Quebecor reveals little on plans for $2 billion available for networks, buybacks
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TORONTO — Quebecor Inc. is in a strong financial position and prepared to invest in its wireless and cable operations, CEO Pierre Karl Peladeau said Wednesday as the company reported its latest fourth-quarter results.
"Our excellent financial position will enable us to continue investing," stated Peladeau, who returned to Quebecor early last year after a stint in provincial politics.
The company has more than $2 billion in available liquidity that it can spend on its wired and wireless networks under its Videotron division, in expanded cable offerings, and share buybacks, he said.
About $864.9 million of that liquidity is in cash or cash-equivalents and the rest is borrowing capacity.
Peladeau told analysts that Quebecor has "the flexibility required" to execute its plans but provided few details about where the funds will be allocated.
During the call, Peladeau said Quebecor would review of its dividend policy after the repurchase of the minority share of Quebecor Media Inc. that's currently owned by the Caisse de depot pension fund, but he didn't provide timing.
Quebecor is also expected to invest in its Videotron networks and the introduction of a new generation of home cable technology based on Comcast's X1 platform, which is being rolled out by most of Canada's major cable services to compete with their telephone-based market rivals.
"We want to be to the market as fast as possible," said Manon Brouillette, Videotron's president and CEO.
"I will give you more information close to the launch because we really want to keep our strategy as safe as possible."
As for fifth-generation wireless technology, which Bell, Telus and Rogers have been trying out in advance of wider availability before 2020, Brouillette said: "Every technology we roll out needs to be 5G-ready, as much as we can, so we are very active in that area."
In the media division, Peleadeau noted that Quebecor is appealing a January regulatory decision on the fees it receives from Bell Canada for distributing the TVA Sports specialty channel to Bell's home television services.
Quebecor's media division was one of the few weak spots in results issued Wednesday.
"Revenues were a bit lighter than expected due to media, but solid with respect to Videotron (telecommunications)," Canaccord Genuity analyst Aravinda Galappatthige wrote in a research note.
Quebecor's overall profit attributable to shareholders was $65.6 million or 27 cents per share for the quarter ended Dec. 31. That was down from $123.3 million or 50 cents per share a year earlier when the Montreal-based company recorded a number of favourable non-operating items.
Adjusted income from continuing operating activities for the quarter totalled $78.7 million or 33 cents per share in the quarter, down from $84.7 million or 35 cents per share a year earlier. Analysts on average had expected an adjusted profit of 37 cents per share.
Fourth-quarter revenue totalled $1.06 billion, up from $1.05 billion — slightly below a consensus estimate of $1.08 billion, according to data from Thomson Reuters.
Desjardins Capital Markets analyst Maher Yaghi also noted the weakness in media revenue, but added that the division's earnings were in line with his estimates after adjusting for changes in financial reporting.
As for the Videotron wireless business, Yaghi wrote the 33,700 net additions reported Wednesday were above the consensus estimate of 28,500.
"QBR's continued strength in wireless is in line with the general strength in the Canadian wireless market in 4Q17, but we are pleased to see this excellent performance after BCE reported very strong net additions in the same quarter," Yaghi wrote.
Analyst Drew McReynolds of RBC Dominion Securities Inc. wrote that wireless revenue was up 18 per cent from last year and internet was up 5.9 per cent. That was partly offset by a 1.1 per cent decline in Videotron's cable revenue and a 7.6 per cent drop in home-phone revenue, he wrote.
For the full year, Quebecor earned a profit attributable to shareholders of $369.7 million or $1.53 per share in 2017, up from $194.7 million or 80 cents per share in 2016. Revenue totalled $4.12 billion, up from $4.02 billion.
The year included significant cash inflows and gains from the sale of wireless spectrum licences outside of Quebec — to Shaw Communications Inc in Alberta and Rogers Communications Inc. in the Toronto area.
Companies in this story: (TSX:QBR.B)