Mr. Pierre Peladeau reports

QUEBECOR INC. REPORTS CONSOLIDATED RESULTS FOR FIRST QUARTER 2023

Quebecor Inc. has released its consolidated financial results for the first quarter of 2023. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. subsidiary.

First quarter 2023 highlights:

• In the first quarter of 2023, Quebecor recorded adjusted cash flows from operations of $346-million, up $29.9-million (9.5 per cent), revenues of $1.12-billion, up $27.6-million (2.5 per cent), and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $442.8-million, up $700,000 (0.2 per cent) compared with the same period in 2022.
• The telecommunications segment's adjusted cash flows from operations increased by $34.9-million (10.1 per cent), its revenues by $21.6-million (2.4 per cent) and its adjusted EBITDA by $14.2-million (3.1 per cent).
• Videotron Ltd. increased its revenues from mobile services and equipment ($25.1-million or 10 per cent) and Internet access services ($16.1-million or 5.4 per cent) in the first quarter of 2023.
• There was a net increase of 4,100 (0.1 per cent) RGUs (revenue-generating units) in the first quarter of 2023, including 26,200 (1.5 per cent) connections to the mobile telephony service and 8,800 (0.5 per cent) subscriptions to Internet access services.
• The revenues of TVA Group Inc. were down $8.4-million and its adjusted EBITDA was negative $24-million, an unfavourable variance of $14.3-million compared with the first quarter of 2022.
• The sports and entertainment segment's revenues increased by $14.4-million (42.2 per cent) and there was a $3.5-million favourable variance in its adjusted EBITDA in the first quarter of 2023.
• Quebecor's net income attributable to shareholders was $120.9-million (52 cents per basic share), a decrease of $500,000 (increase of one cent per basic share).
• Adjusted income from continuing operating activities was $136-million (59 cents per basic share), an increase of $7.3-million (five cents per basic share) or 5.7 per cent.
• On April 3, 2023, Videotron acquired Freedom Mobile Inc. from Shaw Communications Inc. for a purchase price of $2.85-billion. Videotron paid $2.17-billion in cash and assumed certain debts, mainly lease obligations. The consideration paid is subject to certain postclosing adjustments. The acquisition includes the Freedom Mobile brand's entire wireless and Internet customer base, as well as its owned infrastructure, spectrum and retail outlets. It also includes a long-term commitment by Shaw and Rogers Communications Inc. to provide Videotron with transport services (including backhaul and backbone), roaming services and wholesale Internet services. These transactions will support the expansion of the corporation's telecommunications services in Ontario and Western Canada.
• On April 3, 2023, Videotron entered into a new $2.10-billion secured term credit facility with a syndicate of financial institutions to finance the acquisition of Freedom. The term credit facility consists of three tranches of equal size maturing in October, 2024, April, 2026, and April, 2027, bearing interest at floating rates.
• On April 10, 2023, Videotron entered into a floating to fixed interest rate swap in relation with the $700-million tranche maturing in April, 2027, fixing the interest rate at 5.203 per cent, based on Videotron's current leverage ratio.
• Consolidated net debt leverage ratio was down 0.1 point to 3.1 times, lower than that of Canada's big three telecoms.
• On Jan. 26, 2023, Quebecor announced a $9.9-million investment by Videotron in the acquisition of spectrum licences in the 600-megahertz band in Manitoba and in the 3,500 MHz band in Quebec. The spectrum was acquired in the auction of residual spectrum licences that concluded on Jan. 25, 2023.

Comments by Pierre Karl Peladeau, president and chief executive officer of Quebecor:

"We are very pleased to have completed the acquisition of Freedom in April, 2023, creating the fourth major national wireless carrier that Canadian consumers have been waiting for. Together, Freedom and Videotron have more than 3.5 million mobile subscriber connections, nearly 7,500 employees, and extensive network coverage in Quebec, Ontario, Alberta and British Columbia. Videotron's expansion across Canada will transform the Canadian wireless market for the benefit of all consumers, who will have access to innovative products and services at better prices, in a healthy competitive environment. With the recent acquisition of independent telecommunications service provider VMedia Inc., we will also soon be able to offer very attractive multiservice bundles, including not only wireless but also Internet and television.

"Building on Videotron's success in Quebec, we will now focus on upgrading our infrastructure and growing the customer base for our various services across Canada, while managing our capital in a disciplined and efficient manner. That said, while we applaud the courage of the federal government and the CRTC in allowing Videotron to become the fourth national player, much work remains to be done on national public policy, including setting reasonable wholesale rates for mobile virtual network operators (MVNOs), roaming and fibre to the premises (FTTP).

"Quebecor performed strongly in the first quarter of 2023, as reflected in adjusted cash flows from operations of $346-million, up 9.5 per cent from the same period of 2022. The corporation's revenues and adjusted EBITDA also increased by 2.5 per cent and 0.2 per cent, respectively. The telecommunications segment was a significant contributor to these strong results, as evidenced by the $34.9-million (10.1-per-cent) increase in cash flows from operations to $379.5-million and the $14.2-million (3.1-per-cent) increase in adjusted EBITDA to $474.2-million. With $1.51-billion in available liquidity as of March 31, 2023, Quebecor is well positioned to leverage its excellent financial position to execute its cross-Canada growth plan.

"Videotron's flagship services continued to attract more customers over the past 12 months, with the addition of 110,200 mobile subscriber connections, a 6.8-per-cent increase, and 75,300 Internet access subscribers, including 37,200 VMedia customers, a 4.7-per-cent increase.

"I am also very proud of the distinctions Videotron has earned since the beginning of 2023. Videotron was ranked the most respected telecommunications company in Quebec for the 17th time since 2006 in the 2023 Leger reputation survey released on April 5, 2023. And for the fourth year in a row, Fizz placed first for on-line experience in Canada's telecommunications industry on Leger's WOW Digital index.

"In a fiercely competitive environment, TVA Group Inc. continued to invest in quality content, which impacted its profitability in the first quarter of 2023, resulting in an unfavourable variance of $14.3-million in its adjusted EBITDA. TVA Group's financial results were also affected by the absence of foreign blockbusters in the film production and audiovisual services segment.

"The cost reduction measures stemming from the restructuring plan announced in February, 2023, and advertising revenue growth in the first quarter of 2023 driven by the TVA+ platform, which increased its digital video-on-demand views and revenues by 30 per cent and 33 per cent, respectively, were insufficient to counteract current market conditions and support the level of investment TVA Group must make in order to be competitive. We are forced to compete on an uneven playing field against the Web giants and CBC/Radio Canada, which is heavily subsidized by the state. However, our strategy of boosting our spending on content is increasing the market share of both TVA Network and our specialty channels, which reached a combined 40.9 per cent at the end of the first quarter of 2023. TVA Network had four of the top five shows in Quebec during the quarter.

"Quebecor began 2023 on a strong note with excellent financial results that provide a solid foundation on which to build the expansion of our telecommunications services. Our arrival as the fourth national player ushers in an era of healthy competition in the country's wireless market for the benefit of Canadians and announces a new phase of growth for Quebecor. Quebecor has what it takes to be a leader in Canada, and we will implement our strategies with rigour and discipline to continue creating sustainable value for all our stakeholders.

2023/2022 first quarter comparison

Revenues: $1.12-billion, a $27.6-million (2.5-per-cent) increase.

• Revenues increased in telecommunications ($21.6-million or 2.4 per cent of segment revenues) and in sports and entertainment ($14.4-million or 42.2 per cent).
• Revenues decreased in media ($11-million or down 6.1 per cent).

Adjusted EBITDA: $442.8-million, a $700,000 (0.2-per-cent) increase.

• Adjusted EBITDA increased in telecommunications ($14.2-million or 3.1 per cent of segment adjusted EBITDA) and there was a favourable variance in sports and entertainment ($3.5-million).
• There were unfavourable variances in media ($14.5-million) and at head office ($2.5-million).
• The change in the fair value of Quebecor stock options and stock-price-based share units resulted in a $3.6-million unfavourable variance in the corporation's stock-based compensation charge in the first quarter of 2023 compared with the same period of 2022.

Net income attributable to shareholders: $120.9-million (52 cents per basic share) in the first quarter of 2023, compared with $121.4-million (51 cents per basic share) in the same period of 2022, a decrease of $500,000 (increase of one cent per basic share).

• The main unfavourable variances were:
  • $4.7-million unfavourable variance in the charge for restructuring of operations and other items;
  • $4-million unfavourable variance in losses on valuation and translation of financial instruments, including $4.4-million without any tax consequences;
  • $1.4-million increase in the income tax expense.
• The main favourable variances were:
  • $6.2-million decrease in the depreciation and amortization charge;
  • $3.1-million favourable variance in non-controlling interest.

Adjusted income from continuing operating activities: $136-million (59 cents per basic share) in the first quarter of 2023, compared with $128.7-million (54 cents per basic share) in the same period of 2022, an increase of $7.3-million (five cents per basic share).

Adjusted cash flows from operations: $346-million, a $29.9-million (9.5-per-cent) increase due primarily to a $24.8-million decrease in additions to property, plant and equipment and a $4.4-million decrease in additions to intangible assets.

Cash flows provided by operating activities: $271.9-million, a $44.2-million (19.4-per-cent) increase due primarily to the favourable net change in non-cash balances related to operating activities and the decrease in current income taxes, partially offset by the increase in the cash portion of the charge for restructuring of operations and other items.

Investing and financing operations:

• On April 3, 2023, Videotron entered into a new $2.10-billion secured term credit facility with a syndicate of financial institutions to finance the acquisition of Freedom. The term credit facility consists of three tranches of equal size maturing in October, 2024, April, 2026, and April, 2027, bearing interest at bankers' acceptance rate, secured overnight financing rate (SOFR), Canadian prime rate or U.S. prime rate, plus a premium determined by Videotron's leverage ratio. On April 10, 2023, Videotron entered into a floating-to-fixed interest rate swap in relation with the $700-million tranche maturing in April, 2027, fixing the interest rate at 5.203 per cent, based on Videotron's current leverage ratio. The swap becomes effective on May 4, 2023, and matures on April 3, 2027.
• On Feb. 15, 2023, TVA Group amended its $75-million secured revolving credit facility to extend its term from February, 2023, to February, 2024, and amend certain terms and conditions.
• On Jan. 17, 2023, Quebecor Media redeemed at maturity its senior notes in aggregate principal amount of $850-million (U.S.), bearing interest at 5.75 per cent, and unwound the related hedging contracts for a total cash consideration of $830.9-million. Drawings under Videotron's secured revolving credit facility were used to finance this redemption.
• On Jan. 13, 2023, Videotron's secured revolving credit facility was amended to increase it from $1.50-billion to $2-billion. Certain terms and conditions of this credit facility were also amended.

Capital stock

In the first quarter of 2023, the corporation did not purchase and cancel any Class B subordinate voting shares (in the same period of 2022, 890,051 Class B shares were purchased and cancelled for a total cash consideration of $26-million).

Dividends declared

On May 10, 2023, the Board of directors of Quebecor declared a quarterly dividend of 30 cents per share on its Class A multiple voting shares and Class B shares, payable on June 20, 2023, to shareholders of record at the close of business on May 26, 2023. This dividend is designated an eligible dividend, as provided under Subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.

Participation in 600 MHz and 3500 MHz spectrum auction

On Jan. 26, 2023, Quebecor announced a $9.9-million investment by Videotron in the acquisition of spectrum licences in the 600 MHz band in Manitoba and in the 3,500 MHz band in Quebec. The acquisition was made in the auction of residual spectrum licences that concluded on Jan. 25, 2023, with the announcement by Innovation, Science and Economic Development Canada (ISED) of the tentatively accepted bids. Videotron is thus increasing its wireless service capacity and continuing to pave the way for the expansion of its wireless infrastructure outside Quebec.

Acquisition of Freedom

Videotron's acquisition of Freedom enables the corporation to enter the British Columbia and Alberta telecommunications markets and strengthen its position in the Ontario market. Three well-established incumbent local exchange carriers (ILECs) that hold an array of spectrum licences and have considerable operational and financial resources are present in these markets. Videotron's acquisition of Freedom creates a more competitive mobile telephony environment in the markets where Freedom operates. That said, the corporation anticipates that significant and recurring investments will be required in these new markets in order to, among other things, potentially acquire new spectrum licences so it can deploy the latest technologies, expand and maintain the newly acquired mobile networks, support the launch and penetration of new services, and compete effectively with the ILECs and other current or potential competitors in these markets.

Detailed financial information

For a detailed analysis of Quebecor's first quarter 2023 results, please refer to the management discussion and analysis and condensed consolidated financial statements of Quebecor, available on the corporation's website or from the SEDAR filing service.

Conference call for investors and webcast

Quebecor will hold a conference call to discuss its first quarter 2023 results on May 11, 2023, at 2 p.m. EDT. There will be a question period reserved for financial analysts. To access the conference call, please dial 1-877-293-8052, access code for participants 55285 followed by the pound key. The conference call will also be broadcast live on Quebecor's website. It is advisable to ensure the appropriate software is installed before accessing the call. Anyone unable to attend the conference call will be able to listen to a recording by dialling 1-877-293-8133, access code 55285 followed by the pound key, recording access code 0113286 followed by the pound key. The recording will be available until Aug. 11, 2023.

About Quebecor Inc.

Quebecor, a Canadian leader in telecommunications, entertainment, news media and culture, is one of the best-performing integrated communications companies in the industry. Driven by their determination to deliver the best possible customer experience, all of Quebecor's subsidiaries and brands are differentiated by their high-quality, multiplatform, convergent products and services.

Quebec-based Quebecor employs nearly 10,000 people in Canada.

A family business founded in 1950, Quebecor is strongly committed to the community. Every year, it actively supports more than 400 organizations in the vital fields of culture, health, education, the environment and entrepreneurship.

We seek Safe Harbor.