Péladeau likes what he sees at Quebecor
Stock up after solid Q4 results
Pierre Karl Péladeau has no plans to shake up Quebecor Inc.’s strategy now that he’s back at the helm, he told analysts after the communications and media company reported solid fourth-quarter results on Wednesday.
The Montreal-based company posted a profit of $123.3 million in the three months ending Dec. 31 compared with a $34.8 million loss in the same period of 2015. Financial and subscriber metrics were largely in line or better than analysts’ expectations for both the fourth quarter and the year.
Quebecor’s stock price dropped following the February announcement that Péladeau would resume his role as CEO after a stint in politics as head of the Parti Québécois, but the strong finish to 2016 appeared to assuage investors. By noon, the stock price climbed more than four per cent to surpass the price before the leadership change. It finished the day at $39.53, up 4.19 per cent in Toronto.
“We can affirm that our 2016 results were supported by a solid strategic direction involving all parts of our operations,” Péladeau said in a conference call with analysts.
Péladeau praised the management team and said the company would continue on the path it started when it purchased Videotron.
“The digitalization of the economy has favoured the exportation of content over multiple platforms. Our telecom services’ success is therefore closely linked to the richness of the content we produce and broadcast,” he said. “For the last 16 years we’ve been following the same strategy, the combination of content and distribution we will continue in this direction.”
Péladeau said Quebecor anticipated the growth in video and music streaming, pointing to its video service Club Illico and its mobile phone plans that offer unlimited music streaming. The phone plans sparked a controversial regulatory hearing over whether companies should be able to offer unlimited data only for one type of content.
But Péladeau wouldn’t share details on plans for Videotron’s spectrum assets outside of Quebec amid widespread speculation that it will sell the airwaves to a player such as Shaw Communications Inc.’s Freedom Mobile.
“The spectrum is certainly something of great interest. As you can easily imagine, it is something we consider as a very strong asset and therefore obviously we’re not going to negotiate publicly about this,” he said.
Nor did executives release a roadmap for its Internet protocol TV plans, although Videotron CEO Manon Brouillette said it is discussing with vendors and will make an announcement shortly.
Brouillette also noted that Videotron posted its strongest annual growth in wireless subscribers in five years, increasing its subscriber base to 894,000 as of Dec. 31. About 30 per cent are on bring-your-own-device plans, she said, which brings down average revenue per user but bucked industry trends by lowering the cost of acquiring new subscribers.
“We think this phenomenon will increase in the future,” she said, pointing to Europe where subsidized phones are less common. “We believe that we have to be strong in attracting those subscribers because we’re the challenger here, we’re the alternative for those subscribers who were captive of the incumbent for many years.”
Videotron added 26,000 subscribers, lower than analysts expected, but it gained more Internet subscribers and lost fewer TV and telephone customers than expected.
Club Illico reported 315,000 customers at the end of the year, an increase of 36,000 subscribers in the fourth quarter and 57,000 over the year. It launched two original teen dramas, its first 4K original series and a second season of hit show Blue Moon.
“We are clearly on the right path with our strategy of producing original content,” Brouillette said.
Club Illico’s growth comes as cable competitors Shaw and Rogers Communications Inc. shut down their joint video-streaming service Shomi to stem losses. BCE Inc., however, is still in the streaming game with CraveTV.
Analysts’ reactions to the results were neutral given the slightly softer wireless numbers even though financials were in line with expectations.
“QBR’s first earnings release since CEO Péladeau’s return showed continued wireless momentum, leading us to maintain our view that QBR should continue to post midsingle-digit earnings growth,” Desjardins analyst Maher Yaghi said in a note to clients.