Quebecor Inc.

Ladies and gentlemen, 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 fourth quarter and full year of 2019 are Pierre Karl Péladeau, our President and Chief Executive Officer; Jean-François Pruneau, President and CEO of Videotron; and France Lauzière, President and CEO of TVA Group.

You'll be able to listen to this conference call on tape until June the 11, 2020 by dialing 877-293-8133, conference access code 48006#, and playback access code 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 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 Péladeau.

Good morning, everyone. Reviewing the year 2019, I am very pleased with our financial and operating performance.

As we posted a 6% or $103 million EBITDA growth for the year and a 7% EBITDA growth in the fourth quarter continuing to outperform our peers and competitors. In addition, we generated more than $1.144 billion in consolidated cash flows from operation for the year which represents $132 million or 13% more than in 2018 and our best performance ever.

In light of these favorable results and following our plan to gradually increase dividends to represent, 30% to 50% of our net free cash flow, I am happy to report that Quebecor Board of Directors declare yesterday a quarterly dividend of $0.20 per share on both Class A and Class B shares up from $0.1125, a 78% increase. That's all the way our telecom segment delivers solid result in 2019 with 5% annual EBITDA growth propelled by the continued momentum from our 100% digital brand sales and the launch of Helix, our new IPTV and broadband platform.

With our recent launch of wireless services in the Témiscamingue region and our acquisition of Télédistribution Amos in the Abitibi region, Videotron further reinforces its position as the number one telecommunications company in Québec. On the regulatory front, we are happy with the ISED recent announcement of a certified provision for regional players in the upcoming 3,500 megahertz auction.

With wireless prices 35% to 40% lower in Québec than in the rest of Canada, Quebecor and Videotron have clearly demonstrated the impact and value created by regional players. The infrastructure based model is working well, so we must stay the course and continue delivering value, performance and service for the consumer in Quebec and Canada.

Our Media segment also delivered outstanding result in 2019. With the acquisition of Incendo [indiscernible] and distribution capabilities, the Évasion and Zeste specialty channels along with continued tight cost management the Media segment generated higher revenue than an impressive $15 million EBITDA growth in 2019 while Group TVA maintain its leading position as the most watched network in Quebec with 38% market share.

In this regard, as TVA has reduced almost all of its distribution agreement with the notable exception of Bell with everyone recognizing the fair market value of our channels. I will repeat that it is now imperative that Bell finally accepts the fair market value of TVA Sports and all our other specialty services.

Finally, our sports and entertainment segment continue to grow with 97 cultural and sporting events presented at Le Centre Vidéotron in 2019 offering ever more diversified and profitable events. Successful and widely attended shows such as [Celine Dion] produced in collaboration with [indiscernible] which sold more than 75,000 tickets, as well our partnership with Piknic Électronik, Igloofest and other popular events in the Montreal area are further positioning us as the hub for their creation, production and distribution of live events and entertainment content in Québec, thereby feeding our multiple distribution platform within the Quebecor Group.

I will now let you review our consolidated financial results.

Merci, Pierre Karl. For the fourth quarter, Quebecor’s revenues were up 5% to $1.14 billion and revenues from our Telecom segment grew 5% to $909 million.

Quebecor’s EBITDA was up more than 7% to $495 million. Our Telecom segment recorded a 6% EBITDA growth to $463 million, while our Media operations recorded EBITDA of $35 million, an improvement of $7 million over the last year.

Had we not decided to restate the impact of IFRS 16 retroactively, EBITDA growth for Quebecor and our Telecom segment would be 10% and 9% respectively. We reported a net income attributable to shareholders of $145 million in the quarter or $0.57 per share compared with a net income of $119 million or $0.46 per share reported in the same quarter last year.

This increase is primarily explained 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 $160 million or $0.63 per share compared with $133 million or $0.52 per share reported in the same quarter last year.

This 20% increase reflects the improvement in our operating profitability. As of the end of the quarter and the year, our net debt to EBITDA ratio was 2.9 times down from 3.2 times reported at the end of the fourth quarter of last year, and similar to our Telecom peers.

For the full year, revenues were up 3% to $4.3 billion, and EBITDA was up 6% to $1.9 billion. Adjusted income from continuing operations excluding unusual items and gains or losses on valuation of financial instruments came in at $581 million or $2.27 per share compared with $470 million or $1.96 per share reported last year, a 24% improvement.

Our consolidated cash flow from operations for the year 2019 increased by $132 million or 13% to $1.144 billion, our best performance ever. Available liquidity of more than $1.7 billion as of the end of the year and our growing cash flows will be more than sufficient to fulfill our commitments and fuel our growth.

In 2019, we purchased and canceled 3.1 million Class B shares. Since we initiated our normal course issuer bid program nine years ago, approximately 34.2 million Class B shares have been purchased and canceled.

I will now let Jean-François review our Telecom segment operations.

Thank you, Hugues, and good morning, everyone. So before we start our operating review, I'd like to go over some of the significant events that I highlighted in 2019.

It was truly a remarkable year for Videotron filled with accomplishments initiatives that strengthened our position as one of Canada's leading telecom companies. As you know, during the year, we launched Helix, our new broadband video and home connected technology platform that is based on their Comcast X1 platform.

So far we are pleased to count as of today more than 190,000 broadband and video RGUs on our next generation platform in only six months of commercial service. In 2019, we have also partnered with Samsung Electronics Co., for the deployment of our LTE Advanced 5G radio access technologies in Québec and the Ottawa region that we will gradually rollout starting in 2020.

Finally late in the year, we concluded an agreement to acquire Télédistribution Amos right after the CRTC ordered Cablevision Bell to provide us with wholesale Internet access in Rouyn and Val-d'Or. These two developments will allow us to expand our service offerings in the Abitibi region and further strengthen our leading position in the province of Québec.

Today I am very pleased to announce that we connected our first customer in Amos last week, clearly showing our commitment to compete in this region for the benefit of the Abitibi population. We continue to meet our strategic and financial performance objectives, all while focusing on delivering the best experience to our customers and employees.

Throughout the year, we received numerous distinctions, some of which we are pleased to share with you today. We are one of Canada’s top 25 employers, according to Mediacorp Canada and the Best Employer in the Province of Québec based on ND.

We are also one of Canada’s top 70 greenest employers, again according to Mediacorp Canada. And finally, for a sixth consecutive year, we topped Ipsos-Infopresse index as the most influential brand in the Québec Telecom industry.

Turning to our fourth quarter results, we're pleased to report both solid operating and financial performance with a 5% growth in revenues and a 6% EBITDA growth. Had we not retroactively applied IFRS 16 to our 2018 financials, our EBITDA growth would have been 9%.

For the full year we exhibited revenue growth of 3% and EBITDA growth of 5% or 8% had we not retroactively applied IFRS 16. Our performance in wireless services remains impressive.

As of December 31, we powered 1,331,000 mobile lines fueled by a growth of 42,000 lines during the quarter, 9,000 or 27% higher than last year and a growth of 177,000 lines over the full calendar year. This year we posted our best ever annual net adds performance since the launch of our facility based mobile services in 2010.

We've reported year-over-year service revenue growth of 13% in the fourth quarter driven mainly by solid subscriber growth. For a third consecutive year, we led the market in terms of share of growth adds fueled by the success of our new mobile service Fizz and overall we captured just shy of 30% of growth adds in our market during the quarter.

We have recently launched our mobile services in the Rimouski region, a very good news for the consumers in this region who will now enjoy lower prices and the best customer experience. Consolidated wireless ABPU decrease to $51.99 from $53.25 recorded in the fourth quarter of last year, resulting from the increasing proportion of Fizz customers in our total customer base.

Overall, BYOD customers including Fizz represented nearly two-thirds of our new ads during the quarter. More importantly, ABPU and RQ for both Fizz and Videotron Mobile actually increased year-over-year, and I’ll talk about in depth.

Finally our churn rate continues to be well under control as it remains stable year-over-year at 1.3% despite our constantly growing non-contractual customer base. Our marketing tactics continue to focus on the BYOD segment as we prefer its cash flow and lifetime value profile, without having to compromise on churn, thanks to our content, customer experience and bundling competitive advantages.

Moving on to broadband, we recorded growth of 3,000 broadband customers during the quarter and 23,000 for the full year. As I've previously mentioned, Helix exhibits strong growth as we now serve more than 100,000 broadband customers in less than six months of commercial service.

Video services declined 13,000 customers in the quarter as consumer awareness for Helix and its advance functionalities remains at infant stage, but we are confident that the strategies and tools that our teams continue to develop on various communication channels will bear fruit over the future. We are however massively migrating customers from our legacy platform to Helix, which is clearly beneficial to churn statistics and cost reductions.

As of the end of the quarter, 459,000 customers subscribed to Club illico, our OTT video service. We recorded growth of 16,000 customers during the quarter and 38,000 over the last 12 months.

In December, we launched [indiscernible] an original series shot in the far north of Quebec which broke UN records in his first week and is already attracting interest from international markets. On the financial front consolidated revenues amounted to $909 million in the fourth quarter up 5%, compared to the $866 million recorded in the same quarter of 2018.

Our low margin equipment installment program for Helix contributed to this group. For the full year, we recorded revenues of $3.5 billion.

EBITDA amounted to $463 million in the quarter for a growth of more than 6%, while we recorded EBITDA of $1.8 billion for the year for a 5% growth. Again, had we not restated 2018 financial for IFRS 16, EBITDA growth would have been 9% for the quarter, and 8% for the full year.

Our ability to maintain industry leading EBITDA margins of 51% without compromising customer experience demonstrates our continued focus on cost and our ability to leverage operational efficiencies. For the fourth quarter, we generated $282 million in cash flow from segment operations compared to $245 million during the same quarter last year.

For the full year, excluding acquisition of wireless spectrum licenses, we generated more than $1.1 billion in cash flow from segment operations for a growth of more than $100 million. Not only are we focused on EBITDA growth, but our rigorous management of CapEx also proves to be supportive to our cash flow growth.

Net capital expenditures including acquisitions of intangible assets, but excluding wireless spectrum licenses amounted to $180 million in the fourth quarter. For the full year, net CapEx amounted to $685 million excluding the purchase of spectrum licenses, $13 million lower than last year and the decline almost entirely realizing the fourth quarter as we prudently decided to put some CapEx on hold in light of regulatory uncertainties.

Wireless CapEx amounted to $37 million in the fourth quarter and $112 million for the full year. In 2020 reflecting the added potential pressure on our business model coming from ongoing uncertainties around the regulatory environment, we have further reduced our CapEx plans for the year.

As a result, we now expect to spend from $625 million to $700 million in CapEx for the year including our multiyear LTE advanced 5G radio network investment program but excluding wireless spectrum licenses from the 8,500 megahertz auction scheduled for the end of 2020. I will now turn it over to France to review the Media segment performance.

Merci, Jean-François. TVA Group recorded operating revenues of $164 million in the fourth quarter of 2019, a year-over-year increase of $13.7 million.

Broadcasting revenues increased by 8% essentially due to the addition of Évasion and Zeste channels since their acquisition on February 2019, a positive retroactive adjustment to subscription revenues, a 4% increase in the advertising revenues of the other specialty channels, and then 1% increase in TVA Networks advertising revenues. On the ratings front, TVA Network held its number one position with 23.3% market share.

The addition of the Évasion and Zeste channels offsets the decrease in the combined market share of the existing specialty services and maintained the total market share of our specialty services at 13.5%. This acquisition continues to have a positive impact on both our financial results and the range of our content offering.

As Sam remained the most popular specialty channel in Quebec with a 4.8% audience share for the fourth quarter of 2019. Magazine publishing revenues declined 24% due to the decreases in advertising subscription and news channel revenues on a comparable basis and the sale of the publication of Elle Canada and Elle Québec magazines the last issues of which were released in May 2019.

MELS revenues increased by 24% due to the higher revenues from all segments activity. Including a 12% revenue increase from sound stage mobile unit and equipment rental, a 82% increase in visual effects, a 17% increase in post-production.

Our new production and distribution segment created following the acquisition of Incendo on April 1, 2019, added $6.8 million in revenue in the fourth quarter. TVA Group's EBITDA reached $33.6 million for the fourth quarter, an increase of $7.7 million compared to the same quarter of last year.

Our broadcasting segment reported positive EBITDA of $21.3 million, a favorable variance of $4.7 million. Our Magazine segment recorded EBITDA of $2 million, down to $1.3 million, while MELS segment posted EBITDA of $7.8 million, $1.8 million higher than last year.

Our new production and distribution segment made a positive contribution of $2.2 million to EBITDA for our quarterly financial results. For the full year, TVA Group’s revenues amounted to $570 million, an $18 million or 3% increase year-over-year.

Broadcasting revenues increased by 4% to $436 million, essentially due to the 12% revenue increase from our specialty channels. Magazine publishing revenues decreased by 17% to $64 million due to a 25% decline in advertising revenue, a 16% decline in subscription revenues and a 10% decline in new spends revenues.

MELS' revenues increased by 4% to $71 million and our new production and distribution segment added $13 million to TVA Group's revenue. TVA Group recorded EBITDA of $72 million for the year, up $18 million or 33% from last year as our broadcasting activity's EBITDA grew 53% to $43 million.

Magazines EBITDA increased by 10% to $10 million and new production and distribution segment added $3 million to EBITDA. While MELS EBITDA declined by 5% to $16 million.

Cash flow from segment operation was $28 million for the fourth quarter, an improvement of $5 million over last year. For the full year, cash flow from segment operation amounted to $54 million, $12 million higher than in 2018 mainly due to our EBITDA growth.

Let me turn the floor back to Pierre Karl.

Merci beaucoup, France. So looking forward our operations are well-positioned to continue to deliver superior financial and operating performance in 2020, while pursuing investment in digital initiatives that will support our long-term growth and success.

As we have clearly demonstrated in Québec by investing billions of dollars in network and services, we believe in competition in a facility-based competition that produce true sustainable benefits for consumers and we are accounting on the CRTC to pursue targeted regulatory measures that enable such competition and lead to a stable and efficient regulatory environment promoting investment and innovation. On the coronavirus important issue, I would like to repeat what we stated in the press release.

On Page 4, we mentioned that the corporation is monitoring the situation with the COVID-19 virus and taking necessary measures to prevent the spread of the virus to its employees and the public. This situation is not expected to have a material financial impact on the corporation, although our Sports and Entertainment segment could be impacted if the situation worsens in Québec as I declare in the press release.

So I thank you for your attention. And we will now operator take - you can open the lines for questions.

So I wanted to ask you on the 2020 CapEx guidance. I think last quarter, it was mentioned that some of the - that the delay in CapEx was going to be made up in the future.

So is this current kind of reduction of year-over-year something that you're viewing as a delay in the spending, and it will likely get spent in 2021 or is this cuts reflecting kind of the regulatory environment? And kind of along with that just curious if you could provide maybe some sort of split at a high level with wireless and the rest of the business?

Matthew before sending the question to Jean-François I think it would be important just to repeat or to reemphasize the fact that the last decision being taken by the CRTC regarding tariff to the TPIA have been certainly quite an event, quite a moment in the telecom industry. As you saw all the companies, all the incumbent operators while they've been investing billions of dollars in the network throughout the last decades have been able to offer to Canadians the best products and the best services.

And this is certainly something very important for Canada. We've been seeing countries that lack investing in their network and providing not - the sufficient quality in terms of Internet hurting the productivity of their country.

I hope this is something that the government will consider or will reconsider. And as you know they've been three considerations being taken all the companies are in front of the court right now to argue regarding - this bad decision.

Let's call it a bad decision. There is also an appeal to the cabinet and the CRTC is also regarding reconsidering their own decision.

So I'm not saying that all of this is related to this decision, but as Jean-François mentioned earlier that create uncertainty regulatory wise and then therefore we need to be prudent. Our expectation is that we'll be back in a more rational environment and then therefore considering what our CapEx expenses could be in the future.

Jean-François, I don’t know - do you have anything.

Well, the only thing Matt, I would add is, for us we see all regulatory measures being tied together. So we talked about this TPIA decision or the reseller’s decision, the tariffs, there is the MVNO that is coming, the decision is coming from the CRTC which we don't know where the CRTC is going to sit.

There was this announcement last week about the 25% price reduction objective for the big three’s and what's going to be the impact - in our market. Although, we don't think it's going to have a big impact, but it's still up for speculation.

So, all that to say that as rational and prudent investors will look at our investment program and we think that we have to pullback on some investments. You're probably aware that we've pulled our 1 GIG service out of the market.

And obviously, because we cannot afford the investment on our associated - to that kind of service - so that's a reflection of the uncertainties. And if things stabilize in the future, yes we might reconsider those investments.

But at this stage we're not.

Thank you, Matthew. Next question, please.

So, first of all just on the wireless side, can you give us any sort of idea as to how the net adds are coming in are they - in terms of representation between Fizz and the Videotron brand? And then maybe also give us an idea on the EBITDA margin between Fizz and the primary brand if you could?

Yes well, first of all David, we will not disclose the split between the Fizz and Videotron mobile customers. For us it's different segment of the market.

It's a different marketing strategy, but we see our pricing structure and whatnot in combination for one to the other, in combination for one to the other. So there is no such two services.

For us its mobile services with two different brands and different pricing strategy. So, we will not disclose the split between the two.

What I would say though in terms of EBITDA I could say that Fizz is definitely now contributing to margin expansion on the wireless side and EBITDA growth on the wireless side. I told you a few quarters ago that the Fizz is already EBITDA positive and it grows at a very fast pace and now we're talking about close to double-digits percent in terms of EBITDA margins.

So we’re in the teens [ph] essentially. So, it's growing vastly and certainly contributing to margin expansion and EBITDA growth.

Okay. And then I know its early days for Helix, but I was kind of surprised that the cable TV sub-losses were as high as they were.

I was just wondering is that sort of in line with your expectations in terms he likes delivering results there - to the subscribers?

Yes a few things here I would say well, first of all, we currently have close to 100,000 - video subs on the Helix platform. And most of them or the majority of them is coming from migrating to from the legacy platform to the new platform, which is - it’s a clear positive for us.

Even though it doesn't translate it to net adds, it's a clear, clear positive for us. First of all, once you try it, you don't leave it.

So in terms of churn, it's pretty good on our churn statistics and we're already seeing that even though it's only six months of commercial service. We already see that the churn statistics are better for the Helix customers and the illico or the legacy platform customers and it also a help on our culture.

So, migrating customers from one platform to the other or from the old platform to the new one is certainly a positive for us. And second of all, I think that we still have job to do with respect to the product awareness.

The functionalities awareness, we're working very hard on different communication channels to make the public and the customers or the consumers aware of the product, what it brings to the table for them, what better functionalities we have with this product. And this is not something that you can accomplish in three months.

I would be transparent, I probably underestimated the time period that is required to do that. But still I think it’s more of a long term exercise to make the public and the population aware of the product and the functionality.

That being said, it's really going better than we expected at - total RGUs of 190,000 as we speak. It’s better than we expected when we launched the service.

So, we’re very encouraged with the success so far and we think that it's going to improve with the product awareness.

Okay. And if I may a question on the dividend so obviously, a nice increase here in the dividend based on my model and that's obviously different than your model, but based on my model looks like the dividend will now represent about 30% of free cash flow.

And I was just wondering when do you think or how long do you think it will take - you to get to the mid-range of say 40%, are you targeting a year from now or a couple of years to get there?

David, it's a - that this we - we’re following our plan. We announced in 2018.

We wanted to get between 30% and 50%. Now, we're barely reaching the 30%.

So, we'll continue with our plan, but I mean it's I think it's too early to give you some guidance as to what the next steps will be. But I think we're delivering and we'll continue on the plan of being between that 30% and 50%, but you're right basically based on the numbers we're at 29% or something thereabouts.

And then just lastly if you could give us an update on TVA Sports and obviously, we saw the CRTC decision about how that channel needs to be distributed on the Tier. I know Bell filed an appeal in the Federal Court of Appeals, just wondering if you can give us an update on that.

And then also where do you stand with respect to getting a proper revenue per sub-fee similar to what the other distributors are paying?

David, so as you probably saw we’ve been complaining against Bell. The CRTC rendered a decision which was stating that Bell was favoring its own service and was provided undue disadvantage to TVA Sports.

This is certainly a very strong message and we continue to negotiate with Bell. Unfortunately, it's not the only issue that we have with them and I think that basically most of the time if not all, we’re on the good side of the equation and we look forward to have what we call just fair market value because what we're providing to our customers, to our auditors is clearly good products and then therefore we should be compensated properly for it.

I think it’s worth to emphasize the fact that we've been able to have agreements with all other distributors and the only one that what we consider being the proper price is Bell. They’re certainly in a position, in a conflict of interest position because they're pushing for their own channels and then therefore unfortunately, I think this is certainly not good for the broadcasting landscape in Canada.

This is certainly something also that we made loud and clear in front of the CRTC recently now during the audience that took place for the transfer of the V Network to Bell Media and we look forward to continue to push with what we consider the proper position for the TVA shareholders and obviously also for the Quebecor shareholders at the end of the day.

But can you give us an update on the Federal Court of Appeal that Bell has filed, is there any news there or any resolution anytime soon?

Not probably here. We’re still waiting for hearing date.

They haven't even. Okay, has the Federal Court of Appeal even decided to hear it?

You missed. I didn’t get what you mean, has they decided to hearing, yes.

Yes, they have a date.

Okay, so they have agreed to hear this, they haven’t thrown it out entirely.

I want to make sure that we talk about the right file here.

Yes, sorry, David. We just want to make sure that it's important that's the TPI decision which is in front of the court that’s it.

The TVA issue is in front of the CRTC.

But am I right to say, no, but it's always before the Federal Court.

Yes, okay, okay. The steps you go and take and the damage both on court, that’s a compensation they’re asking for.

As you know we have several issues, but also several litigation files going on with them.

Okay, maybe I will follow-up.

We just wanted to be sure that we were talking about the same thing here.

Could you talk a little bit about how wireless is performing, I know you don't like giving CapEx or margins there because it's so hard to allocate costs but could you give us some color on how you’re seeing the progression there and then just a question on network capabilities, there is some concern out there that a lot of people are going to have to work from home and students are going to have to study at home. I'm just wondering if you could talk about how you engineer your network.

My understanding is usually it's done with a six to 12-month window and you assume a significant increase in consumption. I'm just wondering if you're doing anything extra or contemplating doing anything extra given what's going on with COVID-19?

Thank you.

Jean-François, just to introduce before we answer the question, I want to make sure that everybody knows and this is certainly something that which we consider a significant concern. We've been meeting with all our higher management in the different operation from Jean-François to France with the Head Office staff to make sure that we cover all those aspects of what the health issue are all about right now.

This is something also that we addressed yesterday at the Board of Directors. And according to all the efforts that we've been doing, I think that we're up in the proper situation to manage the issue.

But all those questions related to other incidences and therefore, I think that Jean-François will be ready to ask the specific question that you've been asking.

In terms of the wireless performance, like I said Fizz is clearly contributing to our EBITDA growth on the wireless services, in fact EBITDA growth for the first quarter year-over-year was about 30%, this year, this quarter with wireless. So it's clearly accelerating since the erosion or dilution impact is now behind us with Fizz.

In terms of wireless CapEx for the quarter, $37 million was spent on wireless. In total for the year was $112 million.

And in our guidance for 2020, I would say that wireless CapEx would probably be in the same ballpark, same area. So it’s that - that's what I would say for wireless services unless you have other questions or specific question related to that.

But with respect to network capacity, you're right, we mentioned that when we do our budgeting and our investment program, we usually make sure that we have six to 12 months of capacity for our network. I can tell you that for 2019 and so far in 2018 and 2020 as well, usage is below what we plan, expected and budgeted.

So far, so good. And I’m not worried at all with the impact of the virus on consumption and network capacity.

Next question please.

Jean-François, I wanted to ask you a question related to the cable business. When I look at your TV subs last year in Q4, they were down 2.5% year-on-year and that has expanded to minus 4% remind you this is not specific to Quebecor, it's a question more about the market in general.

Are you seeing - well from what we see in your subscribers, we're seeing an acceleration of the decline. Have we reached some kind of a support level here or you expect the decline in TV subs to continue to expand knowing that in the states it's even higher than that level right now.

The second question I had is on the wireless ARPU, you mentioned that your Fizz loading was strong and I'm wondering if you have reached an equilibrium yet because you mentioned that last quarter that as long as you have not reached that equilibrium between Fizz and Videotron, you could continue to see pressure on ARPU. Are we at that level where the pressure is going to subside and if so, are you thinking that the decline in ARPU which was 2.6% year-on-year might stabilize next quarter.

And I have a final question after.

Okay. Well, I can talk for about 15 minutes on the first one.

It's hard to put that, I'd say that obviously Helix and our new service, or new platform will be of great help to mitigate subscriber decline. That being said there is some secular trends in the market.

We all know about that, but the good news is with Helix I can tell you that in Q4 our share of gross adds in Q4 has grown over the last year. So even though we might see some secular trends impacting us with Helix, we are grabbing more share of gross adds that we were last year.

So I think that with a better product awareness, functionalities’ awareness - that will improve. And combined with the reduction in churn that the Helix customers are showing, I think that over the mid to long-term it should be positive.

In terms of the ABPU and the equilibrium no, I don't think we've reached the equilibrium yet. That being said and it's only because as we grow our subscriber base with Fizz and BYOD, two-thirds of our sub adds were BYODs and they obviously come in at lower ARPU.

But again - and I mentioned it again and I will repeat and repeat and repeat it, and you see that in our financials. I love the free cash flow profile of the BYOD customers.

Because obviously we don't have to subsidize the handset cost, but on top of that we are able to limit or to improve or have churn stable. And it's been improving over - a few quarters.

This quarter its stable, but I think that it speaks to our strategy and you’ll see that in our financials I think it's pretty positive. So I don't think we've reached the equilibrium yet.

That being said some very, very positive signs. Fizz, the inbound ARPU is up close to 30%.

We're out of this stabilization period with respect to our pricing. So it has improved like $8 over year-over-year, which is obviously pretty positive, but still commending a lower ARPU than the overall base.

If you look at the Videotron mobile brand specifically once again year-over-year inbound ABPU is up. So I think that once we will get this equilibrium, you're going to see ARPU grow.

But I will - that as well I will repeat, I don't care about ARPU, I'm looking for cash flows.

I have one last question I wanted to ask you related to the minister, [ISED minister] talking about wanting the industries prices to decline by 25% in two years?

Yes.

You mentioned that and it's true that he did not articulate for you guys to do that and he was talking about the Big Three. But even though Quebec prices are below those of Ontario let's say and BC historically Quebec prices have always or have been lower than BC and Ontario.

So, if prices in those two provinces decline, why don't you think that Quebec prices will also decline in the same range?

Well, it's purely speculation obviously I don't know. The thing I know is prices are already 35% to 40% lower than the rest of Canada or BC, Alberta and Ontario.

And I think where the Big Three’s are making money or big money I should say because I suppose they're making money in Quebec as well because we do. So if we do this they certainly do.

But I think that it's really in BC, Alberta and Ontario where reduction is necessary, being 35% to 40% lower than the rest of Canada I don't think Quebec is the target. That being said, I truly don’t know.

In the past, we’ve led the market in terms of pricing. I don’t think it’s going to change.

We will continue to lead the market in terms of pricing. So it all depends on - how the victory is going to react with respect to the province of Quebec and so far obviously I really don’t know.

Thank you. Next question please.

As, maybe about you go in the record books is the only company who raised the dividend 78% every stock go down 5%, so you can add on that, but congrats on that performance by the way?

Thank you.

I have a couple of clarifications if you don't mind. So - let's start with COA.

Jean-François so I see for the one-third of your gross adds that are not coming in on BYOD. Can you give us any color on what's going on with equipment subsidies and acquisition costs, are you able to keep those stable or is there any evidence recently they - even be starting to decline based on maybe actions of some of your competitors just try to do more EIP in lower subsidies?

Yes, I will start by saying that I think that last year Q4 and Q1 specifically we somewhat lost control on COA. It was way too high and we had to do an adjustment in the way that we were marketing our stuff and COA related obviously, things that we've done in the course of Q2 and we've continued to do.

So on a year-over-year basis, its well under control and I assume that Q1 we're already two months out of Q1 now, Q1 is going to be as good as it was for Q4. So, I really think that it's well under control sequentially.

I'm not seeing nothing - that is overly detrimental, it's seasonal as you can imagine Q4 is usually on a sequential basis more active with respect to COA, more expensive with respect to COA because of the Black Friday and the Christmas and the holiday period and whatnot. So - but on a year-over-year basis I can tell you it’s well under control and even though we didn't go into the EIP for mobile.

You look at our share gross adds and market shares that are going up. I think that what we put on the table for the Quebec consumers is the right thing.

It doesn't mean that we will not have to change in the future. But so far I’m very, very positive with respect to our strategies and tactics.

Thanks. Sticking with that subset of ARPU, can you give us any color on your exposure to roaming, I would assume it's less than the incumbents because you haven't really cracked the business traveler market to the same extent they have yet - but I mean are you willing to give us any picture of how big that would be?

Yes, obviously our buckets - our data buckets always been - have always been greater or bigger than our competitors. We've been as you know we've been the first to launch a 6-gig, 6-gig is nothing now but we’ve been the first in Canada to launch a 6-gig data bucket what was it six years ago.

So our buckets always been greater or bigger than the other. So hence, lower overage revenues obviously.

So, since we’ve launched our Zen package which is some 100-gig per year and in extra of your current package. We haven’t seen a - just the significant negative impact on overage revenues because overage revenues never been a big tick.

Sorry if I confused the question. I wasn't referring to data overage I was referring to roaming when your customers are?

In terms of roaming, roaming is nothing for us. It's even less than overage.

Okay just yes I thought so I just want to make sure. And couple of just quick clarification in on resale.

You were going to resale in Amos and then you’re buying instead. Is there any reason that same concept wouldn't work in Cogeco’s territories in Québec.

So that you could bundle wireless with fixed line services are you contemplating reselling their network too?

I’m not sure, I'm following you think, you talk about mobile or?

Well - you can use the TPIA rules to resell their internet?

Yes.

and video…

Yes.

So that you can bundle your wireless service with fixed line products in areas where you're not actually the cable company?

Yes that in the card.

Okay. And anything if you gone on either cash taxes or anything unusual to think about for 2020 and can you give us a reminder of your foreign exchange exposure on either handset if CapEx purchases and how much of that you might hedge?

Answer to the first question, nothing unusual, nothing different in 2020 than 2019 on cash taxes. As far as foreign exchange is concerned we hedge so U.S.

yes we buy handsets and we buy a number of components in U.S. dollars and we’re following what we’ve traditionally done for many years now which is we hedge 50% of our exposure and we’ll continue to do so.

Would you be build the share with the rate is for your advertisers will it be around the 1.3 level?

I wouldn't want to share it. But you're probably not far which is half share yes, which is not half share.

Which is half share.

You’re in the ballpark.

Thanks Vince and thank you all attending this conference call. We'll talk to you next quarter and expecting that it will be in a better environment.

So all of you thank you very much and have a nice day.