Quebecor Inc. hopes to keep its telecom business growing and fend off competitors with the launch of new wireless and television products.
The Montreal-based company reported financial results on Thursday that were in line with analyst forecasts as strength at its Vidéotron Ltd. telecom operation – particularly its wireless division – continued to offset weaker performance from its broadcasting and publishing media assets.
Vidéotron is in the midst of launching a number of new products, including a discount wireless brand dubbed Fizz and a premium, internet-based television platform, Helix, which is based on technology licensed from U.S. cable giant Comcast Corp. Vidéotron chief executive officer Manon Brouillette said Thursday that the company also plans to launch a discount internet service under the Fizz brand.
Analysts have said that the Fizz brand could lead to lower average monthly revenue, but that it could also help Vidéotron target a wider swath of subscribers by going after the lower end of the market while its main brand offers more expensive plans and packaging with cable TV and internet. This follows a similar move by the dominant national carriers, BCE Inc., Telus Corp. and Rogers Communications Inc., to launch multiple sub-brands to appeal to different types of customers.
“The challenge we had up to now was to make sure we were able to compete not only against the incumbents but as well with their sub-brands. So, we had to do some sitting on the fence in certain areas and now we won’t have to do that,” Ms. Brouillette said on a conference call.
Fizz offers customers a self-serve experience with support and sales offered only online and not through retail stores or call centres, which keeps costs low for the company. In addition to lower prices than its main Vidéotron brand, Fizz will allow users to roll over unused wireless data from month to month.
Ms. Brouillette said this is to stand out from the discount brands operated by the Big Three incumbents. Xplornet Communications Inc., which is launching a wireless business in Manitoba, also said this week that it will let customers roll over unused monthly data.
Ms. Brouillette is stepping down as Vidéotron’s CEO at the end of the year, although she plans to remain with the company as a member of its board of directors.
Quebecor CEO and controlling shareholder Pierre-Karl Péladeau thanked Ms. Brouillette on Thursday for her 15 years with the company and in particular the past five years as CEO of Vidéotron, during which she led its now thriving wireless operation. It launched the business in 2010 and offers service in Quebec and the Ottawa region after deciding against expanding to the rest of Canada.
Mr. Péladeau said he had no update on plans for a new CEO to replace Ms. Brouillette at Vidéotron.
Vidéotron added 41,500 new wireless customers in the third quarter and increased the average amount it bills customers by 1.8 per cent to $54.28.
On the residential side, it lost 2,000 television subscribers but won 23,000 internet customers. Videotron plans to officially launch its Helix TV service next year. It hopes this will help it compete with its main rival BCE, which has been investing in faster fibre-optic service to woo TV and internet customers.
Quebecor reported consolidated revenue of $1.06-billion, up 1.7 per cent year over year and slightly below analyst estimates. It posted EBITDA (earnings before interest, taxes, depreciation and amortization) of $465-million, up 7.7 per cent and beating forecasts.
Profit increased by about 4.7 per cent to $187-million or 80 cents a share, compared with $178-million or 74 cents in the same period last year. On an adjusted basis, the company earned 61 cents a share, ahead of analyst estimates of 51 cents.
The telecom business accounted for most of the company’s revenue and growth, with sales up 3.6 per cent to $860-million and EBITDA growing 9.1 per cent to $426-million.
Quebecor’s media division continued to face challenges with declining advertising sales, and revenue slipped 8.5 per cent to $171-million while EBITDA fell 17.1 per cent to $30-million.
Editor’s note: An earlier version of this story stated Vidéotron added 24,000 internet customers in the third quarter. In fact, it added 23,000.