Company Reports

We transfer coverage of the Canadian telecom providers: Rogers, BCE, Telus, Quebecor, and Cogeco. These firms account for nearly all of the wireless and wireline services provided in Canada, with all but Cogeco operating national wireless networks, and Rogers and BCE the largest wireline networks.

Quebecor operates primarily as a Canadian telecom provider, with more than 85% of its revenue generated by its wireline and wireless offerings. Historically, the firm operated almost exclusively in Quebec, where its Videotron brand remains the dominant broadband provider, benefiting from a strong regional brand and an established network infrastructure.

Quebecor reported good second-quarter results, with continued mobile subscriber additions and rising average revenue per user. Wireless revenue grew 9%, driving total telecom revenue up 4%.

Telecom dominates Quebecor’s business, making up more than 85% of revenue and nearly all EBITDA. Quebecor historically operated almost exclusively in Quebec, where it dominates the fixed-line market—providing broadband service to 50% of the homes its network passes—and holding its own in wireless against national providers.

Quebecor was not immune to the challenges facing the Canadian telecom industry, but its disciplined, long-term approach led to 9% growth in wireless services revenue. Average revenue per user increased across wireless and broadband services, and margins expanded.

Quebecor's wireless momentum continued in the fourth quarter, as it added more net subscribers than any peer while also increasing average revenue per user. Total mobile services revenue was up 9.5% year over year, driving total services revenue growth of 5% with steady margins.

Telecom dominates Quebecor’s business, making up more than 85% of revenue and nearly all EBITDA. Quebecor historically operated almost exclusively in Quebec, where it dominates the fixed-line market—providing broadband service to 50% of the homes its network passes—and holding its own in wireless against national providers.

Telecom dominates Quebecor’s business, making up more than 85% of revenue and nearly all EBITDA. Quebecor historically operated almost exclusively in Quebec, where it dominates the fixed-line market—providing broadband service to 50% of the homes its network passes—and holding its own in wireless against national providers.

Quebecor continues to be successful in its foray into the national wireless carrier market. Wireless customer additions have slowed slightly, but pricing has stabilized, and wireless, now the firm's largest business, is growing by midsingle digits. Total third-quarter revenue grew 1% year over year.

Telecom dominates Quebecor’s business, making up more than 85% of revenue and nearly all EBITDA. Quebecor historically operated almost exclusively in Quebec, where it dominates the fixed-line market—providing broadband service to 50% of the homes its network passes—and holding its own in wireless against national providers.

Quebecor posted mixed second-quarter results, as impressive wireless growth was offset by continued broadband weakness, leaving revenue flat year over year. Adjusted EBITDA also declined 3% compared with last year, with the 44% margin taking a 100-basis-point step-down.

Quebecor cable network reaches over 3.6 million homes in Canada, predominantly in Quebec, and we estimate that it serves over 50% of homes within this footprint. The firm has continued to invest in its network, predominantly in its fiber-to-the-home network, to offer high-speed internet services to households. We expect Quebecor will continue to benefit from its leading position and improved network, and forecast the firm continue to extend its penetration levels in its wireline business.

Quebecor posted an annual revenue decline of 1.4% in the first quarter, primarily from lower wireline and media revenue. Adjusted EBITDA declined 2% in the period, as firmwide margins dipped only slightly to about 41%

Quebecor continues progressing nicely in its attempt to disrupt and steal wireless share, as evidenced by its market-leading 88,000 net wireless customer additions in the fourth quarter. We expect Quebecor to continue to take share. However, we think its low-price strategy will hinder its ability to drive profitability as it scales its Freedom Mobile brand. We maintain our $37 fair value estimate and no-moat rating for Quebecor.

Quebecor cable network reaches over 3.6 million homes in Canada, predominantly in Quebec, and we estimate that it serves over 50% of homes within this footprint. The firm has continued to invest in its network, predominantly in its fiber-to-the-home network, to offer high-speed internet services to households. We expect Quebecor will continue to benefit from its leading position and improved network, and forecast the firm continue to extend its penetration levels in its wireline business.

After re-evaluating Quebecor and its efforts to expand into Canada’s fourth major wireless service provider, we’ve reduced our moat rating to no-moat from narrow. We’ve also trimmed our fair value to CAD 37 from CAD 40. While the stock looks undervalued to us, we prefer the shares of its big three rivals, BCE, Telus, and Rogers, which trade in 5-star territory.

Quebecor cable network reaches over 3.6 million homes in Canada, predominantly in Quebec, and we estimate that it serves over 50% of homes within this footprint. The firm has continued to invest in its network, predominantly in its fiber-to-the-home network, to offer high-speed internet services to households. We expect Quebecor will continue to benefit from its leading position and improved network, and forecast the firm continue to extend its penetration levels in its wireline business.

Quebecor’s third-quarter earnings were in line with our expectations. The firm added a healthy number of customers in its wireless and internet businesses, but neither was enough to offset its low-cost strategy, leading to revenue declining 1.8% year over year. We maintain our CAD 40 fair value estimate and believe shares are undervalued.

Quebecor’s second quarter marked a full year since its acquisition of Freedom Mobile. The firm continues to expand its wireless reach and has grown its subscriber base 9%, with 300,000 net new customers, since the acquisition. Although the rest of Quebecor's business continues to struggle, its wireless business can fuel growth now that it has expanded past Quebec. We're maintaining our CAD 40 per share fair value estimate and believe shares are undervalued.

Quebecor’s quarterly results reflected continued progress in integrating Freedom Mobile and expanding its presence as a national wireless carrier. The rest of Quebecor’s business continues to struggle amid a challenging landscape, as internet revenue growth slowed, and other businesses declined year over year. However, wireless is the most important growth business, and we remain confident in Quebecor’s ability to add both wireless and internet subscribers. We’re maintaining our CAD 40 per share fair value estimate and believe shares are undervalued.