Quebecor Inc.

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's financial results for the first quarter 2026 conference call. The call will begin shortly. As a reminder, you may queue up to ask a question anytime during the call by pressing star 1. To apply a question, press star 2. Thank you. Thank you. Thank you.

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Please stand by for the Queveco, Inc. financial results for the first quarter 2026 conference call. The call will begin shortly. As a reminder, you may queue up to ask a question any time during the call by pressing star 1. To withdraw your question, press star 2. Thank you. Thank you. Thank you.

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Good day, everyone, and thank you for standing by. Welcome to the Quebecor, Inc.' 's financial results for the first quarter 2026 conference call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor, Inc. Please go ahead.

Ladies and gentlemen, welcome to this Quebecor conference call. My name is Hugues Simard. I'm the CFO, and joining me to discuss our financial and operating results for the first quarter of 2026 is Pierre-Claude Péladeau, our president and CEO. Anyone unable to attend the conference call will be able to access the recorded version by logging on to the webcast available on QuebecWare's website until July 13th of this year. As usual, I also want to inform you that certain statements made on the call today may be considered forward-looking, and we would refer you to the risk factors outlined in today's press release and reports filed by the corporation with regulatory authorities. I will now turn the floor to Kierkegaard.

Merci, and good afternoon, everyone. I'm happy to report once again solid operational and financial results for Québécois in the first quarter of 2026. We're continuing to deliver on our plan, quarter after quarter, profitably growing our wireless market share across Canada, generating superior cash flows, and reducing our leverage to maintain the best balance sheet of the industry. On a consolidated basis in the first quarter of 2026, Quebecois increased its adjusted cash flow from operation by $40 million, or 10%, to $444 million. Its EBITDA excluded stock-based compensation by $74 million, or 13%, to $577 million, and its adjusted net income by $34 million, or 19%, to $200 million and 20. We reduced our debt by more than $120 million in the quarter after buying back more than $85 million of our stock and thus improved our net debt to EBITDA ratio from 23.26 times in the same quarter last year to 2.86 times, still the lowest leverage of the Canadian industry while investing 133 million in capital expenditures to continue to improve our networks, our system, and our client experience to fuel our resilient and profitable growth. I will now review our operational results, starting with our telecom segment. I'm very pleased to report what I believe is one of, if it's not the strongest first quarter in our company's history. Our telecom segment delivered adjusted EBITDA of $620 million, up 6.6% year-over-year, with a margin of 50.9%, up 80 basis points. Adjusted cash flows from operations reached $489 million, up 11%. Total revenues came in at $1.2 billion, up 5%, with service revenues of $1 billion, rolling 4% year over year. These are record results for a first quarter and a pretty good start for the year. Impressive performance was once again fueled by our wireless operations. where service revenues were up 8.8% year-over-year at $466 million, with consolidated mobile ARPU growing for a second consecutive quarter and reaching $35.89, up 1.4%. Up, not down like all our competitors. In a market where the dominant narrative has been price compression and ARPU erosion for some time, our ARPU is actually growing. And growing not because we're attracting or retaining customers with short-term, unsustainable, and ill-advised promotional offers. Growing because our customers are increasingly happy with our reliability, performance, service, and prices, and are thus choosing to stay and upgrade. This is the difference between a customer base earned with value and one rented through discounts. In terms of subscriber growth, we added 28,800 net mobile lines in Q1 2026. While this is much lower than the 52,900 net additions we reported in the first quarter last year, it is the result of our continued disciplined focus on profitable growth as opposed to buying short-term loading. As you know, this quarter unfolded as one of the most aggressively promotional wireless environments in recent memory. with the incumbents maintaining deep discounting campaigns in all channels well into April, which made little sense, to be honest, unless their compensation is tied to unit growth, which is not how we operate at Quebecois. Basically, a slow organic growth quarter where the big three stole customers from one another at ridiculous prices. This is simply unsustainable. The math doesn't work. We much prefer our math, which led us 37% of the total market loading in the quarter at prices that are improving our ARPU and service revenues. With the lowest cost structure on the market, the lowest ARPU to defend, we have significant pricing flexibility to compete aggressively while maintaining compelling unit economic. This structural advantage, which we have built over many years, is durable and will continue in our favor for quite some time as our competitors struggle with expensive, cash flow draining, heavy restructuring, and workforce reduction. As we mark three years since the Freedom Mobile acquisition, the evidence is clear. Canadian families are paying less for wireless. We have accelerated our infrastructure investment and extended our network footprint. These are not projections. These are measurable outcomes of a decision that reshaped the competitive, dynamic, of Canadian telecommunication. And we are not done. Actually, we are just getting started. On February 24th, we launched our total freedom plan, offering seamless connectivity across Canada and 120 international destinations powered by our 5G plus network With a price freeze commitment in a market where consumers have been conditioned to expect annual price increases, this is a genuine differentiator. On the B2B front, B2O3, service affaires, has been a trusted technology partner for Quebec businesses for over 20 years. We're now expanding that expertise nationally, bringing our business services to Ontario and Western Canada, leveraging Freedom Mobile Expending National Network. We're still in the early innings, of course, but this is a vast and largely untapped opportunity for us. Turning to Wireline, still our largest cash flow generator. We delivered service revenues of $565 billion in the first quarter, up 0.4% year-over-year, and the first increase since Q3 2023. This inflection reflects the cumulative effect of widest network investment in a broadband strategy that is beginning to deliver measurable revenue improvements. On April 10th, we launched Internet2Giga, delivered download speed of up to 2,000 megabytes per second and upload speeds of up to 200 megabytes per second in the greater Montreal area, Laval, and Quebec City. This is not a feature enhancement for a niche audience. It is a significant step forward in residential broadband based on our existing infrastructure deployed efficiently, and designed to serve the rapidly expanding bandwidth needs of household and business in our core markets. In TV distribution, we're able, contrary to the industry, to maintain our revenues and margins thanks to the strength of our ELECT platform and our ELECT Plus revenue quote. With the recent publication of Leger 2026 Reputation Survey, Idéotron was recognized as the most respected telecom provider in Quebec for the 20th time since 2006. Two decades of top recognition, not by an industry panel, but by the Quebec population. rendering its verdict independent, year after year, on how this company treats the people who choose to do business with it. The customer trust and appreciation that underlie this recognition is the same strong foundation that produce our industry low churn, our growing ARPU, and ultimately, the superior financial results we're reporting today. It is a hugely valuable asset that does not appear in our balance sheet, but one in which we have been wisely investing for many years, and now among the most durable competitive advantages we possess. As I look ahead to the remainder of 2026, I am confident in our trajectory. Our wireless platform, with our three complementary brands, Jidotron, Freedom Mobile, and Fizz, is generating both volume and ARPU growth, keeping our churn rate among the lowest and most resilient in accelerating our service revenue momentum. Our wireline business and return to revenue grow, with our recent network innovation positioning us for continued broadband leadership. Our cost structure remains the most competitive in the Canadian telecom sector, and our increasing cash flows give us the financial flexibility to invest wisely, to fuel our continued growth and create long-term value for our shareholders. Turning now to the media segment, Groupe TVE is beginning to see the concrete results of the sustained efforts deployed over the past several years to simplify our structures and streamline our operations in order to better face the ongoing crisis affecting the entire media industry. In the first quarter of 2026, Group TVL reported negative adjusted EBITDA of 1 million, an improvement of 20 million compared to the same quarter, 2025, mostly driven by the benefits of these initiatives. While we welcome these results, we remain extremely cautious in the context of deep structural crisis that continue to shake, sorry, to shake, yeah, and to shape the industry. The strange hold of the GAFAM and the advertising market, the erosion of television subscription, a significant reduction in support from the Canadian Media Fund, the unfair competition from the CBC Radio Canada, and the heavy regulatory burden imposed by the CRTC continue to undermine private broadcasters. faced with these persistent challenges. The mobilization of all stakeholders, including the governments, CRTC, and industry associations and unions is needed to rebuild a viable model adapted to market realities in order to preserve our collective ability to produce and deliver local news, entertainment, and sports content and to support the entire ecosystem that depends on it. I will now let Doug review our detailed financial results.

On a consolidated basis in the first quarter of this year, Quebecor recorded revenues of $1.4 billion, up $52 million, or 4% from last year. EBITDA reached $577 million, an increase of $27 million, or 5%, or a $74 million, or 13% increase when excluding the unfavorable impact of a $47 million rise in share-based compensation expense across all of the corporation segments. Cash flows from operating activities reached $420 million stable year over year, as the EBITDA improvement was partially offset by high current income taxes. In our telecom segment, total revenues increased 5% or $57 million, with growth from both wireless, where revenues were up 9.5% to $608 million, and wireline, with revenues up 0.4% to $565 million. marking the first positive wireline revenue quarter in nearly three years. Total service revenues, the primary indicator of our recurring revenue base, reached $1 billion, up 4% from $992 million a year ago. This acceleration reflects the structural improvement in wireless ARPU combined with the wireline revenue inflection, a second competitive quarter of year-over-year service revenue growth. With rigorous cost management, adjusted EBITDA reached $620 million, up $38 million, or 6.6%, our best performance ever in the first quarter, with adjusted EBITDA margin reaching 50.9%, an 80 basis point improvement year over year. Telecom capex spending, excluding spectrum licenses, was down by $12 million, or 8% in the quarter, essentially due to a timing of a number of investment projects underway this year. Our 5G, 5G plus rollout, remains on track, and the recent commercial launch of Internet 2 giga, as Pierre-Cal mentioned, is a clear example of the high-impact investments we continue to make. As a result, quarterly adjusted cash flows from operations increased $50 million, or 11%, to reach $489 million. Our media segment revenues came in at 1%. $157 million, down 5% or $8 million year-over-year, while EBITDA improved by $16 million to a $2 million loss, reflecting the benefits of the cost reduction initiatives and a favorable impact from the federal government's cancellation of the digital services tax. Our sports and entertainment segment revenues decreased by 1% to $49 million, and EBITDA was down $2 million for the quarter. It was down to $2 million Quebecor reported a net income attributable to shareholders of $225 million in the quarter, or $1 per share, compared to a net income of $191 million, or $0.82 per share, reported in the same quarter last year. Adjusted net income excluding unusual items came in at $220 million, or $0.97 per share, compared to an adjusted net income of $185 million, or $0.80 per share, in the same quarter last year. As of the end of the quarter, Quebecor's net debt to EBITDA ratio decreased to 2.86 times, still the lowest among telecom operators by quite some margin. As we continue to proactively optimize our capital structure, we launched on April 1st of this year a U.S. $1 billion commercial paper program in the United States, further diversifying our funding sources and providing additional flexibility at attractive short-term rates. The very next day, we used available liquidity to repay the $500 million balance on the second tranche of our term credit facility. All in all, we continue to preserve the best-in-class balance sheet with available liquidity of over $1.7 billion at the end of the quarter. In the quarter, we purchased and canceled 1.5 million Class B shares for a total investment of $85 million. And we are pleased to announce that on May 13th, we receive approval from the TSC to increase the maximum number of Class B shares that may be repurchased under this year's program, which ends on August the 15th, to 7 million shares. We thank you for your attention and we'll now open the lines for your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Sebastiano Petty with JP Morgan. Your line is now open.

Hi, thank you for the question. Just real quick, on mobile phone ARPU up for the second consecutive quarter, Pierre, Carl, you talked about, you know, focusing on profitable loadings. Should we anticipate, or despite the competitive environment, do you think the ARPU trajectory or the growth profile can kind of continue through the balance of the year? And then, Yu, on the CapEx expectations, a little bit lighter for the year, for the first quarter rather, but I think you said that was partially due to timing. I think you provided some context on how to think about capital spend for the balance of the year on the 4Q call. Remind us, is that still the right level as you're kind of thinking about the 2026 spend? I think there's a year-on-year increased target or figure you kind of cited last quarter. Thank you both.

Yes, good afternoon, Sebastiano. Sorry. I guess, you know, what I would say, you know, we stayed, of course, I mean, we don't know what the market will be tomorrow. We, in fact, you know, we expect the worst to be ready, you know, for the best. I've been focusing on our cost base. This is something of importance. We believe that our cost base will continue to go lower. Therefore, if the market was to go more aggressive or as aggressive as it was before, we think that we're going to be able to keep the track where we've been going, which is growing with profitable direction. And again, you guys have been looking at the market. We follow you, obviously, as you can imagine. And it looks like you're watching the market every day, probably in different areas of Canada. So you're well aware of the situation. We are never going in this sometimes crazy discount direction. What we do is we try to innovate, and in fact, this is what we did, by proposing new formulas, new packages, new things that will make the market more interesting and more vibrant. And I guess that, you know, at the end of the day, we should say that, you know, our result's not too bad. And this is why, you know, our pool grew instead of going in the other direction like we've been seeing, you know, with our competitors. We have room to grow. This is very interesting. And therefore, the roots and the base are solid, and we look forward to continuing in the same direction.

On CapEx, Sebastiano, we had a little light in the quarter, 12 or 13 mil a night, as you saw. A bit of timing, as I said in my remarks. And also, to be honest, some prudence as the quarter was going, in our view, crazily, a little bit crazily. And unnecessarily competitive and we just wanted to keep some powder and we're very disciplined on some of the projects that were less revenue related or growth related but as Kakao said depending on what's going to happen in the market going forward we should be there's no change at this point in our mind in terms of our CapEx guidance But, you know, it's always good to be a little prudent at the beginning of the year so that you can adjust if things get out of control.

Thank you both. Okay. I'll go to the next question, please.

Your next question comes from Drew McReynolds with RBC. Your line is now open.

Yeah, thanks very much, and obviously a great result. A couple for me. Maybe, Hugh, just unpacking wireless ARPU, clearly return to growth, which looks sustainable. Can you comment on just mix versus price and what kind of dynamics you're seeing on that front across the various brands versus kind of core price increases on average within each brand? And obviously, there's a little bit of an ARPU restatement. I'm just assuming that's a base adjustment of some sort, but maybe you could clarify that. And then I just have one more afterwards.

Before Igor answered the question, I think that you mentioned it. One of the great advantages we have, other than the one that we've been mentioning also, is our brands. We have many brands, and all brands are looking for a certain segment. And we certainly not cover all the segments. Well, we cover most of them. And with Fizz, you know, our digital brand, on top of being a low-cost operator, it also brings, you know, the capacity to move forward in this segment of, let's call it techie, more techie people than usual normal population. And as you know, it's been very successful in Quebec since its launch. And we expect, you know... same success with the other markets that we're servicing in Canada.

Peter, would you... Yeah, on your wireless RQ question, Drew, I think you're asking about the various brands, right? If I understood your question correctly. Yeah, growth on our main two brands. Fizz grew particularly strongly in the quarter, and Fizz is the brand, you will remember me saying this before, where we have a bit more of that flexibility that Pierre-Cal talked about a little bit before due to our low-cost structure. Our low-cost structure, it's a true statement across the company But I'm sure you will remember that it's particularly true in the case of Fizz. It's a lower price brand, but a lower cost structure as well, which allows us more flexibility to be more aggressive when we need to be. So, you know, generally, I mean, directionally, our view improving in our two main brands, both in Quebec and in Ontario in the West, with PHIS taking advantage of, you know, of the competitive situation that was out there. And in terms of, you know, of profitability, which ultimately is what we look at, turned out to be positive, as you can see. as you're continuing to see in the numbers.

And I would add to that, Drew, that it's interesting, obviously, you know, it's easy to understand, but, you know, every investment or additional capital expenditures that we're doing in our network, building our network, extending our network, brings to the other side of the equation a reduction or even reducing our roaming costs. which is obviously down the road, quite interesting, profitable business or perspective.

Drew, I just want to come back to your comment about restatement because we don't, we have made no restatement that we know of. So perhaps you could tell us what you're seeing, but we're actually, we're actually, sorry?

Yeah, go ahead, sorry.

No, I was going to say that we're actually, if anything, we're quite proud of the fact that contrary to all of our competitors, I believe this quarter and a number of quarters before, I can assure you that there was no restatement, no change of calculation in any of the KPIs we put out. We didn't deduct anything or added anything in any of these KPIs. measures and we're quite proud of that. So if you saw a restatement, please tell me where it was because I'm sitting beside the CFO of Videotron who assures me there was no restatement.

Well, I'll chalk that up to our mistake because I was surprised this morning when I saw something. But no, that's good to hear. One last one, Hugh, on my end. So interesting to see the sequential improvement in TV revenue, which I think has been phenomenal. many, many, many quarters since we've seen that. Can you just kind of talk to that kind of success? It seems like maybe a little bit more than just kind of a price increase flowing through. And then that's it for me.

Thank you. Are you referring to TV distribution? You're referring to cable?

That's right.

Yeah, the revenue increase in cable, it was rather flat, right, if I looked at the numbers, which in and of itself is a good performance in this environment. You know, cable has been more resilient over the past few quarters. Performance has been better. You know, there are a number of seasonal issues. You know, hockey is... has been very popular. Does it help us reduce the churn rate on cable? Perhaps a little bit. There are probably some other seasonal reasons for that, but it's definitely a trend that we've been seeing. And if you look at our results, our performance rather over the last few quarters, you will see that we have been rather outperforming other cable coves in terms of our cable performance, you know, negative growth performance, if I can refer to that.

Yeah. Thanks very much. Thank you, Drew.

Your next question. Your next question comes from Matthew Griffiths with Bank of America. Your line is now open.

Hi, thanks. Good afternoon. Thanks for taking the question. First, I was hoping you could share sort of what you saw in churn, wireless churn, this quarter. I mean, everyone else on a blended basis seemed to be, you know, somewhere in the, you know, close to 20, 20 bits range increase. And the interesting thing here, what you saw and obviously how that relates to the net ad performance. So was the, was churn up, but which, which drove lower net ads or was, was growth were gross ads down and churn stable. Like that, that dynamic would just be interesting to hear how the competition amongst the, the larger three kind of ended up impacting you guys. And then, you know, one question on satellite sort of topical to have, to see announcements coming from wireless providers about partnerships or joint ventures that they're entering into to kind of service that with relatively small part of the market, but it's, it's perhaps additive overall. Do you feel though, you're at a disadvantage without any type of offering, or what would you think about how urgent it is to sign a deal, perhaps, to add that to the overall offering that you guys have, which is interesting to hear your thoughts.

Want to start with the seller?

Yes, good afternoon, Matthew. Well, certainly, obviously, this is a an important and an interesting matter. Obviously, I can imagine, you know, we're considering it. You know, we're looking at it. We analyze it. We're looking what's happening in the marketplace. But I guess that, you know, you answered a little bit of the question when you mentioned, is it urgent? We're not considering it an urgent. And this is true that, you know, it's a small market. But that doesn't mean that we should not look at it. In fact, you know, we're considering this is complementary or down the road, probably also of importance. So this is why we are reviewing few avenues. But I would say that, you know, it reminds me a little bit, you know, when 5G came in. 5G will change the face of the world. You know, I remember a CEO that was betting on it will change the landscape. And many people were considering it. I guess at the end of the day, we were all dissing or having a different perspective than the one at the beginning we had. In our side, we didn't change our mind. We said that, you know, 5G obviously is a technology. It will take place like 5G replaced 4G, LTE, 4G replaced 3G. It's a continuum, I would say. And from where the technology appears, we picked the bus and we came and followed. We all knew that some people were considering that this will be monetized. We all know that it was not monetized. Competition is competition. Pricing is pricing. And the market is not changing in a New York minute. So we've been investing steadily without being rushed. And we kept our market share, and with Freedom Mobile, we continue in the same direction. So we think a little bit of the same in terms of satellites, and we will continue to look at it. Smoothly, without any rush, but certainly, you know, without any doubt also.

Matt, on churn, just a couple of comments. We're globally quite pleased with the evolution of our churn rate during the quarter, especially when we look at how we compare with our competitors. We've been more resilient in our, it's quite obvious that we were more resilient. And I think you can see it partly, as you know, higher churn leads to lower ARPU, as people churn out to lower ARPU than they came in with. And I think our trajectory on this is continuing to be very good. So I think the signs are continuing to be positive on churn. I will just point out to maybe some, we had some concerns on fizz again during the quarter, and we found out, I'll be honest with you, we found out a bit of an odd situation where we had more than a few customers who came to fizz for, and I'm literally talking about a few hours, to be able, you know what, to get out and benefit from the new customer-only promotions that were out there by our competitors. So that's how crazy it was, to be honest. So a bit of an odd situation, an odd issue on that front. But other than that, we believe that our fundamental, our base business continues with industry low churn, and we're quite happy because we think, as I just said, that it bodes very well for the continuing RPU trajectory.

Okay, and just so that I understand, it sounds like the competitive element in the market was more about the big three pulling people from one another. And it doesn't sound like you were experiencing any of their promotions pulling any subscribers to you, but were you noticing on the gross ad side that that was, um, so if churn was stable, then, you know, while there was a lot of switching activity, like gross ads were lower and that's what resulted in the year over year decline in nets.

Well, yeah, we said it. I think Thierry Casse said it in his prepared remarks. This was a little bit of an unusual quarter, and we thought unnecessarily crazy, probably sparked by the fact that, as we said, immigration being significantly lower and organic growth being lower. It seemed to have prompted our competitors to launch into things that we thought just weren't willing to follow on because it just didn't make, as we said, the math didn't work for us. But anyway, let's see how the rest of the year goes. It seems to have calmed down for the moment, but who knows. So let's, you know, keep... Stay the course. Yeah, we're certainly going to stay the course for sure, as Kerkal just said, yeah.

I appreciate it. Thank you.

Thank you, Matthew. Your next question comes from David McFadden with ATB Coremark. Your line is now open.

Oh, great. Yeah. So a couple of questions. So just based on your comments earlier in the call, does that mean that maybe Fizz was the biggest contributor of net ads on the wireless side?

Not necessarily the biggest contributor. I mean, Fizz, as you know, is on a different – I wouldn't say trajectory, but it's on a different market or pieces of the market. So not necessarily the highest, but it just, it was more prone to, it was more, it was facing steeper, both, you know, ARPU situation and churn for some reason. But not, I think... All of our brands, especially picking up, in the case of Fizz, don't forget that it's starting to pick up very interesting volumes outside of Quebec, whereas in Quebec it keeps its really very interesting growth trajectory, which we had, you know, I think I said that last time and I'll repeat it, which is proving that our model was done right. That's the very reason why we launched Fizz, was to appeal to what we believed was going to be the next generation and the new way how people wanted to get wireless and to manage their own accounts on wireless. And I think FIS is responding to these needs and to these wants of the market. And that's why it's continuing to develop very strongly both in Quebec and outside of Quebec.

Okay. Because I thought, let's say Ontario... the focus was more freedom. Isn't that still the case? That's the primary brand that you're trying to grow in Ontario?

Yeah, well, it's both. Yeah, yeah. What we've talked about, David, is that, of course, we had to be more careful in Ontario with fizz as the overlap and the potential cannibalization appeared, you know, a little bit more acute for us at the beginning. So we just thought we needed to be a bit more careful. But I think what we are actually seeing as we're developing FIS, and it's now in more than, you know, it's in the second, if not third year right now, that we're actually seeing surprisingly low cannibalization between Freedom and FIS, which is very good news for us.

Okay. And then can you comment on... just the overall market activity so far in Q2. Just kind of wondering where net ads are going to show up this quarter, say, versus the prior year quarter.

Well, it's mid-May. So there's the half of the quarter coming in.

Yeah. Who knows, David? I mean, right now it is, as I said a bit earlier, it seems to be quite... well, in terms of promotional activity, I mean, or intensity, seems to be quietening down. To be honest, on the other side of the equation, are we really seeing increased market growth? Not really. And there are still pockets of, you know, crazy offers in the market. So, you know what? Who knows? I think it's a bit early because We're called a quarter at this point.

Okay. And then lastly, just on the stock buyback. So you're obviously active in the quarter and you've increased your NCIB up to 7 million shares. Are there any sort of parameters where you'd be more active or less active in the market?

Well, we're kind of staying the course on that one as well, David, to be honest. We believe that it makes sense for us to continue at a reasonable level, at a balanced, disciplined level. I mean, it's not as if we're buying crazy amounts of shares, as you see. We believe we're at the right level and certainly intend to continue at this point. As we've said in the past, it's something we can flex quite easily. But at this point, it makes sense for us to continue on that path.

Okay.

All right.

Thank you. Thank you, David. Your next question comes from Mayor Yagi with Scotiabank. Your line is now open.

Parfait. Merci d'avoir pris mes questions. I wanted to ask you... So you mentioned that the lower loading in the quarter was mostly due to gross loading being down year on year, not really a churn issue that your peers have had problems with. Now, if I look at your top line, obviously you're growing very fast, helped by a lot of loading that you did over the last two years. As we look forward, How should we think about your wireless revenue growth rate in a time when subscriber loading, which you've been relying on to grow, is slowing down? Do you think that we need to start to see ARPU actually improve from here to offset that lower growth in subscribers, or that it's hard to you know, expect in the current environment that we're in in Canada right now?

You know, that's a tough one to call, but before I get there, just to your first point, I just want to make sure I don't forget to address your first point. I mean, it doesn't necessarily say, I mean, we went through the same, you know, we live the same quarter as our competitors. We're not saying it was all about gross loading coming down. I mean, churn was up, And so I'm not, you know, just to make clear, I mean, it was part of both, for sure, in terms of loading and churn. But back to your question, you know, it is something that, you know, our view keeps increasing. I mean, we are definitely, I agree with your statement that we are living through right now the the higher the benefits in terms of our view of the higher loading at the right prices that we saw in the past few quarters. But I think you will agree that we haven't changed our strategy and we're continuing to grow at different volumes, maybe lower net ads, and maybe net ads continue to slope down a little bit. But if you're doing it at the right price, then nothing prevents our few. On the contrary, our few should continue to improve positively.

Let me ask it another way. You've been relying on a very fast revenue growth in mobile. In this quarter, you reported 9% revenue growth in mobility, which is really phenomenal. Yes. 8% or 7.5% of that is on subscriber growth. As a company, do you see yourself accepting that this growth might come down into the 4%, 5% range because the overall subscriber growth in Canada is slowing down and it's hard to extract yourself from that environment? As a company, do you accept that you can live with a 4% to 5% mobile telephony revenue growth, or you need to continue to post those kind of growth rates to offset the pressure that you're seeing on the cable side. That's really the question I'm trying to figure out.

You know, Pierre-Claude said it well, I think, in his remarks. What about the bottom line and the cash flow at the end of the day? And that's why we said in Q1, is it a problem for us to have gone from $52.9 to $28.8? No. To be honest, we think we made the right call because the $28.8 is at the right price, which still allows us to continue to improve our view and cash flow as we continue to lower our cost base. and increase our cash flow generation. So, you know, I don't think we're managing – I think maybe the disconnect between what you're saying is we're not managing the company according to what you're saying. I mean, we're not looking for a percentage growth to make up or to counter or to help the fact that on – a lower number we may be expecting on the wireline side. That's not how we on both. We look at each business separately to maximize profitability and ultimately cash flow on both sides and work on the cost structure on both sides independently and have our pricing strategies on both sides independently to maximize profitability We're adjusting all the time these strategies and these packages. As Pierre-Claude said, we keep innovating. We keep coming up with things that people are looking for or will be willing to pay for. We're not at all, to be honest, looking at it in terms of percentage to make up for potentially lower growth on the other side of the business. We're really... driving and being very, very granular in our pricing strategies, whether it's wireless and within wireless, depending on the brand, and also in wireline. I don't know if I'm making myself very clear.

That's very clear. Thank you for that. And maybe just a question on wholesale tariffs. Since we discussed on an open call Last time we were still waiting for the final tariffs to come out on internet wholesale. We have now the final tariffs. Can you update us on your strategy to bundle internet with wireless outside of Quebec under the current tariffs that now we know what they will be going forward?

I would say, you know, well, the first thing is that, you know, we're also looking for the other COACs. That's exactly right. And obviously, you know, we can say that, you know, we were not where we were looking to be. Does that mean that, you know, we are, confined, I would say, to not being able to bundle? The answer would be no. We're going to look at it. We will continue to do it. We will finesse, I would say, our proposal. It's something that is not completely crazy. Is it completely interesting? Not much. So it's balanced with the COAX, and something that we find pretty strange is that there are different prices depending the region where you operate. So you're in the western side, cost of using other people's network is more expensive than in the east side. So it just makes westerners in Canada not being able, you know, to enjoy the most competitive environment. And this was not really explained by the CRTC, and we're still asking ourselves why.

So as we stand right now, should we expect to see you be more active selling bundled services outside of, let's say, Ontario, Quebec, and the West? Or do you have the agreements in place to be competitive selling a bundled product outside Quebec right now.

Where you're going is a little bit too much. You will understand that we're not going to publicly announce or present our commercial strategies. I guess you'll see in the next quarters.

That's fair enough. Sorry about it. No, no. Merci beaucoup. Thank you.

Your next question comes from Stephanie Price with CIBC. Your line is now open. Hi, good afternoon.

Internet service revenue growth of 3% was strong in the quarter. It looks like it was primarily driven by pricing. Hope you can talk a little bit about the competitive Internet environment in Quebec and maybe touch on bundling your thoughts of rest of Canada Internet expansion as well.

Yeah, internet revenue growth was in good part driven by price increases. We've discussed that and we certainly own up to that. But the general competitive situation in Quebec in broadband has improved and is a lot more rational, I would say, than what we've and what we've known over the past years, you know, and I think it's clearly showing in our numbers that we, there again, we're not looking for crazy growth. We're looking for profitable growth. You know, our strategies are pretty simple. You know, we tend to use the same ones. And in the past, when Bell was crazy pricing broadband in Quebec, you will remember that we did not follow for the most part. You know, did we pay a bit of a market share price? Yeah, probably we did, and actually we did. But we reestablished the situation, and our revenue situation is way better. And, you know, as I said, partly helped for sure by price increases. But we're actually quite bullish on this. We believe that the state of the market right now is good, and our internet service revenue performance and even stability in terms of loading was positive for us this quarter. you know, pretty positive and pretty encouraging.

As you know, Stephanie, you know, Bill was our competitor there. You know, the last telco operator to invest in fiber. They did it. They invested significantly, hundreds of million dollars. So they were looking for results. If not, you know, they're Their strategy would be a complete failure. So they went and very aggressively, you know, proposing pricing and splashed over the place, you know, supposed to be better technology, but they forgot a significant thing, which is the customer service. We've been there, we've delivered, and this is tough to beat. But now I guess that after, you know, all the noise they made And we should say also our own improvement in terms of network. Were we behind? Maybe we were in certain areas, but we are just compensating now with additional investment and making sure that we'll be able to match any source of technology that our competitor is deploying. So this is also a matter of looking forward more favorably. for the future because they know that if their awards come to come and getting crazier on their pricing, they will not achieve anything. In fact, they will probably achieve a repricing feature like the one they faced with their wireless business.

Thanks for the color. Maybe I'll just ask one more follow-up. Just in the call, you mentioned a move into B2B technology services in English Canada. Just curious how you think about the pace of that rollout and if you've got the talent and the infrastructure, et cetera, in place at this point.

Well, Stephanie, you know, we're not the kind of organization which is the flavor of the month. You know, we've been looking at our competitors. We're very strong on this. So it's, I would say in Italian, you know, . So it means that, you know, going slowly but surely, and surely very long. So we're starting there. As you know, we started 20 years ago, and we're right now in a very strong competitor to other businesses, servicing operators like Dell, but Dell's not the only one. We have Rogers, and we have a Dallas in certain areas. We follow the course there also. We stay the course, and we've been doing well. We also have the IoT segment, which is of great interest also. Obviously, the pricing is completely different, as you know, but it's certainly a business of the future where we acquired expertise in terms of technology, in terms of sales, craftsmanship, and so we will continue slowly in this direction and move forward with a reasonable growth.

Thank you very much.

Pleasure, Stephanie.

Your next question comes from Jerome Dubreuil with Desjardins. Your line is now open.

Thanks for taking my questions. The first one is on strategy. I mean, we do see a very long runway of growth there, but I'm wondering if you think that Quebec Core is set strategically for a long time, or if you think they're missing blocks, or you're happy just to be, I mean, not just, but to be taking more market share and pricing going forward?

I guess they all... I feel that I repeat myself. I guess my life today has paid a course, which doesn't seem to be a bad strategy. If it's ain't broke, don't fix it. And we look forward to continue what we've been able to achieve. We'll see what the future is all about in terms of other opportunities. If we were to stay on our regular course, we would continue doing what we've been doing in the past. I don't know. I'm not going to announce that we're investing billions of dollars in an AI data center. We think that our business is is open for growth, so this is certainly what we think we should do, and we're trying to do it as best as possible.

Yeah, no, that works. Telco investors like predictability for sure. Second one, you're generating quite a bit of cash, even though it's growing, your leverage is below target. If I'm taking the 2 million additional shares that you're looking to buy back in the next three months before the program expires, at current share price, I get an annualized spending of about $480 million of buybacks annually. Is this a level we should be expecting for the next year or so if we're strategically set and we're happy with the leverage right now or maybe even more than 500 million buybacks?

But, you know, we're working for the shareholders. And we believe that the best way shareholders could be served is by balancing, you know, the usage of the free cash flow that we're generating. And, you know, it's easy to understand. Reduce debt, buy back shares, and pay dividends. There's a decent or reasonable balance between those three items. Maybe the next question you'll tell me is, what are you going to do when you're not going to have debt anymore?

There's still somewhere.

There's still somewhere to go there. Not there yet. Not there yet.

Unfortunately not.

So this is why I guess that the balance between the three components are still the course that we will follow.

Maybe a last one. You said earlier on the call I think I understood you said that Fizz is taking advantage of high competition. I'm wondering what that means exactly. Is it that people see good pricing out there, they start shopping around and ultimately choose Fizz, or is that what you meant?

Well, what I meant is what we've said before, Jerome, is to optimize the positioning of our brands, you know, and to to position as best we can, as we've done in Quebec between Videotron and Fizz. You know, the difference in Ontario and the West is that we're starting from a blank page for Fizz, so that's a huge opportunity for us and allows us to be maybe, as I said, a bit more aggressive in certain cases to make sure that we we position it versus freedom as optimally as possible. That's basically what I meant.

Mr. McCool?

Yes, CEO. I think it's our last question, operator.

Yes, your next question comes from Vince Valentini with TD Cowan. Your line is now open.

Thanks very much. The capex on building out new wireless territory such as Manitoba, where I think you've already started, so that you can wean off of the MVNO regime. Can you update us on that at all as to how much you've spent already and are you still planning to accelerate that investment over the next several quarters? And if there's any update on how long to finish off Manitoba, that would be great.

Hi, Vince. In Manitoba, it's not going to be a huge program, to be honest. And we are at the early stages. So yes, there's been some capex in Manitoba, but to be honest, it hasn't been huge yet. And we definitely intend to continue, and it's continuing as we speak, just for the very reason that you mentioned, to wean off the the MVNO as quickly as possible. It's a market, as I just said, where we believe we can do it fairly quickly by putting on a limited number of sites and being able to then be on our own. So it's progressing. It will ramp up in the next few quarters, but still early stages.

So moving the traffic to your own network from the MVNO partner is not something that's going to happen this calendar year?

A certain ease of it?

Yeah. Yeah. Yeah, absolutely. It's going to be gradual and towards the end of the year, probably.

Okay.

And also wholesale just... Yep, go ahead. No, and then going on over the next year or so.

Okay. Also on wholesale, to clarify, you resell internet... across the country now and you obviously been marketing freedom internet service outside of quebec is that not almost entirely on cable networks and taking advantage of the cable tpia rates as opposed to the more recent fiber tpia rates yes absolutely yep as we do this also in quebec

territory on Quebec footprint where we do not operate as an incumbent. You can think of Cogéco. Cogéco also uses our MVNO program to use eventually our mobile network. So it's true on every piece of the footprint in the Canadian landscape.

Okay. One comment. I mean, the obvious reason is because rates on COACs are lower, as I believe Deca mentioned earlier. On this stage. On this stage, and we don't know. The final price is not there yet. Yeah, we haven't had a price yet. But in our view, it does not make sense that COACs, should be lower. So let's wait and see where prices end up being. But certainly, and we've said this publicly many times, in our view, it should be the same price no matter what technology or platform or whatever you call it, whether it's cable or FDTH. But let's see where that comes out before being able to see if it's an opportunity or a threat or both.

Last sub-question on that, then, Hugh. Do you guys have any visibility as to when the CRTC may set some new cable TPIA rates? Oh, that's the billion dollar question.

You may have it all.

Nothing coming imminently as far as you're aware. Is that fair?

We can't answer because we don't know. We do not have any signals. It comes when it comes or it stays when it stays and We're still waiting, I guess, for a decision that we've been asking two years ago. We've been used with that kind of regime. Fair enough. Thank you very much. Thank you very much, Vince. To all of you, we'd like to thank you for attending this conference call, and we'll be there next quarter. Thank you very much, and have a good afternoon.

Ladies and gentlemen, this concludes the Cavicor, Inc. financial results for the first quarter 2026 conference call. Thank you for your participation and have a nice day.