Quebecor Inc.

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Okay. Good morning, everyone.

We apologies sincerely for this delay for technical difficulties beyond our control. This is the second time that this happened as you know.

So we will definitely look into this and fix it through next time. Sorry about the delay.

So welcome to this Quebecor Conference Call. My name is Hugues Simard, I'm the Chief Financial Officer.

And joining me to discuss our Financial and Operating Results for the Third Quarter of 2019 Pierre Karl Péladeau, our President and Chief Executive Officer; Jean-Francois Pruneau, President and Chief Executive Officer of Videotron and France Lauzière, President and CEO of TVA group. You'll be able to listen to this conference call on tape until February 5, 2020 by dialing 877-293-8133, conference access code 48006 number sign and playback access code 48006 number sign.

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 would refer you to the risk factors outlined in today's press release and reports filed by the corporation with regulatory authorities.

Let's now start with our first speaker, Pierre Karl Peladeau.

Good morning everyone. So I'm very happy to report the successful quarter across all our operations propelled by the continued momentum of our telecom operation, where we reach yet another strategic milestone this quarter with the launch of our much awaited new IPTV platform.

Helix. Which hit the market on August 27.

After only five weeks that we had already reached more than 30,000 customers and we are working hard to meet the ongoing demand for this innovative technology. As Jean-Francois Pruneau, obviously say more about it later.

Delivering a smarter more powerful WiFi and enhance TV experience, thanks to voice activation. Seamless integration of web content platform consume home automation services.

Helix will change the way Quebec works enjoy Quebecor's. Enjoy home connectivity and provide a superior platform compared to our bell offering.

As we continue to offer innovative technology as well as differentiated content and services we will keep our focus and efforts to maintain even improve our proven unparalleled customer service and overall client experience. It was a good quarter on the regulatory front as well.

Most notably with the CRTC decisions, the lower sales access rates without any obligation from resellers, I might add. To invest in anything or to return any savings to consumers the decisions we have appeal and intend on fighting actively as we strongly believe that both the process used and the conclusion reached by the CRTC were and are deeply flaw.

Let me be clear. We have nothing against competition quite the opposite.

It stimulates industry participants as we improve with the launch and the success of our wireless business. The only difference was -- and it is a big win.

We invested in the network and created jobs. The TPIAs are doing none of that, they are simply getting a free lunch.

Moreover, it is a crucial with our -- excuse me. I'm sorry -- also on the governmental front, I would like to comment on the print media credits recently announced by the Government of Quebec.

Although we have always favored the free market rules, we certainly won't reject the money which will otherwise continue to finance Lame Duck media operations without the necessary convergence and integration thus becoming everything less relevant in the marketplace. We also regret that this support -- that's not apply to electronic media, thereby unfairly creating two classes of Journalist.

Turning to our third quarter results. We are very happy with the continued growth and even improving profitability of our telecom segment, where Videotron achieve yet again the highest EBITDA margins of the industry.

More specifically in our Wireless operations, we generated 57,000 net adds in the quarter, 37% more than in the same quarter last year and 168,000 over the last 12 months, the highest since the launch of our mobile business nearly 10 years ago. Our two new brands; Videotron Mobile and Fizz lead the market with 30% of total gross adds during the third quarter, which Fizz performing exceptionally well, a clear proof that this a second step in our wireless plan is as much of success of our initial launch in 2010.

In our Media segment. The expansion of our content offering through the additions of new specialty channels and the acquisition of the in centre group of content and distribution company as well our continued effort to optimize our operating costs have all contributed to a significant improvement in our profitability this quarter.

In addition, we are pleased with the performance of TDS, Paul, which continues to grow audience, clarifying that viewers recognize it's a barrier programming and also with our magazine sector which improved its profitability despite a challenging advertising revenue environment. Finally in our sports and entertainment segment.

We're very proud to have been chosen the opening of the reversals and first shows of the New Zealand beyond store with Paul McCartney and Victoria Secret store having already done the thing, the [indiscernible] is clearly establishing itself as a perfect venue we're entering the national artists to launch their world towards. Our growing success in sports and entertainment also shows that this emerging segment clearly fits within and contributes to our strategy of media convergence.

I will now let Hugues review our consolidated financial results.

Quebecor's revenues were up 2% in the quarter to $1.07 billion. Revenues from our Telecom segment grew 3% to $877 million.

Quebecor's EBITDA was up more than 7% to $509 million. Our Telecom segment recorded an 8% EBITDA growth to $468 million while our media operations recorded EBITDA of $33 million, an improvement of $2 million over last year.

Had we not decided to restate the impact of IFRS 16 retroactively, EBITDA growth for both Quebecor and our Telecom segment would have been 10%. We reported a net income attributable to shareholders of $179 million in the quarter or $0.70 a share compared to a net income of $187 million or $0.80 per share reported in the same quarter last year.

This decrease is primarily explained by an unfavorable variance and valuation and translation of financial instruments, partially offset by our 7% EBITDA growth. Adjusted income from continuing operations excluding unusual items and gains or losses on valuation of financial instruments came in at $174 million or $0.68 per share compared to $142 million or $0.61 per share reported in the same quarter last year.

This 23% increase reflects the improvement of our operating profitability. For the first nine months of the year, revenues were up 2% to $3.2 billion and EBITDA was up 5% to $1.4 billion.

Adjusted income from continuing operations, excluding unusual items and gains or losses on valuation of financial instruments, came in at $421 million or $1.65 per share compared to $337 million or $1.44 per share reported last year, a 25% improvement. Quebecor Media's consolidated free cash flow from continuing operating activity -- operating activities rather, decreased from $304 million in the third quarter of last year to $205 million this quarter, explained primarily by an unfavorable variance in the non-cash balances, partially offset by EBITDA growth.

As of the end of the quarter, our net debt to EBITDA ratio was 2.9 times, down from 3.2 times reported at the end of the third quarter last year. I would like to point out the success of our recent refinancing exercise, where Videotron issued $800 million of senior unsecured notes in the Canadian market, yielding 4.5%.

This transaction represents both the largest offering and below was 10-year coupon ever achieved on the Canadian high yield market. The proceeds have been used to repay drawings under Videotron secured revolving credit facility, raising our available liquidity to more than $1.6 billion.

Since the renewal of our NCIB program on August the 15 of this year, we purchased and canceled 1.4 million Class B shares. Since we initiated our normal course issuer bid program eight years ago, approximately 33.8 million Class B shares have been purchased and canceled.

I will now let Jean-Francois review our Telecom segment's results and operations.

Thank you, Hugues, and good morning, everyone. This quarter was a pivotal quarter for Videotron.

On August 27, we launched Helix our new technology platform that accompanies our customers connected lives through a digital ecosystem based on the Comcast XFINITY X1 platform. Helix offers an enhanced TV experience through IP technology that is built around the voice controlled assistant technology and which includes a seamless integration of web content platforms like Netflix, YouTube and Club illico.

Helix also offers a smarter and more powerful WiFi experience and will soon will come home automation services through our Helix five application. Market acceptance for our product is meeting expectations so far and I want to thank our team and our partners who are deeply committed to this project and all the members throughout the organization for their support and dedication, as we reached this important milestone.

We are also pleased to announce that Videotron was crowned the coolest telecommunications company for a second consecutive year among people between 13 and 37 years old, according to the Léger's Quebec youth poll. Turning to our third quarter results.

We have recorded both solid operating and financial performance with a 53,000 RGU growth and an 8% EBITDA growth, how do we not retroactively applied IFRS 16. Our EBITDA growth would have been 10%.

Our wireless services performance remains impressive. As of September 30, we power 1,289,000 mobile lines, supported by a growth of 57,000 lines during the quarter, 15,000 or 37% higher than last year and 168,000 lines over the last 12 months.

This quarter we posted our best ever quarterly in LTM performance in terms of gross adds. We reported service revenue growth of 13%, driven mainly by solid subscriber growth.

For an 11th consecutive quarter, Videotron mobile maintain the leading market share in terms of gross adds complemented by Fizz, which allows us to properly address our total market. As a result, we captured 30% of total gross adds in our market during the quarter, a significant improvement over last year and the best performance out of the four operators in our market.

Despite our competitors' move to offer throttle unlimited offers and handset financing options. Our outstanding performance demonstrates that stability and transparency remains better for the Quebec market.

Consolidated wireless ABPU decreased to $53.28 from $54.28 recorded in the third quarter of last year, resulting from the increasing proportion of BYOD customers in our total base, which once again represented nearly two-thirds of our new adds during the quarter. Excluding the dilutive impact of Fizz, ABPU and ARPU for Videotron mobile actually increased for the quarter.

Thanks to the relentless work of our teams over the last few months. Our Fizz Mobile services platform has been reinforced, tested and is now stable.

We therefore recently launched our new pricing structure for Fizz Mobile plans, which remains competitive despite the elimination of the stabilization discount. Finally, our overall monthly churn rate continues to decline and now stands at 1.3%, thereby further increasing customer lifetime value, despite our constantly growing BYOD customer base.

Moving on to wireline, we recorded a growth of 17,000 broadband customers during the quarter. Fizz broadband results are improving and already represent an interesting complement to our overall offering, although brand awareness remains low at this stage.

As we continue to build this new brand Fizz broadband results will further contribute to our growth. In cable TV, we recorded a decline of 13,000 customers in the third quarter and as for cable telephony, we exhibited a decline of 20,000 customers during the quarter.

Overall, our broadband and TV subscriber performance for the quarter was somewhat impacted by our installation backlog for Helix. In order to ensure a robust launch from a product back office and customer care perspective we purposely limited our installation capacity for the first four commercial weeks.

Thereby resulting in a heavy backlog of more than 10,000 scheduled installation as of the end of the quarter. We are currently operating at full installed capacity and we expect the backlog to be eliminated by the end of the year.

As of the end of the quarter 444,000 customers subscribed to Club illico, our OTT video service. We recorded growth of 13.000 customers during the quarter and a growth of 41,000 customers over the last 12 months.

Club illico boast over 472 million viewings since its launch. We recently announced 30 new original an exclusive productions from fiction series to documentaries, comedy and teenage series.

On the financial front consolidated revenues amounted to $877 million in the third quarter compared to 855 million in the same quarter of 2018. Revenues were up 3%, primarily due to RGU growth, mainly in mobile and broadband services.

During the quarter, we recorded EBITDA of $468 million for a year-over-year growth of 8% and had we not restated 2018 financials for IFRS-16, EBITDA growth would have been 10%. Service revenue growth and ongoing cost containment initiatives contributed to our EBITDA growth.

Our ability to maintain an industry-leading EBITDA margin of 53% without compromising customer experience demonstrates our continued focus on costs and our ability to leverage operational efficiencies. For the first nine months of the year, EBITDA grew 5% to $1.3 billion or 7% had we not restated for IFRS 16.

For the third quarter, we generated $294 million in cash flow from segment operations compared to $276 million during the same period last year. For the first nine months, excluding acquisition of wireless spectrum licenses, we generated $836 million in cash flow from segment operations compared to $773 million for the same period last year.

Net capital expenditures including acquisitions of intangible assets amounted to 174 million in the third quarter, an increase of $17 million from the third quarter last year. After nine months, we expect total CapEx for the year to be below the low end of our guidance range, mostly due to some delays in deploying our LTE-Advanced 5G ready network.

For the first nine months of the year, net CapEx amounted to $505 million, excluding the purchase of spectrum licenses. Wireless CapEx amounted to $30 million in the quarter and $75 million for the first nine months.

I will now turn it over to France to review the media segment performance.

TVA Group recorded operating revenues in the amount of $126 million in the third quarter of 2019, a year-over-year decrease of $1.8 million. Broadcasting revenues increased by 3% essentially due to the addition of operating revenues from the Évasion and Zeste channels.

Since their acquisition on February 13, 2019 and a 7% increase in advertising revenues for the other specialty channel, partially offset by a 4% decrease in TVA Network's revenue. Under ratings front, our overall viewership market share reached 38.3%, up 0.2 points from the same period of 2018.

TVA Network held its number one position with a 23.6% market share, while our specialty channels and the combined market share of 14.7%, 0.3 point increased, mainly due to the acquisition of Zeste and Évasion, which continue to have positive impacts on both our financial results and the range of our content offering. TVA Sports continued to perform well with a 0.4 points jump in market share during the quarter.

SGM remained the most popular specialty channel in Quebec with 5.1% audience share. Magazines publishing revenues declined 21% mostly due to a 29% decrease in advertising revenues and the discontinuation of the publication of ELLE Canada and ELLE Quebec magazines.

The last issues of which were released in May 2019. MELS revenues decreased by 13% due primarily to a 29% decrease in revenue from some stage mobile units and production equipment rental, partially offset by revenue growth from visual effects, dubbing and subtitling.

Our new production and distribution segment following the acquisition of Incendo on April 1 2019 added $3.1 million in revenue for the third quarter. TVA group's EBITDA reached $31.1 million for the third quarter, an increase of $3.1 million compared to the same quarter of last year.

Our broadcasting segment reported EBITDA of $21.5 million, a favorable variance of $4.5 million. The Magazine segment reported EBITDA of $2.9 million, up $0.8 million, while MELS segment posted EBITDA of $6.5 million, $2.6 million lower than last year.

Our new production and distribution segment had a positive contribution of $0.3 million EBITDA to our quarterly financial results. First nine month period ending September 30, TVA Group's revenues amounted to $406 million, a $4 million increase or 1% year-over-year essentially due to an increase in our broadcasting segment following the addition of operating revenues from the Évasion and Zeste channels as well as the addition of Incendo.

Our magazine business posted a revenue decrease of 15% to $48 million for the nine-month period and MELS recorded a 4% revenue decrease to $48 million. TVA Group's EBITDA amounted to $39 million for the nine month period, a $10 million increase or 36% year-over-year.

Our broadcasting business reported EBITDA of $22 million, while magazines and MELS both reported EBITDA of $8 million. Our new production and distribution segment added $0.6 million to our group's EBITDA.

Cash flow from segment operations was $28 million for the third quarter, an improvement of $0.5 million over last year. For the nine-month period cash flow from segment operations amounted to $26 million, $7 million higher than last year due to our strong EBITDA growth.

Let me turn now the floor back to Pierre.

So on the strength of our performance in the third quarter and as we enter the important last month of the year, we will spare no effort to keep up the momentum to reach our growth and profitability objective for 2019, while remaining focused as ever on protecting one of our most valuable assets, our hard-earned reputation for delivering the best client experience in the industry, thus maintaining our leadership position as the reference in telecom, news media, culture and entertainment in Quebec. Thank you for your attention and we will now open the lines for questions.

Thank you. Can you hear me okay?

Yes, we can now.

All right.

Finally.

I guess – yes.

Jeff, you are the only one we ever hear, so go for it.

Maybe I get a chance to ask all my questions. Okay, let's start with ARPU.

Jeff, I think you talked about the transition of the pricing to take away some of the transitional or stabilization discount that you were renting earlier. How should we think about that as we look at the ARPU growth trends in the next few quarters or even good looking out to next year?

And then the second question is just related to the margins I think in the quarter, very strong operating margins. EBITDA margins across both it looks like cable and wireless.

Wondering if you can talk a little bit about the sustainability of some of the margin improvement that led to the 8% growth this quarter.

Sure I'll start with ARPU. So on October 17, we withdrew our stabilization discount at Fizz since the platform has been tested and is not stable.

And the discount was about 30%, so that discount has now disappeared. That being said, obviously, there has been some impact on our subscriber base and growth at following this price increase, but the good thing is mostly to the benefit of Videotron.

So, overall, when we look at our subscriber results for the month of October, we're well in advance compared to last year even though Fizz's results were lower than the previous week. The week preceding the price increase.

In terms of how do we see it going forward, obviously, through the stabilization period we haven't really had a chance to balance the pricing structure for Videotron Mobile and Fizz to make sure that we maximize our growth. So we will take the next few weeks to do that.

So we might be playing with their pricing structures here and there. That being said two-thirds of our net adds are BYOD including Fizz.

Our overall subscriber base is not up two-thirds being BYOD, it's lower than that. So since even following the elimination of the stabilization discount, the prices of Fizz is lower generally than Videotron.

I think that up until we reach that balance in our overall subscriber base we will continue to see some dilution on ARPU. But I would expect that being lower because the prices at Fizz are now higher than they were before.

And on a year-over-year basis Videotron Mobile is seeing inbound ARPU and ABPU going up both on the BYOD side and the subsidies subscriber side. So it's really a question of reaching that balance in our overall subscriber base with Fizz which is priced at a lower price.

In terms of the EBITDA margin yes, it's true we have -- we had a very strong EBITDA margin in the quarter. We had a contractual obligation on which we worked for a while to restructure, which we were successful in the quarter which will generate future ongoing savings.

But also resulted in the reversal of a portion of our liability related to that obligation. It's an operating obligation obviously and it resulted in a gain.

And the most important thing to note is that even though we take out that gain we would have beaten the consensus EBITDA by a material margin.

What was the size of that gain? If you…

The size of that gain was if we take out the gain we would have beaten the consensus EBITDA by a material margin. That's the size of the gain.

Okay.

And if I can complete. I'm sorry Jeff.

I'm going to complete with respect to wireless versus wireline margins. We've seen and obviously as lifetime value for subscribers is increasing and we don't have obviously to subsidize the customers -- BYOD customers and the churn is going down.

Obviously we expect that at some point we're going to be -- and we're going to see some acceleration in terms of wireless margins and I can tell you that in Q2 it occurred.

And just a quick clarification on the third on the price change on Fizz. Did that apply to just those that were in your Fizz base or were those applied only to new customers coming in?

It applied to mostly new customers coming in.

And when do you expect the ones in the base to actually start to pay full price?

When they're going to change their packages.

Okay. I'll pass the line.

Thanks.

Thank you. Next question, please.

Hi. Yeah, a couple of questions on wireless.

So in the past you talked about being able to move BYOD customers up to a higher ARPU when they got a new device or they ran out of their existing contract and I was just wondering how that is going?

It goes well. Obviously, that's our goal at some point.

Well, our goal is to keep our customers -- peers. So whatever ways they want to stay with us on a subsidized package or staying on BYOD our goal is to keep our customers and we're very successful at doing so.

As I said our churn rates are going down so on a sequential basis and on a year-over-year basis. So it's -- I think that we have the right offers in the marketplace that we have value add that our subscribers are happy with.

Talking about Quebecor mobile is a very, very good example that's unique. And it's one way to differentiate our offers.

Obviously the bundle discounts and whatnot so there is many, many things that we have available for our customers and we offer to our customers to maintain our relationship with them and we're very successful in doing so.

Is the is the ARPU left about $7 when you move someone up on average? I think that's what you indicated in the past wondering.

That's probably a bit more than that.

Okay.

Yes.

And then just on Fizz, I think, initially when you roll this out the EBITDA margin was lower than the Videotron brand, but it doesn't seem to be impacting the EBITDA margin at all. EBITDA margin continues to grow.

So I was just wondering where you stand with respect that EBITDA margin?

We have a -- I would say these were the last two quarters. We had I would say on a year-over-year basis at least we had a double, let's call this double positive on the EBITDA margin.

Obviously, with the churn rates going down and not having to subsidize our customers and the BYOD new ads in proportion of the total base is growing and obviously have a positive impact on the wireless margin. But on top of that when we started Fizz a year ago Fizz was losing money so obviously diluted to our EBITDA margin and now Fizz is becoming profitable.

In fact in the third quarter, we were profitable. We were breaking even in Q2 slightly positive, but now we're certainly in the positive territory and it should continue to grow as we grow our subscriber base.

So I think we have -- and that's probably and that explains why in terms of EBITDA growth.

So if I continue along with that thought that would imply that going forward as Fizz continues to grow in profitability is going to lift the total EBITDA margin know?

Well, if you do the math correctly I would agree with you David.

Okay. All right.

So just let me answer the cable TV sub losses. They were up quite a bit this quarter versus the prior years.

I was wondering was there anything unusual that would account for that?

No, I think, what I would say here is I think that our prudent approach with respect to our launch of Vilix has definitely somewhat impacted our wireline subscriber growth. Like I said previously, at the end of the quarter we had the installation backlog of more than 10,000.

We expect that this backlog will be eliminated by the end of the year. So that should contribute to a better performance on wireline both TV and broadband I would say.

Okay. And then just lastly if you can give us an update on where the CapEx is expected to finish for 2019.

And I don't know if you can comment on 2020.

Well, you have already commented.

Yes, I already commented on this year so 2019. We will definitely be lower and on the low end of our guidance range.

Our guidance was for the year $725 million to $800 million. So we'll be lower than $725 million because of the delays that we experienced in the deployment of our 5G or LTE advanced 5G network.

And obviously that means that next year we're going to have to recover those delays and we'll probably see we'll definitely see a spike I would say next year in terms of our CapEx. But I would say inside our usual annual guidance that we provide to the street so I would not -- certainly not expect that to be higher than $800 million.

Okay. All right thank you.

Thank you.

Thanks.

Next question

Thank you for getting me in the queue. I wanted to ask you what are the delays for the rollout of 5G related to?

And I just want trying to figure out what's driving that push into 2020 from 2019.

Yes, it's related to our RFP for the radio access network. We experienced delays while we were doing our RFP.

The RFP is mostly completed. So we should be able soon to conclude on the RFP and that's primarily the reason why we experienced delays.

So should we take from this that you're -- you discussed in the past, there are two options out there for you either doing a network sharing agreement or going out at it alone. Can we conclude from this that you moved on and you're doing this on your own?

No. You cannot conclude that.

Okay.

But obviously, the not the terms, but the structure of any type of sharing with our partner is under discussion now, but obviously even though we're sharing the network we need radio. So we needed to do our RFP anyway, but we are a movement.

No matter what if we don't get any agreement on whatever structure we are in movement and we will proceed.

Yeah. Of course.

So when you talk about your $800 million ceiling in terms of CapEx is that -- and for 2020, is that under the assumption that you go at it alone or with a partner?

It's normally one, because we know if we share, we're going to be sharing 50-50. So it's really -- I don't think that the early years are impacted by the share.

Okay. So either way it should be below or at $800 million max.

Okay. Now when you look at the pricing in the market and wireless it has been quite fluent over the last few weeks, we've seen pricing on unlimited plans in Quebec go 65, 75 then going back to 65 in the last couple of days by the incumbents.

Can you talk about what you're seeing in the market in terms of pricing and with that, I mean, you significantly take a different marketing view on these unlimited plans, you're offering bigger buckets instead of going at the same kind of marketing of unlimited as the incumbents. Are you seeing more pressure, less pressure?

Are you seeing push to subsidize more in the market or less? Can you talk -- let me -- just on that front, please?

Yeah. In terms of well, I think that going to unlimited was definitely too early from the incumbents.

And I really think that the way to limit consumption that they've chosen trialing -- it's not the right thing -- it's not the right thing to do, because it's it impacts customer experience too much. When you're consuming -- I think I said at the previous quarter, when you're consuming big data buckets for multimedia consumption, once you get trouble your experience is so bad that you don't like it.

And so our view is that going unlimited is not the right thing to do. We prefer offering bigger data buckets not unlimited, but bigger data buckets priced very competitively.

And in fact I don't know if you're aware, but we've launched a few days ago I think something that is going to be very powerful in the marketplace, which is some sort of an insurance in terms of overage for our customers. So it's 100 gig…

100 gig. Yeah.

Yeah, exactly available over one year and once you hit your data cap on the month, you can go into your one gig basket and use the one gig basket without paying any overage. So it's a different way to approach to the market, but it's always up full speed.

It always provides the best customer experience or the best client experience. And I think that's what the Quebecor's want.

And leading our previous year by 37% on sub adds and with the month of October that we're seeing right now, although, we've seen -- I think that we've chosen the right strategy. And in terms of subsidies and financing option, I think for our subsidies and BYOD obviously remains our strategy.

So we're not very heavy on subsidies. So I don't think that we are impacted or hurting ourselves with respect to the level of subsidies that we provide, because our strategy is very much focused on BYOD.

Okay. And my last question JF on the regulatory side, how should we handicap the regulatory environment right now in Canada when you look at it versus previous years are you inclined to be less or more worried about how things are happening or taking shape in Ottawa on that front?

Yeah. Well, let me put it this way.

What prevents me for sleeping at night, it's regulation, because I don't control it. So, obviously, what we're seeing from this -- from the regulatory bodies including the CRTC.

I'm very not pleased with that. And we're going to -- in terms of some decisions has been -- that has been announced or taken by the CRTC, we will fight as hard as we can.

But things that I don't control, I'm always concerned about.

Is it making you delay some of the rollout of 5G? Is that -- are those decisions coming up on the wireless affecting your decision taking -- decision making activities on investing in CapEx?

No, sure. We're disciplined investors, and if the return is impacted by some regulatory decisions, we're going to have to take our decision and in fact, I can tell you that we have already taken some decisions.

We've announced to the CRTC and the resellers and our retail customers that we are withdrawing the one gig service. We will no longer offer the one gig service, because it requires investments and with the new regime we cannot afford it.

So we have to take decisions we've taken that decision. It's probably the first -- the most material one that with that -- that we've taken so far, but it's going to be followed by others.

Okay. Thank you.

Thank you.

Hi. Thanks for taking the question.

I just was wondering with the launch of those 100 gig buckets that people can dip into to avoid overheads, just what is your exposure to overhead revenue right now and kind of across the industry it's around 5%. I would be interested to hear kind of where yours sits in relation to that?

And then separately with Helix. I know it's early, but maybe just talk to your expectations about what you expect to see on the Internet revenue fronts from customers that are migrating over just in the early days and maybe as we go into the rest of the year?

Thanks.

In terms of overhead revenues, obviously, it's going to have an impact, but our buckets are already so big that I don't think that the impact is going to be that material. And on top of that the 100 gig that is available, there are some limitations on a monthly basis.

So you cannot take the 100 gig on the first month. So we have some caps on the 100 gigs as well.

So, some limitation to prevent the excess usage that way. So I don't I don't expect any new material impact with respect to overhead revenues.

In terms of Helix, I'm not sure I understood the question correctly. But…

Assuming that you're expecting a like a bump up perhaps in the packages that people choose for Internet, perhaps not, but that was the premise of my question what your thinking is?

Yeah. Yeah.

That's okay. I understand now the question.

Well, I think there is a potential positive impact of Helix on Internet, because as you know the TV, it's IPTV platform. It's powered by the Wi-Fi and it has the potential of having people migrating to bigger packages or higher speed packages because of you know now that the link that there is with TV.

So I think there is the potential for that. In terms of the results so far, I couldn't say I don't have the by heart with all the statistics, but I definitely think there is the potential for that.

And if you look at least what we know in the public domain from Rogers results on broadband following the introduction of the X1 platform. I think it's very positive.

So I'm very enthusiastic about the future of the broadband service with our Helix platform.

Okay. Thank you.

Thank you.

Yeah. Thanks very much.

First off, given somewhat cryptic answer on the gain within the telecommunications EBITDA this quarter, can I just make sure we're all level set of what do you think consensus was because I've seen different numbers out there. Are you using the $453 million number that growing team distributed?

Yeah that's correct. That's the one that I have.

Okay, great, thanks. Second.

I should have said 475, but…

But there's talk of Club Illico, I think you said tripling the amount of investment in original Quebec productions for this year or next year. Does that mean there could be like a spike in content costs that will be might be tough to offset or is it still a pretty small immaterial base that you're talking about?

Yeah, it's pretty small, but obviously when you're augmenting the proposition in terms of content, there is going to some increase in cost. That's for sure.

That being said, the one thing that we realize over time is that -- well I don't know if it's only true for the Quebecor's. I don't think so because it's I think it's the same kind of trend with Netflix, but there is a tendency from the population to look for documentaries.

So, we are really beefing up on documentaries and as you can expect, it's not the genre that is costing the most. So yeah, in terms of content, we will augment, it is going to have an impact on cost, but it's not material.

Are you able to leverage TVA's production capabilities in any way in doing this or is this all third-party work?

No, it's always -- our model is convergence. And when we talk about convergence, we talk about everything.

So, obviously in terms of content production and content generation, it also plays out quite significantly.

In buckets, based on the convergence model that we've been obviously working on for so many years and it shows that we've been able to deliver successful and will continue with the talent and creativity that we've been able to get from our content business.

And last one for me J.F. If your data buckets are so big, you don't want to do unlimited.

You think giving 15-gig to 20-gig data buckets is the better alternative plus 100 gig top-up opportunity. Can you help me think through when 5G finally comes and people start using a lot more data?

How do you monetize that when the average person can already use, call it 20 gigs a month without paying any more?

That's well that's a good question. Obviously, I think that's with 5G, people will consume more.

There is no doubt about that. With speed -- with so much speed being available to customers, they have the potential for increasing the data usage.

And obviously, our marketing offers and promotions and whatnot will reflect that. But at this stage, we're working with -- we're working with the network that we have and the layers that we have and I think we're quite successful and that's what counts for me as we speak.

Okay. Thanks.

I think that will be the last question.

Thanks for squeezing me in. One different question here obviously, you guys have a good capital return program in place for dividend growth, target and or payout ratio target in the buyback.

Can you just give us an update on where you stand here on M&A opportunities, but with your current asset mix, are you happy with it? Are you happy with the geographic exposure here?

Are you content just investing in the convergence model? Any update there?

Pierre Karl, I guess maybe starting with you would be great.

Yes. On the M&A side, you know the culture of this company that has been always to be opportunistic.

And we will continue in this direction. Therefore, I think that as you know, we have been always disciplined.

I like in fact when Jean-François mentioned this also in the result speech or answering questions. This is something that we have been following for the past 20 years.

And this is certainly something that the market recognizes and I think we have a good description of that when we launch our recent bond refinancing. So, we will continue to look forward in this direction.

On the geographical side, I think that you're right to mention that we would like to grow elsewhere. It's a matter of opportunity and as of today, we have nothing to announce.

But we will certainly continue to be opportunistic with the guidance I just gave it to you earlier. And maybe Hugues, can answer you know what was your first question?

Well, I think it was it was it was part of that as well, right. There was how much how much we'd allocate capital to M&A where we're looking.

I mean it's -- I think, I'll just add to what to what Pierre Karl has said. We will continue to be opportunistic.

Obviously the return is much more interesting for us if it fits within our ecosystem in Quebec and feeds our convergence model. That being said, we will if there are opportunities outside of Quebec, I'm pretty sure we'll as long as it is an accretive and interesting deal, we'll have some interest in looking at it, right?

Absolutely and don't worry. We're not going to overbid on transact.

Thanks very much.

Thank you very much. So continue with the next conference call.

Have a nice day.