Quebecor Inc.

Marc Tremblay - SVP, Chief Legal Officer & Public Affairs and Secretary Pierre Péladeau - CEO & President Jean-François Pruneau - SVP & CFO Manon Brouillette - President & CEO, Videotron France Lauzière - Chief Content Officer, Quebecor Content

Phillip Huang - Barclays Bank Jeffrey Fan - Scotiabank Maher Yaghi - Desjardins Securities Robert Goff - Echelon Wealth Partners Vince Valentini - TD Securities David McFadgen - Cormark Securities Tim Casey - BMO Capital Markets

Ladies and gentlemen, welcome to this Quebecor conference call. Again, my name is Marc Tremblay, and joining me to discuss our financial and operating results for the second quarter of 2018 are Mr.

Pierre Péladeau, President and Chief Executive Officer; Jean-François Pruneau, Senior Vice President and Chief Financial Officer; Manon Brouillette, President and Chief Executive Officer of Vidéotron; and France Lauzière, President and CEO of TVA group. You will be able to listen to this conference call on tape until November 9, 2018, by dialing 877-293-8133, conference number 1229124 and passcode 48006#.

This information is also available on Quebecor's website at www.quebecor.com. I also want to inform you that certain statements made on the call today may be considered forward looking, and we will refer you to the risk factors outlined in today's press release and reports filed by the corporation with regulatory authorities.

Let's now move on with our first speaker, Mr. Pierre Péladeau.

Mark and good morning, everyone. As you all know, early in the quarter, we announced the purchase of all the shares owned by our long-standing partner, Caisse de dépôt et placement du Québec, and became the sole owner of Quebecor Media share capital.

On June 22, we completed the transaction with a final cash payment and the issuance of $150 million in face value of a six year debentures convertible in Quebecor Class B shares. Once again, we're very satisfied with the outcome of this important transaction for our group.

As for our second quarter results, we can only be pleased with the financial performance of our telecom operation, but that our media operation was somewhat disappointing. We can say that the financial results from our media operation were disappointing because of weaknesses mostly concentrated on our specialty channel, including TVA Sports and soft advertising.

We are taking the necessary actions to fight those top line weaknesses. However, all our media activities continue to play a key role in our convergence business strategy, which we expect to continue to grow, especially in light of recent large transaction in the U.S.

like AT&T-Time Warner and Australia with a Fairfax and Nine Network, and in Scandinavia with the telecom operator, TeliaSonera. Our telecom operation continues to outperform, fueled by the continuously improving financial performance from our wireless services.

As Manon will later explain, our brand continues to lead the market with a leading shares of gross subscriber adds across wireless, Internet and TV services. Our ability to differentiate our services by leveraging value-added and local content also contribute to our success, which we believe will be further appreciated by our customers once we launch our improved cable TV and broadband offerings supported by the Comcast XFINITY interface.

Results from our media operations were heavily impacted by TVS Bar, which were our second season out of three. Buffered from the absence of the Montreal Canadiens in the NHL playoffs.

Despite very strong ratings throughout the playoff season and other high-quality content such as the Morreale impact and the major soccer league games. Advertising and subscription revenues misses to meet expectations in the quarter, resulting in an increased operating loss from our sports channel.

This further reinforced our thesis that the Canadian broadcasting regulatory model must now implement a more equitable and clear fee for carriage framework that would no longer protect broadcasting services that benefited decades of regulated fees and monopoly to the expense of the new competing services that exhibit similar viewership performance, while remaining financially fragile. On another note, the CRTC approval process for the acquisition of [indiscernible] is ongoing, and we remain confident that it will go through.

Finally, we're pleased to see that our results in our sports and entertainment operations continue to improve, as we almost cut our operating loss by 50% year-over-year. The quality of our relationships with artists, agents, producers and tour managers have been consistently on the rise since the opening of our Videotron Centre, which can only be beneficial to our event line up and gate performances.

We look forward to presenting more concerts that the population of Québec City and the surrounding appreciated, just like to name a few, Alton John, Paul McCartney, Justin Timberlake and local stars like Lara Fabian and Éric Lapointe, who will visit us over the next few months. I will now let Jean-François review our consolidated financial results.

Thank you, Péladeau. Quebecor's revenues were up 0.5% in the quarter to $1,040,000,000.

Revenues from our Telecom segment grew 2.5% to $847 million. Quebecor's EBITDA was up 3% to $417 million.

Our Telecom segment recorded a 6% EBITDA growth to $423 million, but our media operations recorded a loss of $1 million for a $14 million unfavorable variance. Effective January 1, 2018, we have adopted on a fully retroactive basis the new rules under IFRS 15, which specify how and when we should recognize revenue, impacting mostly our Telecom segment.

Excluding the impact of IFRS 15, revenues from our Telecom segment grew 3% in the quarter from $820 million to $845 million, while EBITDA grew 8% from $389 million to $420 million. We reported a net income attributable to shareholders of $41 million in the quarter or $0.18 per share compared to a net income of $138 million or $0.57 per share reported in the same quarter last year.

The decline is mostly attributable to the one-time gain generated in the second quarter of last year from the sale of our AWS-1 spectrum licenses in Toronto to Rogers as well as an unfavorable variance and the loss on valuation of and translation of financial instruments, mostly related to our convertible debentures. Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments, came in at $106 million or $0.45 per share compared to $89 million or $0.37 per share reported in the same quarter last year.

This 20% increase reflects the improvement in our operating profitability, combined with the favorable leverage effect, unresolved, produced by the repurchase of shares previously held by CDPQ. For the first six months of the year, sorry, revenues were up 0.5% to $2,050,000,000 and EBITDA was up 6% to $825 million.

Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments, came in at $196 million or $0.83 per share compared to $164 million or at $0.68 per share reported last year. Quebecor Media's consolidated free cash from continuing operating activities increased from $162 million in the second quarter of last year to $171 million this quarter, as higher current income tax expense was more than offset by EBITDA growth, lower CapEx, variance in noncash operating balances and lower cash restructuring expense.

As of the end of the quarter, Quebecor's net debt-to-EBITDA ratio was 3.4x, up from 3x reported as of the end of second quarter of last year, explained primarily by the cash settlement related to the purchase of the shares owned by CDPQ. In the quarter, we purchased and canceled 780,000 Class B shares.

Since we initiated our NCIB program six years ago, approximately 25 million Class B shares have been purchased and canceled. Note that the board of directors, upon the termination of the August 2017 program, which was amended and increased in December 2017, approved a renewal of the program for an additional year.

Also, in the quarter, we sent a notice for redemption on $50 million of principal value of our outstanding convertible debentures maturing next October, and we cash settled in July. I will now let Manon review our telecom operation results.

Thank you, Jean-François, and good morning, everyone. We're pleased to report continued strong financial results in this second quarter.

Wireless services continue to lead the way with another strong performance. As of June 30, we reached 1,079,000 activated lines, driven by a growth of 30,000 lines during the second quarter and 126,000 lines year-over-year.

We recorded service revenue growth of 13%, fueled mainly by solid customer growth. For a sixth consecutive quarter, our mobile brand led the market and attracted more than 21% of growth additions in our footprint.

While [indiscernible] grew a little less than 1% year-over-year, from $53.32 to $53.70, impacted by a continuously increasing demand for BYOD offers, which represented 45% of new customer addition during this quarter. In addition to the positive impact of not adding to subsidize and set cost, our churn rate was relatively stable, despite an increasing BYOD subscriber base.

Subscriber performance in primary services impacted by the residential moving season. However, we're pleased to report slower net declines across all services as we also led the market in terms of growth adds for Internet and TV services.

In Internet services, our subscriber base remained unchanged in this quarter compared to a decline of 1,000 last year. Year-over-year, we added 47,000 customers to our base.

We recorded service revenue growth of 6%, driven both by customer and ARPU growth. In cable TV, we recorded a decline of 20,000 customers in the second quarter compared to a loss of 24,000 customers for the same quarter last year.

We managed to limit subscriber decline during the busy movie season with the dynamic customer acquisition initiatives and effective retention strategy. In cable telephony, we recorded a decline of 21,000 customers, similar to last year.

As of the end of the quarter, 392,000 customers subscribed to [indiscernible] for growth of 54,000 customers over the last 12 months. On the technology cost front, we are making steady progress in planning and integrating the rollout of our new full IT platform developed in partnership with Comcast.

I am pleased to announce that this new platform will not only include IPTV at the commercial launch, but also smart Internet as well as a whole new fleet of home automation product and services. Our employee base is fully engaged after having seeing glimpses of the new product, and we are eager to initiate testing with them in the upcoming month.

During the quarter, we also completed the rollout of our DOCSIS 3.1 platform, allowing us to deliver speed of up to 1 gigabyte across our entire footprint. In our B2B operations, revenue increased by 2% in the second quarter, mainly due to RDU and ARPU growth in Internet services.

Excluding the impact of IFRS 15, revenues grew 4% year-over-year, wireless line grew 21%, while churn remained stable. We continue to enhance our value proposition as we launched in the last week our cloud communication service that combines the efficiency of a land line with that of mobility through a unified offer.

On the consolidated financial front, our revenues amounted to $847 million in the second quarter compared to $827 million in the same quarter of 2017 for a growth of 2.5%. This growth was 3% according to the previous accounting rules.

Our growth is primarily due to RGU and ARPU growth, mainly in mobile and Internet services. For the first six months of the year, revenues grew 2% to $1.67 billion or 3% according to previous accounting rules.

We recorded EBITDA of $423 million in the second quarter compared to $398 million last year for a 6% growth. Excluding the impact of IFRS 15, we posted an 8% EBITDA growth.

For the first six months of the year, EBITDA grew 7% to $833 million, and 9% over the previous accounting rules. EBITDA margin grew 176 basis points year-over-year, driven by our ability to improve our operational efficiency as well as by EBITDA growth from our wireless services, which posted about 35% year-over-year growth or close to 60%, excluding the impact of IFRS 15.

We generated $265 million in cash flow from segment operations, a $38 million increase from the second quarter last year due to EBITDA growth and lower CapEx. Net capital expenditures, including acquisitions of intangible assets, amounted to $158 million in the second quarter, a decrease of $13 million from the same quarter last year and in line with guidance.

For the first six months of the year, net CapEx amounted to $352 million. I will now let France review our media results.

And thank you.

Thank you, Manon. Consolidated revenues from TV group decreased $12 million or 8% in the second quarter from $153 million to $140 million.

Broadcasting revenues decreased 8%, primarily due to a 12% fall in advertising revenue, combined with a 3% decrease in subscription revenues, mainly from TVA Sports. Advertising revenues from TVA Sports declined 36%, primarily due to the absence of the Montréal Canadiens in the NHL playoff season.

Advertising revenues from our conventional TV channels declined 9%, while advertising revenues from our other specialty services increased 9%. Magazine publishing revenues declined 15% to $20 million, mostly attributable to a 28% decrease in advertising revenues and an 11% decrease in new stand revenues.

Mels revenues increased 2% in the second quarter to $14 million, essentially due to a 3% revenue growth from sound stage and production equipment rental services. TVA group's operating loss amounted to $4 million in the second quarter, an unfavorable variance of $15 million over the last year.

Our broadcasting activities recorded operating loss of $8 million in the quarter compared to a $5 million EBITDA reported last year. Our magazine business recorded EBITDA of $2 million, same as Mels.

For the six month period ending June 30, TVA Group's revenues amounted to $274 million, a decrease of $20 million or 7% year-over-year. Advertising revenues from our broadcasting activities has decreased 8% to $130 million, and subscription revenues from our specialty channels decreased 2% to $63 million.

Our magazine business exhibited revenue decline of 15% for the first 6 months to $39 million, and now recorded revenue growth of 1% to $26 million. TVA group's operating loss amounted to $2 million for the first 6 months as our Broadcasting operations recorded a loss of $6 million, magazines recorded EBITDA of $3 million and Mels recorded EBITDA of $1 million.

Cash flow from segment operations decreased $12 million to negative $7 million in the quarter, and decreased $8 million for the first six months of the year. Let me now turn to - the floor to Pierre Péladeau.

So in conclusion, we're very satisfied with our operating and financial results from this second quarter. Telecom results were solid, as expected.

And leisure and entertainment results were on the right trends. Although event-driven and cyclical in nature, we're concerned about our ability to further strengthen [indiscernible], if no change is made to the Canadian regulatory regime.

That said, content remains key to differentiate our distribution platform. And we intend to do all that is necessary, including asking for changes to regulation in order to produce and acquire value-added content and protect our local cultural environment.

I thank you very much for your attention. And we're now open for questions.

Operator?

Just a quick one on BYOD, first. You mentioned 45% of your Q2 new activations as BYOD.

Just curious, is there any seasonality to your BYOD mix in terms of new activations? And also do you expect that to increase from here going forward?

Or pretty stable at around 45%?

No, it has no seasonality. And I cannot tell so far if it's going to stop at 45%.

What you've seen is, it has been increasing over the last few months and quarters. The only thing I could tell you is that I think that we have to leverage that situation as being a new entrant and basically see that as a long-term vision.

BYOD for us is a long-term strategy, meaning that, of course, it brings a lower ARPU at first, but we make sure that we manage properly the customer base. And so far what we've seen is the churn for BYOD is not higher than the rest of the customer base.

And we deploy [indiscernible] to up-sell them as soon as we can and to enroll them in subsidized packages and what we've seen so far is that with the renewed customer, we are always able to increase the ARPU by an average of $7 per month, which is quite impressive. So I think it's a quite unique position for us being a new entrant to leverage that.

And we will play that strategy as strong as we can, because we think there's a great opportunity for us.

That's helpful. Quite a few of your competitors have also called BYOD as an opportunity as well.

Just curious if you've seen any increased competition in that segment in particular? And actually, if you could comment on the pricing environment in general as well, because seems pretty consistent with most of your peers with the slower ARPU growth this quarter for mobile in addition to BYOD mix that you called out.

You peers have also talked about more bonus data being included in their plans this year. Just wondering if you're seeing the same in the environment in Québec, and on top line?

Well, of course, it's a pretty dynamic marketplace. There's many brands in the market area.

We have been kind of a disrupter because, I mean, we bring added value content attached to packages; we have a unique position as playing the bundle. So I guess that the market is quite dynamic mostly because of that.

That being said, I think that they are reacting to the BYOD success we had so far. And I mean, like any other quarter, we'll be facing the reality of the market area and we'll play our strategy accordingly.

So I think the dynamic will stay and it's for the benefit of the consumer at the end of the day. And we have to play that game and make sure that we manage our financial assets accordingly to be active in the marketplace and keep generating the highest growth rate in the footprint.

Just a follow up on that question about BYOD. And I'm wondering if you can help us talk about what percentage of those who are coming in on BYOD, so the 45% or so are coming in on multi - as a multiproduct customer, i.e., they already have a cable service with you.

If you can't give me specific numbers, wondering if you can just compare that to the overall wireless base of multiproduct customer in your wireless space?

Yes, it's kind of a delicate question, if I may say, because I don't want to disclose too much information because, as you know, bundle strategy is a key strategy for us. What I can only tell you is that we still have room to grow in that area.

It's not all of our customer base - landline customer base who has a smartphone with us. Maybe you've seen being very active with packages such as multiline, or your kids can talk and text freely, basically, because of that unique position that we want to entertain.

So that would be the only thing I would share with you at that point, if you don't mind.

I guess what I'm trying to get at is, you've said that the churn for your BYOD is not higher than the base, which is - which must be because you have a bundle strategy and I'm just trying to tie those two together.

Okay. Yes, the thing you can see is there some kind of a seasonality.

Just to give an idea, in July, we're up by 3,000 units compared to last year. So basically, this is because of the moving season.

Because as you know, people in July are moving from supplier to another since they have to move their household. So basically there's a small seasonality here.

But I wouldn't attach that to a movement from the customer landline base impacting the mobile customer base. But of course, we try to tie people in.

We try to bundle products. Just to give you an idea, I think the churn in terms of mobile is quite well fueled by our Club illico mobile.

We see a tremendous success with that. Actually, subscriber using Club illico mobile show a churn almost half of the rest of the customer base.

So basically, we have a lot of leverage to share.

Okay. Maybe a couple of quick ones for JF.

Wireless CapEx this quarter, wondering if I can get that number. And then on the convertible debentures, even with the case transaction complete, with the leverage where you are, you have ample capacity to settle the convertibles in cash.

I'm wondering how do you plan to address the convertible settlement as we approach that in October.

Yes, I'll start with - we're looking for the wireless CapEx, as we speak. But we'll start with convertible debentures.

The decision has not been taken yet with respect to this - the mix in terms of the settlement, cash and shares. As you know, the maturity date is October 15, so we still have a few months to go.

But obviously we will maintain our maximum threshold of 4x and that's very important to us. But I have to say that also monitor the trading of our stock, because as you know, there will be an impact if we cash settle.

And so we're very sensitive to that. And based on our analysis, we will decide what's going to be the right mix.

In terms of the wireless CapEx for the quarter, it was $15 million, 1-5.

Manon, I wanted to ask you about prepaid. I know it has not been an important driver of your business, but the incumbents have been using prepaid as a good tool to get customers in the door and then switching them to postpaid down the road.

We've seen companies launch prepaid services recently in the hope of kickstarting that conversion cycle for them. Other companies have had great success, like Rogers.

Can you talk about if you're missing a potential growth strategy in wireless, not pushing that angle of the business yet? And if there's potential for that down the road?

And I wanted to also ask you about your Ottawa launch. Recently we've seen heavier promotions in Ottawa, what's your goal over there?

Yes, as for the prepaid, it's a good question. We see that.

I totally agree with you. The only thing I could tell you is stay tuned.

We are - we're preparing something in that area and soon to be I'll be able to share more detail. As for the Ottawa region, we have a tremendous success there.

I think that what we've done is we've put in place team that will focus on that particular market. We also open new stores.

And just for you to know, those two stores are the best stores across the whole network at that point. I think there's an opportunity, there was a momentum and, of course, we'd like to grab as much customers as we can in that marketplace.

What, if I can, on just Ottawa market. What's in your estimates your addressable market over there, if you have something that you can help us there?

And in terms of the customer base, since you don't have a lot of potential bundling abilities as much as you have in other areas, what's your, let's say, upside market share goal? Because you've said in the past, your goal in Québec is somewhere at least 20%, 25%.

What's your goal in Ottawa?

I'm not comfortable to disclose that type of information, sorry.

Okay. And just, if I can, in terms of the rest of the business on the cable side, if I was to exclude wireless results, it's showing - by my estimates some decline year-on-year.

What's - what can we do or what is the company doing to reverse the situation, if you can?

First of all, as I mentioned in my speech, we're very happy with the gross add performance in the market and the footprint. We've been able to achieve the best gross adds in TV as well as Internet.

And what we've seen is some kind of a decline in the Internet reseller take-up rate, so that was a good quarter for us in terms of gross addition. As for about what we're doing, of course, with the Comcast platform coming around the corner, we see tremendous opportunity for us in terms of TV.

I think that we'll be able to regain momentum in that area. And as for the Internet, with all the suite of product that comes with the home automation, which will be a part of the Internet experience for us, the best Wi-Fi in the industry with that new home gateway that is around the corner.

So basically we have a lot of new product soon to come on the market that will enable us to keep our first-rank market share, if I may say, because as you know, we are the dominant player today in TV as well as in the Internet. But I'm quite confident.

Okay. And just one last question from me on media.

It has not been, let's say, it has - media - the media assets had been a little bit more protected than English Canada. We're seeing a bit more pressure.

Do you say - would you say that the pressure we saw in the quarter was predominately just because of what's happening around TVA Sports? Or is there anything else that can come or could continue in the next couple of quarters pressuring EBITDA for Q3, Q4?

Like Pierre said earlier, despite our strong ratings, we suffered from the absence. And for sure it's - the results is for us the absence of the Montréal Canadiens in the playoff.

In the future, we will work on our content strategy to offer 12-month content over the year and thereby reduce the impact of the revenues fluctuation associated with the performance of the Montréal Canadiens. And also we will work hard on expanding our subscription base and higher - and get higher royalty to have TVA valued of its true worth.

I will add to that, France, also that I think that we're really positioned as something unique I would in the marketplace because of the number of media that we're able to line up to our advertisers. This being said, obviously, we have legacy, we have legacy out of our historical performance and our different medias, from newspapers to broadcasting, we also have some outdoors and many other things.

So the challenge, which is not completely a challenge, but certainly an exercise to improve how we can service our customers better in the future with our sales force, with our sales presentation to make sure that when we are lining up our different medias, we are able to successfully meet the expectation of our customers. So this is a sort of a new perspective.

It's not completely new, but it's certainly something that we need to position more and to improve and this is what we are working on and we will continue to work on for the last quarter - for the next quarters.

Two questions, if I might. One would be on clarification.

I believe you made a reference to July adding 3000, would that be RGUs or was that wireless? I wasn't quite sure.

And then my second question would be with respect to the rollout of the Comcast platform, you made mention that employee testing in the coming months. Could you perhaps talk to the milestones that we should watch for in terms of employee testing or employee training as we look forward?

Yes, as for the growth in July, I was referring to mobile and that was - it's 3,000 more than same period last year in July alone. As for the Comcast, well, of course, I don't want to share too much information.

As I mentioned in my speech, we are about to start the employee testing before - in a few months. So as soon as I can share more detail with you will, I'll be more than pleased to talk about that new line of product.

And then, if I might, could I ask how you were doing on the wired year-on-year for the month of July?

Basically, I think we're about at the same as last year. I don't have the specific number with me, but it's smooth.

I'm here to clarify a couple of things. To start with the converts, JF.

You mentioned October 15, but is there not a process or a time frame that you have to meet notification to give your notification well before that date. Can you give us what your view is of the last eight, where we could possibly see the conversion notice from you?

Well, there's a process or a mechanics, I should say, in the [indiscernible] denture. And part of the mechanics there's a possibility for us even not to do nothing.

So we haven't decided which path we're going to choose. So - but even if don't send any notice, everything will go flawless.

Okay. The O2 clarifications around.

BYOD, in the press release you say 35% of new customers are on BYOD and your comments here you're saying 45%. Is 45% gross adds and 35% net add?

No. It's 45% was in the quarter and 35% is rolling 12 months.

That's the difference.

Okay. So both figures we're talking about gross adds?

Your new...

Yes, always gross adds. Yes.

Does that imply then your overall basis is getting up to close to 30% BYOD?

No, that's not something I'd like to share. I think you can make your own calculation.

The other thing I'm a little confused, maybe it's IFRS 15, yes, maybe you can help us, it's wireless EBITDA. So last year in the second quarter it was said that EBITDA was up 60% or more year-over-year, and in Q2, the year before that, it was said to be low 20s.

So we triangulated somewhere around $34 million, $35 million as EBITDA in Q2 last year. Did that base change with IFRS 15?

Like, did that number go up, so that you're growing 35% off of a new number that we don't know? Like, maybe if you can and try to help us with some at least ballpark on the absolute numbers versus just growth rates, because IFRS 15 is changing everything.

Yes, well, the answer is going to be straight. If you look at the press release that we released, in fact, this morning, there is a restatement of our EBITDA and revenues for post- and pre-IFRS 15 for the last eight quarters and most of the difference is really the impact on wireless.

Okay. So we can take that - I look into difference to wireless in Q2 last year and then you're saying 35% growth off of that restated base?

That is correct.

Excellent.

Well, Vince, it's 35% when you - as reported. It's close to 60% before IFRS 15, or excluding IFRS 15.

All right. If we just use the base we had last year, it would be up 60% on that old accounting basis.

I get that, yes.

So given that BYOD was 45% in the gross adds in the quarter, can you tell us what the gross adds ARPU is now? Just wondering what that implies for future growth on ARPU?

Well, the only thing I could tell you is that we are still strong on some key elements such as packages over $60, over $50. We monitor as well as with - our renewal ARPU, as I mentioned, which is up average $7.

So basically I think that the only makes that impact our ARPU now is the ARPU of BYOD, which is slightly lower than the renewal - actual, sorry, than the subsidized ARPU. So I would take keep it to that, if you don't mind.

Okay. So given that it seems that maybe a realistic expectation for growth then is going to be something in the 1% range.

Would that make sense, given such a large performance in BOYD?

Yes, that makes sense. It makes sense.

I think that you have to look at into that into a long-term vision. As I mentioned, BYOD for us is a long-term strategy, so.

And I don't know if you can give this, but is the EBITDA substantially higher with BYOD than the other one? I would imagine it would be, wouldn't it?

Yes, definitely, because BYOD customers is profitable day one.

Yes, okay. And then can you give us a sort of an idea of the mix of those BYOD customers, how many are iPhone or Android?

No, I don't think I have that type of information, anyway.

So the next question is going to be the last one thing. I think it's coming from Tim Casey, is that it?

So Tim, go ahead.

Pierre Karl, could you talk a little bit about - more about the regulatory items you mentioned in your opening statement. What exactly are you suggesting is required?

And I guess what are your strategies to get there? And what would it mean more for your financials?

Thanks, Tim. Look, I would tell you, we're in the middle of a situation where we need - I think that we seriously need to evolve.

We've been for decades run by a regulator that was giving away licenses and to be a broadcaster, whatever your rate to broadcaster or television broadcaster, even distributor or a telecom distributor, you would need a license. Because we were protected, the national territory was protected and then therefore if you want to operate something, you need a license.

Obviously, for the last few years, I would say probably 10 years now, the environment changed dramatically. And unfortunately it seems that the regulator didn't access this changes with the proper assessment.

If we're getting late - as we are late, what we're seeing is foreign media/Internet companies that are eating our lunch. With the regulator continue to let that situation happen, I guess that they need to a little bit wake up and find out that we need to have a new regulatory landscape.

We've been starting, trying to explain what this situation was all about. As we think that we were always anticipating changes, then we were always in front of the parade, I would say, to illustrate and also contemplate the effect that this can have in our different businesses.

So we have other ways to manage things elsewhere in the world since our competition is coming from the world, then therefore we needed to figure out how can we move forward in the same kind of environment that is basically we're facing with. So I think we will continue to happen, and we think that we need more freedom to negotiate the content that we are proposing to our customers forward.

And we obviously look forward this direction to move on in the next quarter to the regulatory body.

So I think that this was the last question. Thank you, Tim.

Thank you all being here this morning with us. And we look forward to see and to talk with you at our next quarter conference call.

Thanks, and have a nice day.