Mr. Pierre Peladeau reports

QUEBECOR INC. REPORTS CONSOLIDATED RESULTS FOR SECOND QUARTER 2023

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

Second quarter 2023 highlights:

• In the context of the acquisition of Freedom Mobile Inc. on April 3, 2023, Quebecor recorded revenues of $1.4-billion, up $283.3-million (25.4 per cent), adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $605.2-million, up $113.8-million (23.2 per cent), and adjusted cash flows from operations of $455.3-million, up $94.3-million (26.1 per cent) compared with the same period of 2022.
• The telecommunications segment increased its revenues by $288.6-million (31.6 per cent), its adjusted EBITDA by $120.1-million (24.6 per cent) and its adjusted cash flows from operations by $92.3-million (25.0 per cent), reflecting, among other things, the contribution of the Freedom acquisition.
• The telecommunications segment's revenues from mobile services and equipment increased by $275.9-million (104.2 per cent) due to the impact of the Freedom acquisition and growth in the revenues of Videotron Ltd. and its revenues from Internet access services increased by $17-million (5.6 per cent).
• Organic growth added 24,600 revenue-generating units (RGUs) (0.4 per cent) during the quarter, including 49,100 subscriber connections (2.8 per cent) in mobile telephony and 5,300 Internet access subscriptions (0.3 per cent).
• Following the acquisition of Freedom, the telecommunications segment now has 3,610,100 mobile telephony connections and 1,716,800 Internet access customers.
• TVA Group Inc. recorded an $8.7-million (negative 5.9 per cent) decrease in revenues and negative adjusted EBITDA of $3.8-million, an unfavourable variance of $7.1-million compared with the second quarter of 2022.
• The sports and entertainment segment's revenues increased by $3.8-million (8.4 per cent) and there was a $1.7-million unfavourable variance in its adjusted EBITDA in the second quarter of 2023.
• Quebecor's consolidated net income attributable to shareholders was $174.1-million (75 cents per basic share), up $16.7-million (nine cents per basic share), or 10.6 per cent.
• Adjusted income from continuing operating activities was $182.3-million (79 cents per basic share), up $20.6-million (11 cents per basic share), or 12.7 per cent.
• On April 3, 2023, Videotron acquired Freedom from Shaw Communications Inc. Videotron paid $2.07-billion in cash, net of cash acquired of $103.2-million. As part of the transaction, Videotron assumed certain liabilities, mainly lease obligations. The consideration paid is subject to certain postclosing adjustments. The acquisition includes the Freedom brand's entire wireless and Internet customer base, as well as its owned infrastructure, spectrum and retail outlets. The transaction also includes a long-term undertaking by Shaw and Rogers Communications Inc. to provide Videotron with transport services (including backhaul and backbone), roaming services and wholesale Internet services. Through the acquisition of Freedom, Videotron has entered the British Columbia and Alberta telecommunications markets and strengthened its position in the Ontario market.
• On April 3, 2023, Videotron entered into a new $2.1-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 agreement in connection with the $700-million tranche maturing in April, 2027, fixing the interest rate at 5.203 per cent based on Videotron's then leverage ratio.

Pierre Karl Peladeau, president and chief executive officer of Quebecor, commented: "The acquisition of Freedom in April 2023 has positioned Quebecor as Canada's fourth national wireless provider. Our mobile network now reaches nearly 70 per cent of Canada's population and we will be able to further expand our coverage by functioning as a mobile virtual network operator ("MVNO"). In just four months, we have lowered telecom prices across the country by increasing competition and delivered on the majority of the commitments we made to Canadians and to Innovation, Science and Economic Development Canada ("ISED Canada").

"We have rapidly enhanced our product and service offerings and significantly upgraded Freedom's wireless network. On July 27, 2023, we proudly unveiled an ultra-competitive suite of wireless plans including true nationwide coverage. Now supported by a first class 5G network, our new plans enhance the customer experience in Ontario, British Columbia and Alberta.

"Another important development was the Canadian Radio-television and Telecommunications Commission (CRTC) decision issued on July 24, 2023, which selected Quebecor's proposed rates for MVNO access to Rogers' network, enabling us to offer affordable and accessible plans in more Canadian regions.

"Driven by the Freedom transaction, Quebecor delivered an outstanding financial performance in the second quarter of 2023 with increases of 25.4 per cent in revenues, 23.2 per cent in adjusted EBITDA and 26.1 per cent in adjusted cash flows from operations. The Telecommunications segment reported increases of 31.6 per cent in revenues, 24.6 per cent in adjusted EBITDA and 25.0 per cent in adjusted cash flows from operations, which rose to $461.7-million.

"Our Telecommunications segment's range of plans continued to attract more customers. Over the past twelve months, it has added 124,700 (7.5 per cent) mobile telephony connections and 38,100 (2.4 per cent) Internet access customers.

"We now have a total of 3,610,100 subscriber connections to our mobile telephony service and 1,716,800 subscribers to our Internet access services nationwide and we are executing our development plan to increase market share and profitability. Our strong cash flows will also enable us to continue to invest in our networks and to enhance online services for our customers, building on the complementary strengths and successes of our Videotron, Freedom and Fizz brands.

"TVA Group continued to be impacted by lower profitability across all of its businesses and all of the industries in which it operates, posting a $7.1-million unfavourable variance in adjusted EBITDA. The restructuring plan announced on February 16, 2023 has not yet generated sufficient savings to offset the major impact of the decline in the advertising market, which is the sole source of revenue for over-the-air television stations, and the absence of foreign productions in the film production and audiovisual services segment. Unfortunately, there is no reason to believe the situation will improve in the short or medium term, in view of the conditions throughout the entire North American broadcasting industry. Only Radio-Canada is not subject to the profit imperative, which forces us to make difficult decisions to ensure the business's sustainability.

"Despite the challenging environment, we continued to invest in content to protect our market share, both for TVA Network and the specialty channels. As a result, TVA Group's market share rose to 42.7 per cent, up 0.4 points from the same period of 2022. TVA Network had four of the top five shows in Quebec during the quarter. However, in order to be able to continue investing in programming and news content, it is imperative that we have a legislative and regulatory framework that applies to the web giants and requires them to contribute financially to Canada's broadcasting system. It is also critical to remove advertising from all of Radio-Canada's platforms. The public broadcaster is engaging in unfair competition with private broadcasters in the race for ratings and advertising revenue, despite the fact that it receives huge amounts of government funding to fulfil its mandate.

"Over the past several months, we have clearly demonstrated our ability to execute, and our determination to achieve, our goal of fostering healthy competition in the wireless marketplace for the benefit of all Canadian consumers. With our solid track record and strong financial position, we are more committed than ever to our cross-Canada growth strategy and our goal of creating long-term value for all our stakeholders.

"We look to the future with confidence because of our agility and rigour, as demonstrated by our operating costs, which are the lowest in the Canadian telecom industry. And it should be noted that, despite the acquisition of Freedom without any issuance of capital stock, Quebecor's debt leverage ratio remains among the lowest in the industry."

2023/2022 second quarter comparison

Revenues: $1.40 billion, a $283.3-million (25.4 per cent) increase.

• Revenues increased in Telecommunications ($288.6-million or 31.6 per cent of segment revenues), due to the impact of the Freedom acquisition and growth in mobile services and equipment and Internet access services, and in Sports and Entertainment ($3.8-million or 8.4 per cent).
• Revenues decreased in Media ($7.8-million or -4.1 per cent).

Adjusted EBITDA: $605.2-million, a $113.8-million (23.2 per cent) increase.

• Adjusted EBITDA increased in Telecommunications ($120.1-million or 24.6 per cent of segment adjusted EBITDA), including Freedom's contribution.
• There was an unfavourable variance in Media ($4.6-million) and a decrease in Sports and Entertainment ($1.7-million or -36.2 per cent).
• The change in the fair value of Quebecor stock options and stock-price-based share units resulted in a $1.4-million unfavourable variance in the Corporation's stock-based compensation charge in the second quarter of 2023 compared with the same period of 2022.

Net income attributable to shareholders: $174.1-million ($0.75 per basic share) in the second quarter of 2023, compared with $157.4-million ($0.66 per basic share) in the same period of 2022, an increase of $16.7-million ($0.09 per basic share).

• The main favourable variances were:
  • $113.8-million increase in adjusted EBITDA;
  • $3.7-million favourable variance in gains and losses on valuation and translation of financial instruments, including $3.8-million without any tax consequences.
• The main unfavourable variances were:
  • $59-million increase in the depreciation and amortization charge;
  • $31.7-million increase related to financial expenses;
  • $9.8-million unfavourable variance in the charge for restructuring, acquisition costs and other.

Adjusted income from continuing operating activities: $182.3-million ($0.79 per basic share) in the second quarter of 2023, compared with $161.7-million ($0.68 per basic share) in the same period of 2022, an increase of $20.6-million ($0.11 per basic share) or 12.7 per cent.

Adjusted cash flows from operations: $455.3-million, a $94.3-million (26.1 per cent) increase due primarily to the $113.8-million increase in adjusted EBITDA, partially offset by a $19.7-million increase in additions to intangible assets.

Cash flows provided by operating activities: $358.4-million, a $116.7-million (48.3 per cent) increase due primarily to the increase in adjusted EBITDA, 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 financial expenses and the unfavourable variance in the cash portion of restructuring, acquisition costs and other.

2023/2022 year-to-date comparison

Revenues: $2.51 billion, a $310.9-million (14.1 per cent) increase.

• Revenues increased in Telecommunications ($310.2-million or 17.1 per cent of segment revenues), due to the impact of the Freedom acquisition and growth in mobile services and equipment and Internet access services, and in Sports and Entertainment ($18.2-million or 23.0 per cent).
• Revenues decreased in Media ($18.8-million or -5.1 per cent).

Adjusted EBITDA: $1.05 billion, a $114.5-million (12.3 per cent) increase.

• Adjusted EBITDA increased in Telecommunications ($134.3-million or 14.2 per cent of segment adjusted EBITDA), including Freedom's contribution, and Sports and Entertainment ($1.8-million or 39.1 per cent).
• Adjusted EBITDA decreased in Media ($19.1-million) and there was an unfavourable variance 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 $5-million unfavourable variance in the Corporation's stock-based compensation charge in the first half of 2023 compared with the same period of 2022.

Net income attributable to shareholders: $295-million ($1.28 per basic share) in the first half of 2023, compared with $278.8-million ($1.17 per basic share) in the same period of 2022, an increase of $16.2-million ($0.11 per basic share).

• The main favourable variance was:
  • $114.5-million increase in adjusted EBITDA.
• The main unfavourable variances were:
  • $52.8-million increase in the depreciation and amortization charge;
  • $32.1-million increase related to financial expenses;
  • $14.5-million unfavourable variance in the charge for restructuring, acquisition costs and other.

Adjusted income from continuing operating activities: $318.3-million ($1.38 per basic share) in the first half of 2023, compared with $290.4-million ($1.22 per basic share) in the same period of 2022, an increase of $27.9-million ($0.16 per basic share) or 9.6 per cent.

Adjusted cash flows from operations: $801.3-million, a $124.2-million (18.3 per cent) increase due primarily to the $114.5-million increase in adjusted EBITDA and a $25-million decrease in additions to property, plant and equipment, partially offset by a $15.3-million increase in additions to intangible assets.

Cash flows provided by operating activities: $630.3-million, a $160.9-million (34.3 per cent) increase due primarily to the increase in adjusted EBITDA, 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 financial expenses and the unfavourable variance in the cash portion of restructuring, acquisition costs and other.

Financing transactions

• On June 28, 2023, TVA Group entered into a new $20-million secured revolving credit facility repayable on demand. On the same date, TVA Group terminated its secured revolving credit facility in the amount of $75-million.
• 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 agreement in connection with the $700-million tranche maturing in April 2027, fixing the interest rate at 5.203 per cent based on Videotron's then applicable leverage ratio. The swap became effective on May 4, 2023 and matures on April 3, 2027.

Normal course issuer bid

On August 9, 2023, the Board of Directors of the Corporation authorized a normal course issuer bid for a maximum of 1,000,000 Class A Multiple Voting Shares ("Class A Shares"), representing approximately 1.3 per cent of issued and outstanding Class A Shares, and for a maximum of 2,000,000 Class B Subordinate Voting Shares ("Class B Shares"), representing approximately 1.3 per cent of issued and outstanding Class B Shares as of August 1, 2023. The purchases can be made from August 15, 2023 to August 14, 2024, at prevailing market prices on the open market through the facilities of the Toronto Stock Exchange or other alternative trading systems in Canada. All the repurchased shares will be cancelled. As of August 1, 2023, 76,970,888 Class A Shares and 153,965,202 Class B Shares were issued and outstanding.

The average daily trading volume of the Class A Shares and Class B Shares of the Corporation between February 1, 2023 and July 31, 2023 on the Toronto Stock Exchange was 4,244 Class A Shares and 539,941 Class B Shares. Consequently, the Corporation will be authorized to purchase a maximum of 1,061 Class A Shares and 134,985 Class B Shares during the same trading day, pursuant to its normal course issuer bid.

The Corporation believes that the repurchase of these shares under this normal course issuer bid is in the best interests of the Corporation and its shareholders.

The Corporation also announced that on or around August 11, 2023 it will enter into an automatic securities purchase plan ("the plan") with a designated broker whereby shares may be repurchased under the plan at times when such purchases would otherwise be prohibited pursuant to regulatory restrictions or self-imposed blackout periods. The plan received prior approval from the Toronto Stock Exchange. It will come into effect on August 15, 2023 and terminate on the same date as the normal course issuer bid.

Under the plan, before entering a self-imposed blackout period, the Corporation may, but is not required to, ask the designated broker to make purchases under the normal course issuer bid. Such purchases shall be made at the discretion of the designated broker, within parameters established by the Corporation prior to the blackout periods. Outside the blackout periods, purchases will be made at the discretion of the Corporation's management.

Between August 15, 2022 and August 1, 2023, of the 1,000,000 Class A Shares and 6,000,000 Class B Shares it was authorized to repurchase under its previous normal course issuer bid, the Corporation repurchased no Class A Shares and 2,668,500 Class B Shares at a weighted average price of $27.35904 per share on the open market through the facilities of the TSX and alternative trading systems.

In the first half of 2023, the Corporation did not purchase and cancel any Class A and Class B Shares (in the same period of 2022, 4,202,951 Class B Shares were purchased and cancelled for a total cash consideration of $123.1-million).

Dividends declared

On August 9, 2023, the Board of Directors of Quebecor declared a quarterly dividend of $0.30 per share on its Class A Shares and Class B Shares, payable on September 19, 2023 to shareholders of record at the close of business on August 25, 2023. This dividend is designated an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.

Convertible debentures

In accordance with the terms of the trust indenture governing the convertible debentures, the quarterly dividend declared on May 10, 2023 on Quebecor Class B Shares triggered an adjustment to the floor price and ceiling price then in effect. Accordingly, effective May 25, 2023, the conversion features of the convertible debentures are subject to an adjusted floor price of approximately $24.25 per share (that is, a maximum number of approximately 6,184,391 Class B Shares corresponding to a ratio of $150-million to the adjusted floor price) and an adjusted ceiling price of approximately $30.32 per share (that is, a minimum number of approximately 4,947,513 Class B Shares corresponding to a ratio of $150-million to the adjusted ceiling price).

600 MHz, 3500 MHz and 3800 MHz spectrum auction

In July 2023, Videotron contracted new unsecured on-demand credit facilities under which letters of credit were issued and submitted to ISED Canada as a pre-auction deposit, in respect to its application to participate in the 3800 MHz spectrum auction. The submission of these letters of credit did not have the effect of reducing the Corporation's net available liquid assets under the Corporation's current credit facilities. In accordance with the rules of confidentiality established by ISED Canada respecting restrictions on communications during the auction process, it is strictly forbidden for the Corporation to disclose the amount of these letters of credit. Videotron may withdraw the letters of credit at any time prior to the opening of the auction.

On January 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 3500 MHz band in Quebec. The acquisition was made in the auction of residual spectrum licences that concluded on January 25, 2023 with the announcement by ISED Canada 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

Through the acquisition of Freedom, Videotron has entered the British Columbia and Alberta telecommunications markets and strengthened its position in the Ontario market. This expansion of Videotron's wireless business outside of its traditional Quebec footprint has improved its geographic diversification, with approximately 45 per cent of mobile subscribers in Quebec, 40 per cent in Ontario and 15 per cent in Western Canada, at June 30, 2023.

As a result of the transaction, the number of Canadians reached by Videotron's mobile networks increased from 7.5-million (or 20 per cent of the Canadian population) to more than 26-million (or 70 per cent of the Canadian population), thereby significantly increasing its addressable market. In addition, entering new markets as a MVNO will enable Videotron to further improve its reach and offer its competitive services to even more potential users.

Three well-established mobile network operators that offer a full range of telecommunications services and have nationwide wireline and wireless networks are present in these markets. These mobile network operators, including two incumbent local exchange carriers ("ILECs") and one broadcast distribution undertaking ("BDU") have been in business for a long time, hold an array of spectrum licenses and have considerable operational and financial resources. Videotron's acquisition of Freedom creates a more competitive mobile telephony environment in the markets where Freedom operates. Since the closing of the Freedom acquisition, significant enhancements have been made to Freedom's offering, plans and network to improve the customer experience. These enhancements include the introduction of 5G services, seamless handoff and nationwide free roaming. Going forward, Videotron intends to bring further improvements to the Freedom offering by, among other things, introducing attractive multi-service bundles and improving online experience for users.

Prior to the acquisition by Videotron, Freedom customers did not yet have access to 5G services. In order to be able to offer a true 5G experience, Freedom required greater bandwidth in mid-band frequencies, such as the 3500 MHz band, which it did not have, but upon the closing of the acquisition, Videotron was able to rapidly deploy its holding of 3500 MHz spectrum licenses which it had acquired in 2021 in order to upgrade Freedom's infrastructure and offer 5G service to over 12-million Canadians in the Toronto, Vancouver, Calgary and Edmonton metropolitan areas along with select cities across Ontario, British Columbia and Alberta. Over time, Freedom will continue to roll out 5G to other markets. In addition, through the transaction, Videotron has acquired more than 90 MHz (and up to 135 MHz in some areas) of spectrum holdings in major markets in Ontario, British Columbia and Alberta, comprised of spectrum in the 600 MHz, 700 MHz, AWS-1, AWS-3 and 2500 MHz bands.

The Corporation anticipates that significant and recurring investments will be required in the new Canadian markets in order to, among other things, potentially acquire new spectrum licenses for the deployment of the latest technologies, expansion and maintenance of newly acquired mobile networks, support for the launch and penetration of new services, and to compete effectively with the ILECs and other current or potential competitors in these markets.

Detailed financial information

For a detailed analysis of Quebecor's second quarter 2023 results, please refer to the Management Discussion and Analysis and condensed consolidated financial statements of Quebecor, available on the Corporation's website at www.quebecor.com/en/investors/financial documentation and the SEDAR+ website at www.sedarplus.ca.

Conference call for investors and webcast

Quebecor will hold a conference call to discuss its second quarter 2023 results on August 10, 2023, at 11:00 a.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 56951#. The conference call will also be broadcast live on Quebecor's website at www.quebecor.com/en/investors/conferences-and-annual-meeting. It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above. Anyone unable to attend the conference call will be able to listen to a recording by dialing 1-877-293-8133, access code 56951#, recording access code 0113645#. The recording will be available until November 11, 2023.

About Quebecor

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.

Quebecor (TSX: QBR.A, QBR.B) is headquartered in Quebec and employs more than 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.