unmatched quality of its customer experience is well-established. In this year's Légis Reputation Survey, D'Autron was again ranked the most respected telecommunication company in Quebec, for the 17th time since 2006. Also, FIS placed first for online experience in Canada telecommunication industry on Liché Waon Digital Index for the fourth year in a row. And adding to the list, in another Liché survey conducted between August 1st and August 7th, the backers rated Videotron as the telecommunication company with the best customer service, with twice as many respondents ranking Videotron first as its closest competitor, confirming the undeniable strategic advantage we have built through the years. These results clearly explain why our competitors have no choice but to rely on unsustainable pricing strategies in Quebec, hoping to pile on customer ads, but without any significant revenue growth. Turning to our media segment, our third quarter results continue to be impacted by a very difficult advertising market that shows no signs of improving anytime soon. and a static regulatory environment that continues to put us at a disadvantage in our fight against the web giants and the national broadcast. Group TVA experienced a decrease of $12 million in revenues and $2 million in EBITDA for the quarter as compared to last year, adding up to a cumulative EBITDA loss of $11 million after nine months this year compared to a positive 12 million EBITDA over the same nine-month period last year. As you know, the audiovisual and media landscapes throughout the Western world is undergoing profound and unprecedented changes as a result of the globalizations 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 a long-term trend that is reshaping the broadcasting ecosystem. For over 10 years, we have been telling government bodies and regulators that the situation is dire and urgent. Canada's private media companies must be able to operate in a modernized ecosystem that can adapt to a borderless digital world. More than ever, this demands regulatory relief, flexibility, and tax credit that more adequately and equitably reflect the conditions facing broadcasters and producers in the television industry. The fact is that not only has nothing changed, but the situation is now worse than ever. A lack of consideration for our industry coupled with the mounting challenges it confronts has forced us to take unprecedented action. The deficit TDR Group is currently running is simply no longer sustainable. We have a responsibility to correct the situation. Quebec has historically been an important vehicle for Quebec culture, language, and news. We have a duty to preserve it and ensure its sustainability. The necessary measure we announced last week will change the way we do business to withstand the market pressures and fade the competition. We will refocus our activities, reduce our operating costs, and concentrate on the strengths that set us apart and make Stéphanie Hoc-Québec a favorite television network. Our goal is to be able to continue offering viewers original Quebec content, to continue investing, and to bring all Quebecers reliable coverage of news and major sporting events. Finally, Our sports and entertainment division maintains its momentum with revenues and EBITDA of $60 million and $40 million, respectively, in the quarter. Major shows, including Peter Gabriel, Morgan Wallen, and André Lierre, were great successes, and our hockey champions, the Rapport de Québec, have launched a new season, drawing record audiences. I will now let Hugues review questions. our detailed financial results.

Merci, Pierre-Cal.

On a consolidated basis in the third quarter of 2023, Quebecor recorded revenues of $1.4 billion, up 24%, EBITDA of $624 million, up 21%, and cash flows from operations of $482 million, up 20% from the same period last year. Our telecom segment generated $454 million in cash flows from operations, a 19% increase compared to the same quarter last year. EBITDA also increased 20% at 590 million, and EBITDA margins stood at 48%. Revenues reached $1.2 billion, up 31% compared to the same quarter last year. In addition to Freedom Mobile, which accounts for most of the revenue growth, the Videotron and Fizz brands continued to deliver growth in both wireless and internet revenue, service revenues, rather. On the OPEC side, the increase of 46% in the quarter compared to last year is due to the consolidation of Freedom Mobile, of course, as the cost containment initiatives in Videotron and Fizz continue to pay off, translating into our increasing and industry-leading EBITDA margins. Silicon CapEx spending, excluding the acquisition of Spectrum licenses, was up $28 million as compared to the same quarter last year. This variance is due to the addition of Freedom Mobile and to higher investments in key initiatives such as LTE Advanced and 5G, network extensions, and geographic expansion on all markets. Our media segment recorded revenues of $166 million, a 2% decrease, and EBITDA of $21 million, a 17% increase compared to the same period last year, attributable to the excellent performance of our digital and out-of-home activities. Our sports and entertainment segment revenues grew 4% to $60 million, and EBITDA grew 18% to $14 million in the quarter. Quebecor reported a net income attributable to shareholders of $209 million in the quarter, or $0.91 per share, compared to the net income of $178 million, or $0.76, cents per share reported 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 $202 million or 88 cents per share compared to an adjusted income of $175 million or 75 cents per share in the same quarter last year. For the nine months of the year, for the first nine months of the year rather, Quebecois revenues were up 17% to $3.9 billion, and EBITDA was up 15% to $1.7 billion. EBITDA from our telecom segment grew 16% to $1.7 billion, an improvement of $234 million over last year. As of the end of the quarter, Quebecor Inc.' 's net debt to EBITDA ratio was 3.39 times down from 3.52 times reported at the end of the previous quarter and still one of the lowest of all our telecom competitors and peers. Available liquidity of more than $1.8 billion at the end of the quarter and our growing free cash flows will allow us to continue to improve our very strong balance sheet. During the first nine months of the year, we purchased and canceled 236,000 Class B shares for a total investment of $7.1 million. We thank you for your attention. And we can now open the lines for your questions.

All right. First question comes from Mar Yagi from Scotiabank. Please go ahead.

Thank you, Monsieur. Thank you for taking my question. I wanted to ask you, you know, obviously you had a much better performance on wireless subscriber loading in Q3. Can you maybe talk a little bit, and maybe if you can break your comments separately between what you saw in Videotron in Quebec in terms of improvement in the subscriber loading parameters and what you're seeing on the Freedom side. Any separate comments on both brands would be great. And on the second question I wanted to ask you is, On the leverage side, we continue to see, you know, good paths for lower leverage. What is your, you know, expected level that you feel you want to achieve? And then when you think that will be attained in terms of timing? Thank you.

Thanks, Maya. On your first question, so for the loading, for the wireless loading, so starting in Quebec, my comments would be that, you know, continued growth in Quebec. I mean, our momentum is basically very similar to what we've been experiencing, you know, over the past few quarters. Fizz performed very well, but so did Videotron. More of the same, I'd say. A very, very good quarter. A very favorable back-to-school season for us in Quebec on both of our brands. Certainly, continued momentum and continued increased loading in both of our brands in Quebec. In the rest of the country for Freedom Mobile, a couple of comments. It was a little bit, you know, what we call sort of a two, a quarter in two steps, you know. The beginning of the quarter before we launched, you know, some of our plans and some of our remedies was, you know, perhaps a little slow, you know, sort of following the sequential last quarter. But then the reaction and the reception from our various roaming plans, from our 5G, from our various initiatives to keep the seamless handoff from the various initiatives that we've put in place to improve the experience and the quality of our network has really... resonated, I would say, with the, you know, with the customers in Ontario and the rest of the country. And that really, really, you know, turned on the momentum. And we finished the quarter quite strongly, as you can see. And that's, you know, bodes very well for, you know, for the rest. I mean, we always said, and I think I'd point out as well, Mael, that, you know, it's a tribute to our, you know, to our discipline. You know, we always said the last quarter, I think we said that we were You know, we needed to put in place, you know, we had a plan and we were focused on executing this plan and putting in place the various building blocks that were needed to, you know, to relaunch Freedom's growth and, you know, in market share fight in the rest of the country. And I think we've delivered on these goals. on these building blocks. And the customer reception has been really good. So, you know, that's sort of the conclusion of our very strong loading.

On your second question, I guess that, you know, we should say that, you know, for the last 25 years, I guess, since the, well, almost 25, since the acquisition of Duocon, you know, you will probably remember, you know, that the leverage was pretty high, seven times, and even You know, our mission and objective was to reduce the leverage. And we've been able, you know, to do it, despite the fact that, you know, we bought our partner's position, Kaiser Depot, and they're fed 45%, you know, with the cash flow that was generated with the company. We started and participate in auctions to buy Spectrum and build a wireless network. and many other things. And despite all this, and obviously for the most recent acquisition of Freedom, we were still focused on reducing our leverage. And this is what we're doing. And we are looking and trying to achieve an investment grade position. And we found that not really fair when our leverage is one of the best, if not the best, maybe to the exception of but I'm not completely sure, out of the industry. So Telus has 3.8 times. Bell has 3.5 times. Just read the Rogers report that they have 4.9, looking to have 4.8. We are at 3.29 or something like this. We're looking to move forward and reduce it, and there is no reason why we're not going to be able to do so. You certainly know, but this is an industry trend, that auctions are taking place right now. So will we be able to continue as strongly as we were for the last two quarters? I should say that probably not. But we will keep our objective to do so, making sure that we're going to have the proper spectrum to continue to grow our business, improve all the time, and offer the best product in terms of quality and prices.

Thank you very much. Perfect.

The next question comes from Jérôme Dubreuil from Desjardins. Please go ahead.

Hello everyone. Thanks for taking my questions. You know, we've learned a lot about the environment where you're going to be evolving in the next year. You know, we've had the MVNO race decision recently. We have had the fiber access rates as well. Is it fair to say that now that the environment is pretty much set for the, at least probably next year, is it fair to say that you can probably accelerate some more initiatives on the freedom side? Maybe I'm thinking of maybe bundling or other initiatives.

Well, Jerome, thanks for your question.

As you know, we already mentioned, you know, in the quarters before, this is what we're looking for. We said that, you know, obviously there's many markets. It's not, and I remember, you know, when the, in front of the competition bureau, some people were saying that, oh, they are not going to be able to succeed because they do not have the capacity to bundle services. First of all, we should say that it's not completely true. And as you just mentioned, the regulatory front provides our capacity to do so. I guess that we have tools. And if I refer, you know, to what the president of the commission said, this is what in the FTPH decision, this is really what the commission is looking for. And we find that this is certainly a very favorable environment for us to moving forward. Yes, we're looking, you know, to get bundling services. As you know that, you know, we already bought D-Media, which is already offering, you know, Internet and cable distributions. Then, you know, with our wireless services, you know, we have now the capacity to offer even larger bundle proposals. So this is what we're looking for. We're going to do it, you know, in – proper phase. I mean, by this, you know, we would like to continue to offer quality products. As you know, maybe, that it's not as simple as looking to do it. You know, we have big systems behind. We want to make sure that, you know, we're not going to create any mistakes. We're not going to create customers' insatisfaction. We've been always looking and considering this is the most important thing for us. But certainly, again,

We have the tools to do so, and we're looking to move forward in the quarters to come.

Thanks. And maybe a follow-up to Mayor's question, looking at the deleveraging, I think that was probably one of the highlights of your quarter, but is it too soon to start already talking about eventual buybacks, or are we maybe more focused on what's going to be happening in terms of network deployment and we'll see after a spectrum auction or we can already start thinking about this.

Well, I think that we used to have a kind of a policy which is a balanced policy between buybacks and dividends. And again, reducing our debt because what we're looking for is to make sure that we're going to be able to save on our interest costs while obtaining our investment grade So, again, it's a matter of balance. And we've been disciplined. We've been looking at all those avenues. And this is of importance for us that we're not going to focus or favor one to the detriment of the others.

Merci.

All right, next question comes from Stephanie Price from CIBC. Please go ahead.

Good morning. I just want to touch on CapEx here. It's come in below, I think, street expectations over the last two quarters. Can you give us a little bit of color around the ramp-up of the CapEx as you make network investments at Freedom?

Sure. Hi, Stephanie.

Yeah, I mean, as we said, you know, as we said last quarter, you know, this is, sure, there will be, you know, there will be a ramp up, but there will be a gradual ramp up, you know. It was important for us to, you know, as I said earlier, to execute our plan in a very disciplined way, meaning that it is important for us to focus right now on the on putting through the remedies that will ensure that we keep improving performance and service levels and that we can continue to build market share. So at Freedom, I think it was important for us to start by re-questioning and making sure, re-prioritizing all of the various needs for capital. And I think that's what we've been doing. And we are focusing on improving the networks, on taking care of the black spots, for example, and ensuring that our quality continues to build up. But at the same time, as we had said, we made sure that through our roaming agreements and through our MVNO agreements that we were also in a position to continue to offer the best network. to our customers as we are continuing to address the issues with the network. So all of that to say that as we move along in this reprioritization, and I think it's a necessary thing to do, not to just spend right, left, and center without much analysis. And you will remember that that's certainly what we've been doing in Quebec at Videotron for the past few years, you know, re-questioning all capital investments and optimizing our investments and focusing on the revenue generating and on the, you know, the strategic projects like LT Advance, which we are, you know, speeding up, and 5G, which we've launched, and network extensions. So all of that to say that, you know, we feel in a pretty good position in terms of CapEx. That's allowed us to, you know, while continuing to invest in that work, to continue to, you know, to generate very strong cash flows. and to be in a good position for the next wave of investments, which obviously will come. We talked about stability for a 12-month period, and then we'll see over next year in the various next phases of investment at Freedom and at Videotron. But for now, we feel that our our campus levels are, you know, allow us to, you know, to focus on the important stuff.

You will probably remember, Stephanie, that in the previous auction, the 3,500, where we participated and bought over $800 million of Spectrum, 400 in the three provinces, Ontario, Alberta, and British Columbia, In fact, you know, in considering that, you know, we will enter the Canadian market, one of the most important things was, well, you know, you buy Spectrum, you have seven years to build. So contrary to some of our competitors in front of the regulators saying that, oh, they don't want to build, they're not going to build, they're going to use roaming agreements, what we say, what we're saying is that Yes, we're going to obviously use roaming agreements, but we will continue to build, and we will deploy our network. The interesting thing is that you do not have two years to do so. We have seven years, and as just, you know, mentioned, we will continue to be disciplined. Some people said, you know, 5G is the end of the world. I remember, you know, two, three years ago, we said, well, you know, 5G is, you know, the thing that happened after LTE and after 4G. 4G was something that happened after 3G. We didn't have a revolution in the wireless industry. So we are considering that, obviously, we're going to enhance our network and provide quality and new technologies to our customers. But there's no such a rush that other companies have been doing. In fact, as you probably know, worldwide, and manufacturers of 5G equipment are just also saying that they're not able to meet their own objective because all telephone providers have been slowing down their deployment of 5G around the world. So I'm not saying that we're going to slow down, but we're not going to rush because there's no need to rush. We will continue to Deploy our network in due time with proper discipline.

All right. Thank you for the color. And maybe just one follow-up on ARPU. Obviously, you know, prepaid freedom impacted it in the quarter. Just curious how we should kind of think about the puts and takes for the remainder of the year and into fiscal 24 as you think about some of the other initiatives that you're rolling out like 5G and bundling.

Sure, Stephanie. You know, as we've said from the beginning, you know, our focus is on profitability, not on, you know, not on our pew. You know, we said, you know, we're in this market to, you know, to succeed, you know, to build market share in a disciplined way, as Pierre-Claude just said, but, you know, to build market share and continue to compete. And that's, you know, that's obviously going to you know, going to put pressure on our pew. I mean, you know, we need to maintain, we are the fourth player in English Canada. So clearly, you know, we need to maintain as we are, you know, building and enhancing our network. We need to maintain a price advantage and that's what we're doing. And that obviously puts, you know, puts pressure on our pew. But I think this is nothing unexpected and it's certainly, you know, when we focus on on profitability, I think you'll see that we're delivering the goods. The other put on our pew is obviously FIS in Quebec, which is performing very, very well. And we've had this discourse for many years, as you know, that it dilutes our our pew a little bit, you know, being a lower price, lower cost operation, which maintains our margins, you know. So I think all in all, you know, as we're focusing on the bottom line, and I think we're showing that from our results that we're succeeding at it, And, you know, our pew is, and as we've said, you know, we don't expect our pew to go up. You know, some of our competitors have expected it, and, you know, good for them. But in our case, I think we can be, and we're proving that we can be successful by focusing on profitability as opposed to our pew.

We will continue to have operational costs, you know, lower than our competitors. This is what we've been doing for years and years and years. In fact, that's probably what Dutronc is all about. You know, since the inception of the acquisition by Quebecois, we will continue to do so. And at the end of the day, I would say, you know, the proof of the pudding is the eating. I mean, by this, you know, you've been seeing the EBITDA on an increasing mode for almost, you know, since the time we acquired the company. And we will continue to do so.

No spoilers.

Thanks so much for the color. Thanks so much for the color.

All right, next question comes from Matthew Griffiths from Bank of America. Please go ahead.

Hi, good morning. Thanks for taking the question. I just wanted to follow up, I guess, first on some just the comments about, I guess, Freedom's net ads and the kind of exiting the quarter at a better kind of cadence than you entered the quarter in. And I was wondering if you could shed some light on to what extent that increase is being generated by kind of the elevated gross ads as you move to the latter part of the quarter, or if you're seeing kind of churn benefits from the work you were describing on the network and from changing plans, keeping customers, maybe they migrate within them, that would be helpful. And then just on the internet side, obviously, I think you mentioned that the competitiveness the competition you're facing within Quebec and the promotions, it's obviously having an impact. I was just, you know, it seems as though this is going to be the strategy, you know, moving forward from your peer. So to what extent do you feel confident that you can kind of, you know, keep the net ads in broadband, especially, you know, positive and maybe even retain some stronger growth going forward. That would be helpful, Kohler. Thanks.

Yeah, thanks, Matt, for your question. So, on your freedom question, it's actually a little bit of both, I'd say. Growth ads, yes, picked up, certainly, as reception to our you know, to our various plans and, you know, nationwide and, you know, in roaming packages was, you know, was improving. But also, you know, churn is something, and we said that last time, and, you know, I think we should repeat it now. This is something we're keeping our eye on. You know, Freedom's churn has historically been very high. They've historically actually done a fairly good job, as we said, you know, picking up subscribers, especially focusing on, you know, people who wanted to, you know, a fair service and a fair performance at a good price, you know, but, you know, had a hard time keeping these customers due to, you know, network issues or other issues. So churn is clearly something that we identified very early on as, you know, as a huge lever for us. going forward. And we are, you know, in putting in place the various pieces that we talked about earlier, you know, not only improving the network, but also, you know, these various plans that we talked about, you know, has really, in opening up, you know, seamless handoff and VNOs and et cetera, will keep, you know, will keep decreasing churn. And we're already seeing the first results from that. And as we said in our prepared script, you know, we certainly expect, you know, the churn reduction to continue to accelerate because as we're focusing on the, you know, the major irritants and it's important for us to keep, because as we said, we keep doing a good job on the growth. Now we need to do a better job on the net and reduce churn. But we're really focused on this and we're confident that that's in the right direction.

Will we be, you know, will we stay in a competitive environment? Certainly, Matt, you know, but we are prepared to face that. And, you know, what we've been seeing on the competitive front is, you know, they probably may be gaining customers, you know, with what we called as, you know, our employees. script or prepare a script, you know, on sustainable. And probably, you know, when we look at the numbers, you know, they have higher revenues, but they have lower EBITDA. So does that mean that they're buying their customers? Well, you know, asking the question is maybe answering it. But we certainly have the main logic and the main desire to maintain our operational costs as efficient as possible, and we will continue to do so. But, you know, and again, regarding what I said regarding our own dividend policy, I mean, you know, we can ask ourselves with the reduce EBITDA by our main competitor, will they be able to continue to increase their dividends?

Well, that's a good question. We'll find out. Thank you very much. Thanks, Pat.

All right. Next question comes from David McFadgen from Cormark. Please go ahead. Okay.

Thank you. Yeah, a couple of questions. Can we assume that the greater than 50% of the net ads are coming from Freedom?

Well, we don't, David, thanks for trying, but... Again and again and again, eh? Yeah, I think if I remember well, you asked that very question last time. This is for sure. We expect that you're going to ask the same question, David. We won't tell you, David.

But it's from both sides, okay? Very good performance on both sides. Both Freedom, Fizz did well, and Videotron did well. So you know what? Good momentum, as I said earlier, in Quebec. Continued momentum in Quebec and good performance of Fizz, which had a bit of a foot on our view, as we talked about, but also very good towards the latter part of the – of the trimester of the quarter from Freedom as well. So, a very balanced loading.

Okay. So, if we just look at Freedom for a second, are there any plans in particular that are really driving the net ads at Freedom that you could call out or not really?

You know, we know that our nationwide programs were very successful. You know, just addressing some of the network issues from the start, you know, with the seamless handoffs and 5G and all of that, that's also brought a lot of people to us. Oh, yeah, U.S. and CAN, our U.S. CAN-U.S. program. Yeah, that also fared very, very well. That also, by the way, has a bit of a put on our view in the sense that usage revenues are a little bit under pressure, but I think it brought to the market something that others were not offering, and it differentiated us, and it was very well received, yeah.

Okay. So just on the MVNO front, where are you now expanding the MVNO and where do you expect to be in the next year?

Well, we mentioned as an announcement that we're moving forward. We are at the end of the process regarding establishing the prices with the commission. We look forward, you know, to make sure that we're going to be able to connect, you know, in a different location. So we're moving ahead and establishing where we will focus in first class because, you know, if I refer to my previous answer, we will start making sure that we will build, you know, in the years to come. So we will certainly prioritize those areas, but that doesn't mean that we're not going to operate, you know, elsewhere. So it's a mix of making sure that, you know, we're focused on, I mean, by advertising our products on the areas where we know that we will build in the years to come and another areas where, you know, the buildup will take probably a longer term. So, you know, if I was to refer to the Stephanie question in terms of capital expenditures, deploying that network, and we want to make sure that it will fix and it will be balanced with our MD&O marketing strategy.

Okay. And just on the CapEx question, can you give us an update on... this year to be, and then if you could give us an indication for next year.

I think you got cut off a little bit. Can you repeat the first part of your question? Sorry, I know you're asking about next year, but what was the first part of your question?

Just give us an update on CapEx this year and next year.

Well, you know, last time we talked about, you know, stability for the rest of the year as compared to, you know, and we're still, we're certainly still in that direction. Next year, as we said, you know, we will, you know, we will gradually continue to, you know, to invest, as Pierre-Claude said. And so we'll be, yeah, there will be, you know, our network, and we've never hit that, you know, Freedom's network needs... uh needs investment and we will we will continue to expand our network uh but you know we're uh as we've said as kaka said we're in no rush to do that so this will done will be done gradually and over time so um you know no step function as we've said all along you know capex uh there will be uh next waves of of investments in the in the next uh you know in the next uh 12 months, let's say, but certainly no material step functions to be expected. So, you know, gradual investments and disciplined investment will continue.

Okay. All right. Thank you. Thank you, David.

Next question comes from Vince Valentini from TD. Please go ahead.

Yeah, thanks very much. I just need to clarify a couple of numbers. Hugh, I'm not sure I caught you on wireless EBITDA in your prepared remarks.

233, well, 232.5 million in EBITDA, in wireless EBITDA.

Do you have, are you willing to give us CapEx for the wireless segment in total? No. Sorry. No problem. the churn number up 0.1% year over year. Just to be clear, that's only because you didn't include freedom in Q3 last year and now you're including it, or are you saying that... That's correct. Okay. That's right.

That's exactly it, yeah.

If you go from what they had been doing under Shaw's ownership to what it is now, do you have those figures? Like, do you think you improved churn because of all the initiatives you put in place?

Oh, absolutely. As we've just said, yeah, absolutely. You know, by far, you know, when we looked at and, you know, God knows that we had time to look at this while we were waiting for the various approvals from everyone. You know, we were looking at what the issue, you know, what was the highest levels of complaints and why people were leaving the network and the reasons for churn. And, you know, and digging down below just the first line of, yeah, network issues, you know, people getting cut off, you know, leaving the service, the coverage area was by far the number one. So Seamless Handoff really addressed this. Our roaming packet, and then roaming was a big issue, which, you know, was hugely expensive. And there were no, as you know, Freedom wasn't competitive on that front. So that's the second thing. Third, you know, as we keep addressing these what we call back spots, you know, when we introduce fire, you know, all of these various introductions that we've made, all of these various packages that have, you know, that have resonated with the client. I mean, this has really allowed us to start, you know, right away over the summer and certainly, you know, And now it should pick up in the fall, as we've said earlier, to reduce turn. So, yeah, I mean, we are delivering on turn reduction, yes.

Okay. Two more clarifications. The 89,000 wireless sub-ads this quarter is clearly quite strong versus, I think, what most of us expected. Was there any huge skew in there of prepaid or is most of the 89,000 postpaid?

No, it's mostly postpaid. Yeah, for sure. Yeah.

I mean, prepaid, I mean, not that prepaid isn't doing well. I think we're faring quite well on prepaid. We don't focus on that all that much. But, you know, it's a good business. And it's done well as well, but most of it is on postpaid.

And we certainly reversed the previous trend, you know, when prepaid was the big stuff on Dirt Shaw ownership. And since, you know, we acquired, we reversed that trend.

Yeah. And as a matter of fact, for Q4, that's something, you know, you will remember that Q4 last year, you know, freedom did, you know, did, I was about to say did very well. I'm not sure that's the right term. But anyway, generated a lot of prepaids at low prices in Q4. So that's something we're going to have to cycle over. But we've definitely reversed that trend, as Pierre-Claude just said yesterday.

Last one is on the TVA restructuring. It seems quite large. Have I missed in any of your disclosures any mention of what the severance and restructuring costs will be and then what the recurring savings are on the other end of that, or do we just need to take that number of jobs and multiply it by whatever estimate we have?

Well, you know, Vince, you know, The people involved in the restructuring are not, you know, are not all full-time employees. So, you know, the indemnity will be different. And we keep this numbers, those numbers for our negotiation that is going to take place with the union. Again, it's unfortunate that we were forced to do this. We need to do it. It's our responsibility to do it. But there is proper environment or proper locations to discuss this and respect what we can call our social partner being the union. We look forward to come shortly at a table and establish what we will consider being a generous offer because we've been respectful and we need to recognize that they've been doing for so many years a good job. We're by far the number one network. We have over 40% market share. For sure, it's a declining market, but everyone here was been working very hard. If we were able to establish this level of market share, it's because of teamwork, and we need to recognize this. We will certainly have more details for you at the next conference call.

No, that's totally fine, Pierre-Claude. I just want to make sure I hadn't missed the number somewhere. That's all I had. Thank you.

Thanks, Vince. Thanks, Vince.

All right. Next question comes from Tim Casey from BMO. Please go ahead.

Thanks. Can we just go back to the spending question, Hugh? I mean, prior to the closing of Freedom, you had notionally suggested that $200 million was kind of a run rate capex. Can you just help us out? Is that in the numbers now, or have you – sort of adjusted your thinking there and you're going to wait and see, get a better feel for the business, get behind spectrum and then reassess that number. Just wondering if that's still a valid thing for us to consider. Thanks.

Hi, Tim. Yeah, it's actually, you know, that's the number we, the guidance we gave out at the very beginning. Now, you know, as I said, I think answering Stephanie's question, you know, we really started by really reassessing everything and, you know, like as, you know, as people do when, when you make an acquisition. And, you know, so we focused on the important stuff first. And, yeah, we're certainly not on a 200 run rate at this point, as you can see. You know, will we get back to it in the future? You know, perhaps, but in steps. So, yeah, to answer your question The 200 has been revised probably on the, you know, a little bit lower side than that, because we're certainly not on a 200 run rate right now.

Thank you.

All right.

That's right, yes. Last question comes from Drew McReynolds from RBC. Please go ahead.

Yeah, thanks very much for that. Squeezing me in. Yeah. Good morning or now, I guess. Good afternoon. One, one for me. And I guess it just is probably floats above all the wireless questions here. And maybe you can just help us out how to think about this. We're all trying to triangulate. I think you're loading with our crew and margin. How should we think about how I guess margin evolves as over the course of time, presumably you will have more loading either on Rogers roaming agreements or the NVNO framework. Is it important for you to essentially target a certain EBITDA or margin in the wireless business and therefore manage your loading mix? How are you approaching that? That'd be helpful.

Hi, Drew.

So, well, you know, as we said earlier, you know, our focus is clearly on profitability. So, you know, loading, we are kind of, you know, we're doing a little bit of what you're describing. You know, we are triangulating, actually. That's what we're doing, you know. in trying to maximize, of course, loading and market share gains by, but at profitable levels, you know, and having negotiated some agreements that allow us to keep our costs down and also with MVNO rates that are, you know, that are coming in at much more reasonable levels than what was in the past, you know. So, I think this will allow us to continue to, you know, to push on loading, but while margin, you know, while we preserve and, you know, while we preserve margin. Our view, as we said earlier, that's sort of probably the third piece of the triangle that is less, you know, for us, it's more of an arbitrage between loading and margin, to be honest, you know, as opposed to our view. Yeah, no, that's helpful. Thank you.

I think the last question was by Drew, so thank you very much for attending this conference call. Since we're not going to talk to each other before next February, I know I'm a little bit in advance, but wish you a Merry Christmas.

This will be your first Merry Christmas.

Thank you all.

Ladies and gentlemen, this concludes the Quebecor Inc.' 's financial results for the 2023 three third quarter conference call. Thank you for your participation and have a nice day.