Quebecor Inc. (OTCPK:QBCRF) Q1 2023 Earnings Conference Call May 11, 2023 2:00 PM ET
Company Participants
Hugues Simard – Chief Financial Officer
Pierre Karl Péladeau – President and Chief Executive Officer
Conference Call Participants
Maher Yaghi – Scotiabank
Jerome Dubreuil – Desjardins
Drew McReynolds – RBC
Aravinda Galappatthige – Canaccord Genuity
David McFadgen – Cormark Securities
Matthew Griffiths – Bank of America
Vince Valentini – TD
Operator
Good day, everyone, and thank you for standing by. Welcome to the Quebecor Inc.’s Financial Results for the First Quarter 2023 Conference Call.
I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor Inc. Please go ahead.
Hugues Simard
Good afternoon, everyone. Ladies and gentlemen, welcome to this Quebecor’s 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 2023 is Pierre Karl Peladeau, our President and Chief Executive Officer.
Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast. Access details are available on Quebecor’s website at www.quebecor.com, and the recording will be available until August 11. I also want to inform you that certain statements as usual, made on this call today may be considered forward-looking, and we would refer you to the risk factors outlined in today’s press release and reports filed by the corporation with regulatory authorities.
Let me now turn the floor to Pierre Karl.
Pierre Karl Péladeau
Merci, Hughes and good afternoon, everyone. So, first and foremost, I should say that we’re very happy to have finally closed the acquisition of Freedom Mobile on April 3. After months of negotiation, representations at various levels of judicial, governmental, regulatory authorities and other twists and turns, we’re now already hard at work to offer all Canadians for the first time ever, the benefits of our competitive services, superior client experience and lower prices. It is an important milestone for both Quebecor and Freedom. And I would say a natural fit between two companies with a strong track record at disrupting their respective market and successfully competing against well-entrenched incumbents through an acute knowledge of our markets, agile and responsive commercial strategies as well as unparalleled client care.
With our combined experience, expertise and assets, we have everything we need to drive long-term competition as a strong fourth national wireless carrier and we will. As you know, we have accepted the conditions stipulated by the Minister and we intend to deliver better pricing for Canadians swiftly. These conditions are aligned with our business philosophy, which has proven highly successful in Quebec, where we built a significant market share in a very short time-span.
As I said this morning to our shareholders, things are about to change for the better for Canadians. And I should say, stay tuned. That being said, it is important to reinforce that for our competition to truly tried in Canada, fair and reasonable roaming and MVNO rates must be established in line with international standards as well as the government and the CRTC objectives. It is imperative that the big three sign MVNO agreements with regional players and stop perpetually using delaying tactics as has been their modus operandi over the years as we continue to experiment with Bell and Telus these days.
On the bright side, the CRTC ordered on Tuesday several changes to be made to the proposed tariff stages of the national players and has set a reasonable time line for the implementation of the mandated MVNO operator regime. We are optimistic as we sincerely believe that a new pro-competition mindset is firmly in place at the out of the CRTC and even more so at ISED. In addition, it is essential that incumbent carriers be required to offer TPI services through aggregated FTTP facilities for us to become a truly fourth national player in wireless and wireline services for the rest of Canada.
The CRTC must implement a reasonable test for FTTP rates to prevent abusive situation where underlying providers offer their services at prices significantly below approved wholesale rates. While on the regulatory front, we welcome the addition of the Bill C-11, the step in the right direction. Canadian private broadcasters companies have been weakened by an unfair competitive and regulatory environment for too long. We now encourage the government to quickly give direction to the CRTC to grant local private companies the flexibility necessary to continue to evolve in this new regulatory context and thus ensure their future.
To quickly remedy the precarious situation of private television, it is imperative to immediately withdraw advertising from all CBC/Radio Canada platform to put an end to unfair competition and rates for ratings. This situation should not be true for CBC as a whole with less than 8% market share. But certainly, the case for Radio-Canada, which competes directly and actively with TVA and reaches a very significant 21% market share, contrary to the CBC, which is hardly moving any kind of needles.
Finally, we need a swift adoption of Bill C-18 that would regulate negotiation between web giants and local news outlets to ensure fair and equitable compensation for the use of their content. The creation of our distribution platform is necessary in view of the web giant market dominance. As we all know, these platforms use the content produced by Canadian news organizations to generate a significant portion of the interaction on their network and should be required to pay a fair price for it.
Before turning to our operational results, I’m proud to report that Quebecor on a consolidated basis has generated $346 million in cash flow from operations in the first quarter 2023, an increase of nearly 10% over the first quarter of 2022 with Videotron also improving its cash flow from operations by 10% to $380 million and its EBITDA by 3% in the quarter, while maintaining the best margins in the industry.
As I have said before, I believe that cash flow from operation is by far, the most important compelling benchmark of a company’s true performance compared to its competitors. As you know well, it is easy to capitalize operational expenses to improve the EBITDA line. But at the end of the day, what really matters is how much free cash you generate.
I will now review our operational results, starting with our Telecom segment. In the first quarter, ARPU increased in all our services. And through the price optimization, improved brand positioning and churn management with continued mitigation of customer decline in traditional services, we returned to growth in our wireline services gross margin. In a market characterized by ongoing cord-shaving and cord-cutting, we managed to slow down this trend in both television and wireline telephony for a fifth consecutive quarter by optimizing the positioning of our brands and the pricing of our illico and Helix platforms, thereby improving ARPU. This quarter, we reduced television and wireline telephony declines by 15% and 5%, respectively.
In broadband, we recorded 9,000 net adds this quarter, excluding third-party retailers for a year-over-year growth of 75,000, which includes the acquisition of 37,000 VMedia customers in Q3 2022. Internet ARPU improved $1.06 or 2% over the last year, again, resulting from pricing optimization and brand positioning, allowing us to overcome the diluted effect of FIDs and lower client mix.
In the Wireless segment, we recorded 26,000 net adds during the quarter, 2,000 or 6.9% more than last year for a year-over-year growth of 110,000 new lines, capturing a 25% combined share of gross adds in Quebec with our two brands Videotron and Fizz according to a Leger survey. Churn remained stable and our wireless EBITDA increased by 13% in the quarter.
Consolidated wireless ARPU for the quarter improved by $0.21 or 0.5% compared to the same quarter last year due to higher plan mix, lower discounts and higher roaming and data usage revenues offsetting the diminishing diluted effect of sales.
Lastly, I am proud to report that Videotron was rated again as it has been 17th time since 2006, Quebec’s most respected telecommunication services provider in Quebec, according to Leger 2023 representation survey. In addition, Fizz was rated first for online experience in Canada, telecommunication industry for fourth consecutive year according to the Leger Digital WOW study published in 2023. Whether traditional or digital, Videotron simply deliver the best client experience and offers the product and services that our client wants at the most affordable prices, performance and commitment we’re now expanding across Canada.
Turning to our Media segment. Despite challenging advertising market conditions, especially in television, we have continued to invest significantly in the production of unique, differentiated and highly popular content to ensure continued leading ratings and maintain our position at Quebec undisputed destination for broadcasting information and entertainment. Our strategy was successful. As [indiscernible] still dominated market, increasing its consolidated market share by 0.3 part to 40.9% in the quarter compared to HASU [ph] Canada 21.2% and Noovo Bell Media to 20.2%, respective market shares. Also broadcasted four out of the five most watched TV shows in Quebec, including their new reality show something with Z, which rose to first place with an average audience of nearly 1.7 million viewers and Les beaux, which attracted nearly 1.6 million viewers.
Finally, our Sports and Entertainment division had a very productive quarter, organizing more than 200 cultural and sporting events throughout the province of Quebec. Igloofest Quebec, the first of in Quebec City of our blockbuster Piknic Électronik Igloofest franchise was a huge success with crowd favorite talents such as [indiscernible] and a fully booked venue every night at the festival. The Quebec Alpha [ph] also drawing record growth as they continue to perform well in the playoff of Quebec Major Junior Hockey League.
I will now let Hugues to review our detailed financial results and come back to you for a question period. Hugues?
Hugues Simard
Merci, Pierre Karl. So, turning to our financial results. Our Telecom segment started the year on a strong note with $380 million in cash flow from operations, a solid 10% increase compared to the same quarter last year. Our cash flow from operations margin stood at 41%, improving 3% compared to 38% last year. EBITDA growth was 3% and EBITDA margin grew to 51%.
Revenues reached $925 million, a 2% increase compared to the same quarter last year, the best performance in nearly two years, mostly due to higher wireless and Internet service revenues and wireless equipment sales, partially offset by lower Helix equipment sales resulting from our pricing strategies to improve margins.
On the OpEx side, our cost containment initiatives are continuing to pay off and translating into our increasing and industry-leading EBITDA margin. Telecom CapEx spending, including the acquisition of spectrum licenses was down $21 million as compared to the same quarter last year. This favorable variance is mainly due to the timing effect of the sourcing of materials as we continue to focus on our strategic priorities and remain committed to our efficient spending path, while increasing our investment levels on key initiatives such as LTE Advanced, 5G, network extensions and geographic expansion.
In our Media segment now, revenues were down 6% in the quarter as compared to last year, driven by Mel’s lower film production and audiovisual services activity. In broadcasting, our investments in a wealth of new shows, original productions and exclusive content paid off as evidenced by a 2% revenue increase in the quarter as compared to last year. As we announced in February, we initiated a number of restructuring and cost-saving measures, both at [indiscernible] and in other media units to address the challenging advertising revenue market. The positive financial impact of these initiatives will increasingly be felt over the next quarters.
On a consolidated basis, Quebecor’s revenues reached $1.12 billion for the first quarter, up 2.5% from last year. Our adjusted cash flows from operations increased by $30 million in the quarter or 10% to $348 million, mainly due to lower CapEx spend. Quebecor’s EBITDA was up 0.2% to $443 million in the quarter, driven by the $14 million or 2% increase to $474 million in EBITDA from our Telecom segment but counterbalanced by [indiscernible] $14 million decline in EBITDA due to our increased investments in content, which helped us, as Pierre Karl explained, continue to grow our market share but did not unfortunately translate into sufficient additional revenues in a difficult and more competitive advertising market.
Quebecor reported a net income attributable to shareholders of $121 million in the quarter or $0.52 per share compared to a net income of $121 million or $0.51 per share last year. Adjusted income from continuing operations, excluding unusual items or gains or losses on valuation of financial instruments, came in at $136 million or $0.59 per share compared to an adjusted income of $129 million or $0.54 per share last year. As of the end of the quarter, our net debt-to-EBITDA ratio was 3.13 times compared to 3.18 times reported at the end of the first quarter of last year. And it’s important to underline still and continuing to be better than Bell’s 3.44 times, Rogers 2.50 times and Telus 3.85 times. Pro forma, the acquisition of Freedom, our ratio will be 3.8 times, rather 3.80 times.
Our balance sheet remains very strong with available liquidity of $1.5 billion at the end of the first quarter following the redemption at maturity of Quebecor Media’s 5.75% senior notes and the increase of Videotron secured revolving credit facility from $1.5 billion to $2 billion in January. Pro forma the Freedom acquisition and the new $2.1 billion secured term credit facility consisting of three tranches of equal size maturing over four years, our available liquidities of $1.5 million – billion rather, are more than sufficient to build our – to fulfill our commitments and fuel our development plans.
We thank you for your attention, and we’ll now open the lines for your questions.
Question-and-Answer Session
Operator
All right. Our first question comes from Maher Yaghi from Scotiabank. Please go ahead.
Maher Yaghi
Yes, thank you, and thank you for taking my question. I wanted to focus on your bundling strategy in the Freedom areas that you are starting to look at. This week, we saw a significant reduction in prices on bundled services in Ontario. Both Bell and Rogers have brought down their prices quite a bit. So I mean, right now, Rogers is not far away selling their 1.5 gig price Internet from the $49 tariff that it has to sell on an aggregated wholesale basis. So obviously, regular ISP will have a hard time to compete at these levels, at the retail levels that we see right now in the marketplace. So, my question is, did the deal that you struck with Rogers give you enough margin here to continue to operate and sell profitably a bundled product at 1.5 gig given the new lower retail prices that you see in the marketplace in Ontario?
Pierre Karl Péladeau
Maher, so I’ll start and probably Hugues will add a few things. Well, first of all, I would like to refer a little bit about what I said in my intervention regarding what the CRTC said earlier this week on Tuesday. And I don’t want to interpret this as a completely without any question thing, but I read between the lines that the message is loud and clear from the leadership of the CRTC. You will remember also when the Minister Champagne announced the approval of the transaction in his press conference that he was going to push and reinforce – well, maybe not reinforce because probably it was not there big time, but certainly push forward for more competition.
And what the CRTC said, what the leadership said is that they know about all those tactics being used by the incumbents. They know that the roaming prices in Canada doesn’t make sense. And therefore, they will review this quickly other than they also move forward with a schedule to make the incumbent their network opening for MVNO operators. So, as you can imagine, we intend to start as an MVNO operator where our network is not actually built. We have obligation that we will build this network, but you know that we have seven years to do so.
By the time that also we will implement this is also being regulated by the CRTC, the seamless and of, so our network will be of the quality of any other operator in Canada. And we expect roaming prices, we expect MVNO prices, we expect certainly also additional maybe conditions for the TPIA, certainly on the FTTH base. If you’re familiar with the prices and I think that you refer to some pricing in terms of Bell selling price for their gig, the pricing regulated for the FTTP by Bell is 122 to have access. And for the last, I would say, probably four months or five months, even more Bell have been selling their gig at $60. So, either on the 122 price is highly inflated or either they’re selling their gig at a loss. So, pick what you want. We think we will pick that the pricing is inflated. And therefore, we think also that the CRTC and ISED will be able to find this at the same conclusion. So, then this network also will be available for TPIA as we are. And as you also know that Bell, Telus and Rogers not as more as Rogers and Bell, but they’re all TPIA. So, there’s a new game in town that will come.
I’ll finish before moving to Hugues, is the market competitive? Yes, it is. We expect that the market will be competitive? For sure. This is how we’ve been able to gain market share in Quebec, and we don’t expect that it will be different in the other regions in Canada, where we’re now operating with Freedom. And overall, with roaming prices that will change in the near future with arbitration taking place at the MVNO process being launched by the CRTC.
Hugues Simard
And maybe just to add a little bit on your comment on bundled prices, Maher. As [indiscernible] said, I was going to say that’s how I was going to start my answer. I mean it’s not as if this is a surprise that both the wireless and the bundled prices are coming down. My first comment would be, we’ve been – we’ve been at this for many, many years in Quebec. And I think we’ve demonstrated that we can successfully and profitably compete against that.
And in the rest of Canada, and that was one of the reasons that we negotiated a number of specific agreements with Rogers to ensure that we can make the margin that is necessary as these prices come down and that we are in a position to bundle that we are in a position to lower our back-end expenses, whether it’s transport, backhaul or whatever and to be in a position to be aggressive on bundled and unbundled prices. So, this is not – this is not unforeseen and this is not something we’re not used to. And I’d say that we certainly plan this and to make sure that we were able to respond to the situation and just watch us go. And I think the future will tell if we’re right about this, but we’re pretty confident.
Pierre Karl Péladeau
And I will just add that Maher that we all did this despite the fact that we were paying roaming prices that was completely out of what the market is all about elsewhere than in Canada, being known the country where the roaming prices are the highest or if it’s not the highest, one of the most higher in the world.
Maher Yaghi
But just want to summarize it quickly. Under the agreement that you have with Rogers or if you don’t want to get into the details, it’s okay. But can you sell Internet at 1.5 gigabyte in Ontario at $50 in a bundle and still make money. That’s really what I’m trying to get to because that’s the price that Dell is selling their 1.5 gig in Ontario adds right now. Can you make money at $50 for 1.5 gig in a bundle?
Pierre Karl Péladeau
I will answer very quickly by no. Because, as I said to you, the price to have access to the FTTH is $122. So, you can’t sell this to $60. This is what we experienced in Quebec for the last five months or six months.
Maher Yaghi
Okay. Thank you.
Operator
All right. Next question comes from Jerome Dubreuil from Desjardins. Please go ahead.
Jerome Dubreuil
Thanks for taking my questions. Karl, you talked about the importance of generating free cash flow in your prepared remarks. Typically, you’re open to sharing your CapEx plans for your business in Quebec. Would you also be ready to share what your CapEx plans in dollars would be for the Freedom initiative?
Hugues Simard
Yes. I mean we’ve – I think one thing we can say it’s – I mean, the number that we would feel probably comfortable with is probably going to be over the next few years to be in the neighborhood of $200 million CapEx as guidance for English Canada.
Jerome Dubreuil
Okay. And that would include possibly launching a 5G network in the early months, I’m guessing?
Hugues Simard
That includes everything, Jerome. This is our CapEx guidance forward. So I mean 5G, don’t forget I mean, or maybe you don’t know, but one thing that’s important to know is that Shaw and Freedom had started the investments in 5G with certain areas quite ready actually to be turned on. So, there will be further investments in – not only in 5G, but in the network as it’s – as we continue to make it better. But all of the above is included in the number I gave.
Jerome Dubreuil
Okay, great. And then second question is on the Internet loading. We look at the numbers and it looks like an improvement. It’s been a while since we’ve seen the net adds actually improving year-on-year. However, wholesale excluded right now, there’s these regional deployments. What’s really the trend like – the underlying trend in terms of Internet net adds? Has the competition stabilized a bit in Quebec?
Hugues Simard
Just on a few points on it. Yes, now we are reporting only the retail Internet numbers like all of our competitors, by the way. I mean, it is due to – first of all, as you well know, our competitors mostly, especially Bell and Telus, have invested significant, very, very large sums of money to make acquisitions. They’re obviously trying to migrate as quickly as they can on their own network. So that creates, obviously, a wholesale downward trend in terms of RGUs. So, we’ve excluded that.
And so – but even if you look at just the retail in and of itself, that’s a – it’s a huge improvement over last – over the same quarter last year. So, we believe that there’s – on the Internet side, our response to Bell has been quite successful. And we will continue in terms of our market share of adds on the Internet front, we remain still – of gross adds, we remain still higher than Bell. So I mean, this is good news for us.
Jerome Dubreuil
Thank you.
Operator
All right. Next question comes from Drew McReynolds from RBC. Please go ahead.
Drew McReynolds
Yes, thanks very much and good afternoon. Yes. First Pierre Karl, congrats on closing the transaction and expanding outside of Quebec. I know it’s been almost a lifelong dream, so that’s great. Two for me. One is just Hugues, just wanted to clarify the $200 million comment. So, when you acquire Freedom were to assume annual CapEx of $200 million for now for Freedom and that should cover off essentially everything excluding spectrum. Is that the right interpretation?
Hugues Simard
Yes.
Drew McReynolds
Okay. And on the core…
Hugues Simard
It’s not going to be – no, no, we’ll wait a minute for this year, yes, yes. There won’t be any spectrum. So no, no, that’s excluding spectrum, sorry.
Drew McReynolds
Okay, no I understood. And on the Videotron side, so just the core business in Quebec, I think your last kind of updated CapEx outlook was for stability year-over-year relative to about $450 million in CapEx last year. Does that still stand? Obviously, you have some clarity on other things inside Quebec, whether it was the relationship with Rogers or kind of 5G continuing to be deployed. Any change to that previous type of outlook?
Hugues Simard
No, we’re still on track for that.
Drew McReynolds
Okay. And last one then for me. On the Freedom mobile side, in terms of kind of integrating the asset into the broader Quebecor, have you kind of provided any road map there in terms of the extent to which the asset actually gets integrated, maybe some synergies that can be realized along the way? Anything that you can give us would be helpful. Thank you.
Pierre Karl Péladeau
Yes, Drew obviously, you can easily imagine that we were considering in our due diligence, the long time frame that we wait until we’ve been able to close the transaction. So, the different elements where we think that we will be able to improve our results and where we’re going to pick our savings in terms of those synergies that we were considering. So, it was “easy for us”. They want to implement them. And I guess that probably the same for Rogers regarding Shaw because they even wait even longer than we were. So those elements have been lined up and we’ve been working on it and that will be available even – it’s even there for a significant portion of it and it will be continued to be implemented with the recent months to come.
Drew McReynolds
Okay. Thank you.
Operator
All right. Next question comes from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.
Aravinda Galappatthige
Good afternoon. Thanks for taking my question. Two from me. First of all, just to go back to the cable business, in addition to, obviously, sort of the stability in the subs, the core cable margins look to be stabilizing, particularly if we make, I guess, a small adjustment for VMedia. Can you perhaps talk to sort of the outlook there? I mean based on the wireless EBITDA comment that you made, it sounds like cable EBITDA is almost stable. Any commentary around sustainability there and incremental tailwinds from your cost reduction efforts going forward?
And then secondly, is there an update that – or some sort of color you can provide on sort of your executive team as you sort of look to English Canada and your plans there. Where do you stand in that process? Thank you.
Pierre Karl Péladeau
Okay. Well, on the cable side, as we have two platforms. We have the new one, Helix, which is Infinity – Xfinity Comcast platform and our legacy platform. Our legacy customers are of a certain market segment. And so what we’re doing is to make sure that we will continue to serve them with the product they want. The digital platform under Xfinity and Helix it is obviously of greater quality, but not all ways what certain segment of customers will ask or will require. So, we need to be clever and smart, I would say, marketing-wise to make sure that we will do the proper offer at the proper segment without disrupting our legacy base, which are happy with the customer – the product that we’re servicing.
And cable is not only historical cable as we also provide video‑on‑demand and many other features that makes a lot of sense for customers since also, as we’ve been valuing-added this service with strong content with [indiscernible] and strong content with our media platform that is able to bring what our customer base is looking for. So, I think that we – to answer the question, there’s a balance that is something that we work with touch to make sure that we will keep as long as possible our legacy, which provides a stable flow of return and making sure that our cable business is also digitally educated “to make sure that it will fit”, especially with the bundle on the Internet, what are the desires of a more sophisticated segment of customers. So, this is how we try to manage the balance. And as of today, we can say that we are happy with the results.
On the management side, I would say, and it’s going very well. You know why, because people that work at Freedom have been working for a lot of them. And the wireless business – and what, well, we’re also coming from the wireless business. So, we talk the same language. We have the same expertise. We work with the same suppliers. We know where we can improve our results. We know, what are the challenges that our industry is facing. So, all this makes people talking together much easier than anything else.
You will remember at certain point that maybe Freedom would be considered to be sold to whatever, hedge fund or another telecom company, so I think this is the best outcome for Freedom employees to be part of a larger platform and they understand this. They understand that there’s an interesting future. There’s an interesting growth future for them and they will have the ability to participate and being part of this success. So, every Tuesday from my perspective, unfortunately, not this week because I had another annual meeting for [indiscernible]. But I go there and we make our agenda lighting up and work on the things that we know that will improve our future.
Aravinda Galappatthige
Thank you very much. I’ll pass the line.
Operator
All right. Next question comes from David McFadgen from Cormark Securities. Please go ahead.
David McFadgen
Okay. Thank you. A couple of questions. Did you disclose your market share on the gross adds, wireless gross adds for Quebec? Maybe I missed it.
Hugues Simard
Yes, 25%.
David McFadgen
25%, sorry about that.
Hugues Simard
With the two brands as usual, right? Yes.
David McFadgen
Yes. So, a question for Pierre Karl. When you look at the three provinces that Freedom operates in B.C., Alberta, Ontario, is there one of those that gets you more excited than the other two? And if so, why? And then secondly, when you look at the Freedom wireless network, are there certain areas where you think there’s more of an urgency for investment to get it up to speed relative to the rest of the network? Thanks.
Pierre Karl Péladeau
David, I love all of them equally like my kids.
Hugues Simard
You make me cough.
Pierre Karl Péladeau
And the second question is interesting, David. I would say that certainly, obviously, Freedom being coming from win and win being investing in Ontario more than elsewhere either in the Toronto and GTA area, I guess that, obviously, building a network there will not going to be as large as if we were to compare to Alberta and B.C. This being said, and I’d like to refer again what I said earlier regarding the seamless hand of then we will build and we will enlarge the wireless footprint, but we have seven years to do so. So, we have plenty of time to make sure that we will coordinate our investments with what we consider being the biggest or the most interesting returns. So, I’m not saying that we have the opportunity of time. But in the meantime, we also added. So, we’re going to pick where it’s worth more to invest and – but we will certainly do it on the western side as it was done also in Ontario for the last few years before.
David McFadgen
Okay, all right. Thank you.
Operator
All right. Our next question comes from Matthew Griffiths from Bank of America. Please go ahead.
Matthew Griffiths
Hi, good afternoon. Thanks for taking the question. Pierre Karl, I think this morning, you were mentioning how you’re in the process of working on your marketing strategies and more will come in the coming months. And so, I don’t – I’m not really asking about the details, but if you could give some sense about what it is, like what the work streams are that you’re focusing on? Are you preparing integrating systems that will be needed for a launch? Is it – are you aiming for the back-to-school time frame, the kind of Christmas holiday time frame? Are you working on a rebrand of the Freedom brand? Are you working on Fizz being brought into the Ontario and Alberta and B.C.? Just the context about what it is that the marketing strategy is working towards in broad strokes.
And separately, so obviously, you have these agreements with Rogers that help enable you to be more competitive and more profitable. On the wireless side, we’ve seen Freedom offer more data in the outer footprint areas. I was just wondering, is this the kind of end state about what you think is needed to make those packages competitive against the incumbents? Or is that a work-in-progress and more is going to come on that front? Thanks.
Pierre Karl Péladeau
Thank you, Matthew. You said that you will understand that I’m not going to be able to give the details. And then you continue with the lineup of certain things that we can do. So, I will say, and I will answer that we – certainly, we think that there’s a lot of things to do. And we will not reinvent the wheel. There are certain things that had been done previously and shows it works. Maybe what we can say is – from our perspective, that probably we have more alternatives than what we would have five or 10 years ago, given that the landscape is larger and the footprint also. So, that would – I know that it will be certainly not what you were looking for as an answer, but in the meantime, I guess, that you will understand, I can’t say too much. So, here we are.
On the wireless, would you repeat, I’m not sure that I have completely your question, Matt, which was, I guess, the last portion of the…
Matthew Griffiths
Yes, I can kind of reiterate it more briefly. One of the challenges with the Freedom Wireless offering was their out of footprint data allotments were just massively smaller than what you would get when you were roaming on the Freedom – when you were using your device on the Freedom network. And those very small allotments of data are slightly larger today post the transaction. So presumably, that’s an element to make those plans more competitive. Presumably, your agreements with Rogers help you to do that in a profitable way. And I was wondering if, as they stand today, if you believe that this amount of data when you’re off of the Freedom network is sufficient to make that a compelling offer for subscribers? Or do you think it’s still a pain point?
Pierre Karl Péladeau
Yes. Okay good. I have it. Well, it’s true, Matthew that data is certainly a portion of growth, which is significant. In fact, I guess, that data would certainly, if not already surpassed voice. So then, therefore, we’re obviously quite – we’re bringing the proper attention for this purpose. I would say that two things that will give you an indication of where we’re going. And again, it’s the roaming prices, yes, it’s true that data is certainly of importance.
And yes, it’s true that it depends on roaming where we are not on our footprint. Certainly, we will continue to grow the footprint of the wireless network of Freedom, but we will also use data on roaming basis, which, again, as I previously mentioned, we consider going south other than the CRTC and ISED intervening in a significant portion of what cost is all about in the wireless business. Seamless, not completely on data, but seamless end of is also something that will bring higher quality and then therefore makes our product equivalent to the incomes. That would be my answer, Matthew.
Matthew Griffiths
Okay. And if I could just have a follow-up, just – and I appreciate that you’re sensitive to giving away plans. But are you finding that the delays that the review of the transaction went through? Is that going to hurt you competitively as you enter the busier periods of the year in the back half? Or do you feel like you’re planning for the integration and all of the marketing work you have to do is sufficiently advance that you will not – Freedom will not once again be somewhat handicapped during those very busy selling seasons like back-to-school and holidays.
Pierre Karl Péladeau
Well, I would say yes and no. Yes, we would be happier if the transaction had closed previously. And no, because we have the proper tools to get jobs done on the advertising side. Obviously, we’re in this business. So, we are familiar with the issue are all about. We would not be surprised to see a replication of what the incumbent did at the last special events like Black Friday and holiday seasons. In fact, they’ve been repeating this all the time. Will this will be more aggressive this time? This we don’t know. But again, we’re not going to be surprised of anything that goes aggressive. So, we have access to the phone. We have access to accessories.
Maybe the thing that we would like to improve in the near future and as you probably know, that the marketing vehicle or the sales channels being used by Freedom was, I would say, almost exclusively retail. What we are expecting to do is to enlarge those sales channels to have access a transactional website, who have call centers that also will make – will pick and activate subscriptions and other tools that we have been using quite successfully in Quebec and for which we have experience and expertise and therefore, being in use for having a larger capacity of getting customers where they are and when they want.
Matthew Griffiths
Thank you very much.
Operator
All right. Last question comes from Vince Valentini from TD. Please go ahead Vince.
Vince Valentini
Thanks very much. First, can I just clarify a couple of things on your current Quebec business and then maybe a couple of questions on Freedom. The wireless EBITDA growth at 13%, that mathematically would mean there was a very small decline in the Wireline segment EBITDA. Is that correct Hugues?
Hugues Simard
Well, it was flat, actually. So, it may be rounding a little bit, but wireline was flat basically and yes, and wireless was around 13%, yes.
Vince Valentini
Fair enough. And the second one is TV or video revenue, it was up year-over-year and we haven’t seen video revenue up for a heck of a long time. And maybe that’s just VMedia, but even in the fourth quarter, you owned the VMedia for the whole quarter and video revenue was still down year-over-year. Is there something going on there in video with sort of temporary pay TV purchases or rate increases or something? Or is it just VMedia?
Hugues Simard
No, no. It’s not all – it’s not – VMedia is actually, a small – well, it’s a smaller portion. It’s part of it, but it’s a smaller portion of it. It’s basically rate increases and the fact that we’ve been successful at slowing down the rate of cut-off, so when we compare it to last year. So, that’s just anyway. So, it’s – but it’s – I have to be honest, mostly it’s rate increase and more stability. But – and a little bit of it is VMedia. But there’s nothing – there’s no one-time or anything specific going on here, no.
Vince Valentini
So, the rate increase benefit should still be there for another couple of quarters, I assume. So, unless you lose the whole subscribers, you could see positive a little bit.
Hugues Simard
Yes. Actually, it wasn’t even there for the whole first quarter. So, it will be a bit more of a pickup in Q3 and then the rest of the year, yes.
Vince Valentini
And let me just try to ask on Freedom, a couple of different things. When you got into wireless in the first place in Quebec, like 15 years ago, you gave us some long-term targets. You wanted to get to 20% market share. You’ve since exceeded that and then raised that target, which was great. But you were willing to give us something. Are you willing to give anything on Freedom of whether it’s number of subscribers or percentage market share? Any sort of longer-term aspirations?
Pierre Karl Péladeau
I guess it, Vince, you would like to have something. But I would say this was all don’t go well, not completely, but I guess a little bit different. Other management, I guess, it’s too early for us to have a full assessment of a complete answer. That doesn’t mean that we’re going to give one next quarter or in the quarters to come. But I guess that we are certainly looking more on delivering the goods than giving projections or guidance. Well, us and we – maybe we’re a little bit boring because of this. But yes, we are where we are. We are what we are. Yes, sorry about this, Vince.
Vince Valentini
I don’t think anybody calls you boring Pierre Karl, just to be clear.
Pierre Karl Péladeau
Yes. I’m calling myself boring, not being able to give guidance. Good one.
Vince Valentini
Maybe I wanted to just try to clarify one last thing before we end the call. The 5G was asked about before. I just – you made some commitments, I think to ISED that there would be a rollout in a certain time frame. Is that still the case that at least some of the Freedom network will be upgraded to 5G and customers be able to start using it within three months or so of the transaction closing?
Pierre Karl Péladeau
Absolutely, Vince.
Vince Valentini
Great. Thanks very much.
Pierre Karl Péladeau
If we were not to deliver, we would not say it. Good. And I think along Vince, it was the last question. So, to all of you, thank you very much attending this conference call and let’s hope that we’re going to be able to talk to each other at next quarter.
Operator
This concludes the Quebecor Inc.’s financial results for the 2023 first quarter conference call. Thank you for your participation and have a nice day.
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