Quebecor Inc.

Ladies and gentlemen, welcome to this Quebecor conference call. My name is Hugues Simard, CFO, and joining me to discuss our financial and operating results for the Third Quarter of 2020 are Pierre Karl Peladeau, our President and Chief Executive Officer; Jean-Francois Pruneau, President and CEO of Videotron; and France Lauziere, President and CEO of TVA Group.

You will be able to listen to this conference call on tape until February 6th, 2021, by dialing 877-293-8133, conference access code 48006# and playback access same 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 Peladeau.

Merci, Hugues, and good morning, everyone. As we are collectively battling the pandemic’s second wave here in Quebec and around the world, we at Quebecor continue to focus our efforts on keeping our employees safe and ensuring that we support our clients and partners who are struggling through those unfortunate times.

On the positive side, this quarter marked the 10th anniversary of the launch of Videotron mobile services. How time flies, it seems like yesterday that Videotron entry into mobile services disrupted the market with lower prices, innovative marketing, and a second-to-none customer service.

As we were gearing up to enter the mobile services market 10 years ago, it was obvious to us that competition was not very fierce and that consumers deserve lower prices, better service, and state-of-the-art technology. Over the past 10 years, Videotron has invested more than $2.5 billion, successfully deploying 3rd, 4th generation, and LTE networks and now rolling out the next-generation 5G network in urban areas, and we took it up another notch 2 years ago when we launched Fizz, a new brand that we invented the customer experience with a unique, fully digital model that gives the user full autonomy.

Today, with a 20% market share in Quebec where prices are amongst the lowest in Canada and our ongoing highest share of gross adds for several quarters, we can clearly call our entry into wireless a resounding success and we’re very proud, very proud of this impressive progression in less than 10 years. The result of our differentiated approach and disciplined execution.

While we’re celebrating anniversaries, we are also proud to highlight the 1st birthday of Helix, our broadband video in-home connected technology platform, which offers the best video customers experience in Quebec to already more than 300,000 customers, and as we had announced our last quarter, we recently launched our Helix service in the Abitibi region and are quite pleased with the response coming from consumers in the Northwestern Quebec. Despite some anti-competitive actions from our competitor Bell for which we filed a complaint to the CRTC and a $13 million damage lawsuit, we are determined to have the Abitibi citizens enjoy the best technology, the best customer experience along with lower prices.

Considerable demand from citizens shows the strong desire for quality and choices. On the regulatory front, we hope that the CRTC who is expected to review is decision on TPIAs all sale rates over the next few months.

We’ll take action to engage a more equitable solution. We are encouraged by Minister Bains’ comments yesterday, stating that these rates need to enable the incumbents to earn a fair return on their investment, repeating the government concerns expressed earlier this summer that the earlier approach taken by the CRTC may undermine investment in high quality networks and that the commission needs to do a better job at balancing Canada telecommunication policy objectives.

Reducing and to curb investment in the Canadian telecom network will be the worst thing to do in Canada and in Quebec to compromise productivity and economic success. We are confident that the Commission will take these words to heart both in the context of its review of TPIA rates and also as it waits its decision regarding MVNOs.

We remain convinced that the establishment of a strong 4th facility-based competitor in every region of the country is the only way to secure lasting benefits for Canadian wireless consumers. Turning to our third quarter results, we are happy with the continued growth and ever-improving profitability of our telecom segment, where Videotron’s performance in broadband was particularly impressive this quarter and also with our wireless operations, where our two brands combined were again number one in the market with a growth of 7% in revenues and 3.4% in EBITDA.

Our telecom operations continue to lead the industry in Canada, a clear tribute to our disciplined focus on profitable growth. In our Media segment, where we are, we were, I’m sorry, again impacted by the soft advertising market on all platforms this quarter, but we saw positive signs of gradual stabilization towards the later part, the latter part of the quarter.

In addition, production has started again and the level of activity at Mels Studios is also back on track. TVA Group’s rating reached an impressive 41.5% market share in the third quarter with gains from the main network TVA Sport and LCN, which remain the undisputed leader in information in Qubec.

I will now let Hugues review our consolidated financial results.

Quebecor’s revenues were up 4% in the quarter to $1.1 billion. Revenues from our Telecom segment grew 7% to $938 million.

Quebecor’s EBITDA was up 1% to $513 million. Our telecom segment recorded EBITDA growth of 3% to $484 million while our Media segment recorded an EBITDA of $25 million for an $8 million favorable -- unfavorable variance.

We reported a net income attributable to shareholders of $141 million in the quarter or $0.56 per share compared to $179 million or $0.70 per share reported in the same quarter last year. This decrease is mainly related to an unfavorable variance in the valuation and translation of financial instruments, more specifically our convertible debenture and related to as well some restructuring initiatives during the quarter.

Adjusted income from continuing operations excluding unusual items or gains or losses on valuation of financial instruments came in at $173 million or $0.69 per share, compared to $174 million or $0.68 per share reported in the same quarter last year. For the first 9 months of the year, revenues were up 0.4% to $3.17 billion and EBITDA was up 3% to $1.43 billion.

Adjusted income from continuing operations excluding unusual items and gains or losses on valuation of financial instruments for the first 9 months of 2020 came in at $430 million or $1.70 per share compared to $421 million or $1.65 per share reported last year. Our cash flow from operations for the third quarter of 2020 increased by $14 million or 4% to $346 million, once again demonstrating the resilience and strength of our business model as well as our discipline and operating excellence.

As of the end of the quarter, our net debt to EBITDA ratio was 2.76 times, down from 3.01 times reported at the end of the third quarter last year and comparing very favorably to our telecom peers. Available liquidity of more than $1.8 billion as of the end of the quarter and our growing free cash flows are more than sufficient to fulfill our commitments and fuel -- continue to fuel our growth.

On the NCIB front, since the renewal of the program on August 15, we purchased and canceled 600,000 Class B shares. Since we initiated the NCIB program 9 years ago, approximately 38.9 million Class B shares have been purchased and canceled.

I will now let Jean-Francois review our telecom segment’s operations.

Good morning, everyone. So as we are confronted with the second wave of the pandemic situation, the are health and safety of our employees and customers continue to be the focal point of our priorities.

We are more than ever committed to keeping our customers and communities connected. As a result, all of our stores remain open, offering a safe and secure experience both for our employees and customers.

Additionally, of our employees including our customer care agents continue to work efficiently and safely from home. As Pierre Karl mentioned, we are proud to highlight the first anniversary of Helix, our broadband video in-home connected technology platform.

Since our commercial launch in August last year, close to 300,000 customers have made the lead to our new solution, the best customer experience in the Quebec market. We continue to develop new functionalities as well as integrating new OTT apps to the platform, contributing to improving customer awareness.

Of note, we have recently launched the Helix TV app, a flexible OTT service that lets users watch and cast all of their content at home or away from home without having to purchase additional equipment. In response to the current and future needs of our businesses and their employees, our business segment has launched a new set of solutions to enhance teamwork, security, and productivity for teams working from home.

The new working from home offering includes dedicated Internet access, advanced cloud communication features, secured VPN access, and mobile solutions. In addition, we develop a new IoT solution to support physical distancing in the workplace, The Radius Wristband.

Quebec businesses can now welcome employees and customers and their workplace without compromising on on safety measures. Turning to our third quarter results, we’re proud to report a 7% growth in revenues and a quite solid 3% growth in EBITDA.

As of September 30th, we powered almost 1,453,000 mobile lines, fueled by a growth of 48,000 lines during the quarter and a growth of 164,000 lines on a year-over-year basis. Our slower year-over-year subscriber growth is primarily explained by the outperformance exhibited by Fizz in August and September of last year after we announced mid-August the end of the discounted pricing effective for the end of October 2019.

We reported service revenue growth of 8% in the quarter driven mainly by solid subscriber growth, while impacted by the loss in overage and roaming revenues due to a significant decline in traveling and roaming outside of Canada. Once again, we clearly outperformed the market with a combined 34% market share of gross adds during the quarter, showing the effectiveness of our one-two punch offering with Videotron and Fizz.

Consolidated wireless ABPU decreased to $50.98 from $53.28 recorded in the third quarter of last year. Firstly, impacted by the loss of overage and roaming revenues and secondly, by our increasing BYOD and Fizz customer mix.

As I have said more than once in the past, our BYOD focused strategy remains top of mind as the absence of handset cost subsidy contributes to strong operating leverage and superior cash flow generation despite the erosion of our ABPU growth. Once again, Videotron mobile and Fizz exhibited respective year-over-year inbound ABPU growth which will position us well from an ABPU perspective once the weight of our BYOD and Fizz customers and our overall customer base stabilizes.

Finally, our monthly churn rate is stable year-over-year despite exceptional aggressive promotions from our competitors during the quarter, which we declined to match as we try to maintain an orderly market. Helix gained strong momentum amongst existing as well as new customers as we signed up more than 100,000 new customers during the quarter.

We now count more than half a million video and broadband RGUs on the platform as we posted our best take up performance this quarter. Churn rates from customers subscribing to our new products continue to be 50% lower than those of our legacy products.

New features such as Chrome casting and soon from AirPlay and Firestick is for sure no strangers to this performance. During the quarter, we recorded another impressive growth of 20,000 broadband customers compared to a growth of 17,000 customers in the same quarter last year and a growth of 49,000 customers over the last 12 months.

The growing customer awareness for Helix continues to contribute to this outperformance. Fizz’ superior value proposal also favors stronger growth despite impacting our ARPU growth due to the discount nature of Fizz proposal.

As of the end of the quarter, 453,000 customers subscribed to Club illico, our OTT service. During these uncertain and difficult times, adding original content is likely a worldwide challenge.

Series and film production have resumed and as a result, Club illico recently announced its involvement in the production of four major Quebec feature films. We are looking forward to proposing a richer and diverse programming with new captivating documentaries, drama series, and original local productions coming in the first quarter of 2021.

On the financial front, consolidated revenues amounted to $938 million in the quarter, up 7%, to the $870 million, $877 million recorded in the same quarter of 2019. Revenue growth from our lower margin equipment sales and from wireless services primarily contributed to this growth.

For the first nine months of 2020 revenue grew 4% to $2.7 billion. EBITDA amounted to $484 million in the quarter for a year-over-year growth of more than 3%.

For the first nine months of the year, EBITDA grew 3% to $1.4 billion. We continue to focus our efforts on cash flow generation and cost containment as well as leveraging all operational efficiencies without compromising our customer experience.

For the quarter, we generated $326 million in cash flow from operations, $19 million higher than last year. For the first nine months, we generated $951 million in cash flow for a growth of $74 million.

CapEx including acquisitions of intangible assets amounted to $158 million in the quarter, $4 million lower than last year and amounted to $432 million for the first nine months of the year. For the full year 2020, we now forecast CapEx to be $15 million to $25 million lower than the lower end of our annual guidance range.

The launch of our 5G network technology is scheduled for the end of this year and progresses well, despite some delays experienced from the pandemic situation. Wireless CapEx amounted to $56 million during the quarter and $109 million for the first nine months of the year.

I will now turn it over to France to review TVA Group’s performance.

Merci, Jean-Francois. As expected, the COVID-19 pandemic continued to affect our business and to cause among other things a significant decline in advertising revenues, a large reduction in the sporting events broadcast by the TVA Sports specialty channel, despite the postponement of the NHL playoffs in the third quarter and the need to adapt our work environments and methods in order to protect the health and safety of our employees and the public.

Turning to our third quarter financial results. TVA Group recorded operating revenues of $120 million, a year-over-year decrease of $6 million.

Broadcasting revenues increased by 5%, essentially due to a 29% increase in TVA Sports revenues as a result of the postponement of the NHL playoffs to the third quarter and the fact that the Montreal Canadiens qualified for them, partially offset by a 11% decrease in the TVA Network’s advertising revenue as a result of the pandemic. On the ratings front, our overall viewership market share reached 41.5%, up 3.2 points from the same period of 2019.

I am proud of the work our people have been doing to deliver on our mission of informing and entertaining the public under these difficult conditions. Thanks to the content teams leadership and the way they rose to the challenge of developing five new original productions in the midst of the pandemic and thanks also to the professionalism of the TVA news division, which has been drawing more than a million viewers for the evening newscast every day for the past three weeks.

The specialty channels gained 3.3 points, driven by two points increase at LCN. More than ever, the most-watched specialty channel in Quebec with a 7.1% market share.

TVA Sports also registered a 1.9 point increase due to the broadcast of the NHL playoff. Mels revenues decreased 42% mainly due to the current health crisis which has reduced the volume of activities, most notably in soundstage and equipment rental, which gradually resumed towards the end of the quarter as well as post-production and visual effects.

This variance was partially offset by a 38% increase in dubbing and described video revenues. During the pandemic, Mel has introduced a new service offering a virtual production stage.

This innovation combines LED screens, the Unreal video game engine and Mels visual effects to create something very close to the finished product when shooting live-action on the set. In the current environment, this type of filmmaking makes it easier to comply with physical distancing rules and reduces the size and scope of shoots, sets, and groundscenes.

Magazine publishing revenues declined 1% due to continued decreases in advertising, subscription, and newsstand revenues, mostly attributable to the COVID-19 situation, but largely offset by an increase in financial assistance for the Canada Periodical Fund. TVA Group’s EBITDA reached $23.4 million in the third quarter, a decrease of $7.8 million compared to the same quarter last year.

The broadcasting segment posted EBITDA of $16.9 million, a negative variance of $5 million, mainly due to TVA Sports, which recorded a significant increase in cost from the NHL playoffs. Mels segment posted EBITDA of $2.9 million, $3.5 million lower than last year due to the lower level of activities during the quarter.

The magazine segment recorded EBITDA of $3 million, up by $0.6 million while the Production and Distribution segment made positive EBITDA contribution of $0.4 million, an improvement over last year. Back to you Pierre Karl.

Merci, France. So, on the strength of our performance in this third quarter with increasing cash flow declining leverage below than our national competitors and a solid balance sheet, our ever-improving financial situation is the clear result of performing and low bullshit operating execution and disciplined growth.

As we enter the important last month of the year, still in the mid of the lasting effect of global pandemic, we will spare no effort to keep up the momentum, while remaining focused to ensure that our employees remain safe and healthy, that our clients, our partners, and the Quebec population remain connected, informed, and entertained with the best client experience in the industry, thereby maintaining our leadership position as the reference in telecom, news media, culture, and entertainment in Quebec. I thank you for your attention.

And operator, please open the lines for questions.

[Foreign Language]. Thanks for taking my question.

So, I saw the strong Internet net ads despite the softer moving season. Was the impact from moving season maybe more muted than expected and do you think this improvement in net additions is sustainable?

Now that maybe work from home has stabilized?

Merci, Jerome. [Foreign Language] So with respect to the specific question and the moving season, obviously like I said in the last conference call, the moving season was slower this year.

And so one could have, one should have in fact expected that our performance in terms of Internet or broadband and in terms of cable and overall should have been lower, but I think that we posted quite an impressive performance despite the slower, the slower moving season. So in terms of sustainability, on the wireline I think that, I think that the Helix, the customer awareness for Helix continues to grow, which bodes well for the future I believe.

Fizz is making its stride with respect to the broadband service as well. So there is nothing that should allow us or should not allow us to maintain this outperformance.

So I’m, I remain very confident about our Q4 wireline results and as for wireless, you know that bundling is quite an effective tool to attract customers to our, all of our services. So I think that bundling will continue to play its role.

Okay, thanks. [Foreign Language], maybe now switching gears on the on wireless add too.

We’ve seen a stable decline sequentially, but at Peers [ph], we’ve seen a lighter impact of roaming and overage so far in the quarter, is this also the case for Quebecor or this is due to an acceleration in Fizz loading versus video trial.

Well, in terms of roaming and overage revenues and the impact of the significant decline in transport and traveling, about 50% of our ABPU decline and ARPU decline in related to this factor. So the balance is really a question of mix and obviously of up until the wait of our Fizz and BYOD customer mix, up until the wait goes or stabilizes, I think that we will continue to see some ABPU growth, because BYOD customers and Fizz customers are commanding a lower ARPU, but we don’t have to subsidize the handset and what’s important here is not having to subsidize the handset costs obviously is good from an operating leverage perspective, is good from a cash flow perspective, 70% in the quarter, 70% of our new ads were BYOD and Fizz customers combined.

So it’s only 30% of our adds that are asking for handset cost subsidy, are commencing a different business model essentially, so I really think that, I really think that up until the wait of the Fizz and BYOD customers stabilizes, we might continue to see some ARPU decline, but I’m not concerned about this decline because our cash flow profile improves with that kind of customers and that’s what I believe is important.

A couple of just maybe housekeeping questions first. Can you give us the wireless EBITDA in the quarter and CapEx if you have those handy.

And then on the CapEx comment about being $15 million to $20 million lower than the low end of your original guidance this year, should we think of that as just being pushed out, but start 2021 CapEx would be higher by that same amount and then in terms of just maybe a broader question, what is on the commercial side -- do you see an opportunity to work with one of your peers, Cogeco, on the wireless side, particularly in regions where you don’t necessarily have a cable footprint. Just on the back of your, Jean-Francois, your comment about how bundle works, I’m wondering if that commercially would be attractive to you to be kind of a wholesale provider in parts of Quebec where you don’t have cable.

Thanks.

Okay, with respect to wireless results, CapEx were $56 million in the year, so wireless CapEx $56 million for the quarter I should say, $109 million for the first 9 months. In terms of wireless EBITDA, as you know, Jeff, we don’t disclose a broken down EBITDA by service, but I can tell you that the EBITDA growth was approximately 30% for wireless.

So based on your model, you can probably make the math and finally, the CapEx, the total CapEx being $15 million to $25 million -- expected to be $15 million to $25 million lower than the original guidance, this is true. I would assume it’s going to be pushed out because it’s mostly related to the cuts that we’ve made into our CapEx budget related to the pandemic and how prudent we managed cash flows.

And finally wireless MVNO, yes, obviously, in sectors where we don’t have a cable network or wireless performance is not as stellar as it would be where we can bundle services, so I would say yes, there’s always a possibility, then to maybe attract new customers on the wholesale side, obviously in that -- in that case, if something can be done, but as you know, it’s not a question only for us, it’s also a question for the partner.

It takes two to tango as we say here.

Yeah.

Great, thanks for the color.

Yes, hi. A couple of questions.

First of all, I was just looking at the equipment sales revenue, that was at 88%. I was just wondering whether it has changed to drive that growth to be so high and then secondly, just following up on that question on MVNO for wireless, I guess for Fizz, what about the idea of taking Fizz outside of Quebec as an MVNO.

Can you give us your thoughts on that. And then lastly, just on the dividend, last year you raised the dividend when you referred to your fourth quarter results, so I’m wondering if the intention is to review the dividend again when you report fourth quarter this year.

And then a lot of companies are sort of maybe delaying a dividend increase because they don’t want to be seen to be doing really well during a pandemic and so they, instead of doing a dividend increase, they are opting for maybe aggressive share buybacks, so just wondering if you can comment on that.

Okay, with respect to growth in equipment sales. It’s really related to Helix.

As you know Helix, we are working off a sell model rather than a lease model, so it’s really our outperformance in Helix that explains the revenue growth. In Q3 last year, Helix was, for 2 months wasn’t there at all.

So it has obviously contributed to the equipment sales growth. As for Fizz and potential MVNO outside Quebec, yeah, absolutely, Fizz, you can look at Fizz as being an autonomous platform essentially.

That being said, we don’t have any network outside Quebec, so we would have to find a network partner and if we do find a network partner, yes, there is a, there is definitely, it makes some sense since its, Fizz is not an autonomous platform.

On the dividend side though, I’ll ask, David, Hugues to give you the answer please.

Yes, on the dividends, David, we, we intend to review our dividend policy at the same time as last year, so when they meet only towards the end of the year. As you know, we’re barely entering the range that we had set out some years ago for dividend payout on the basis of free cash flow, between 30% and 50% we had said.

So at this point, nothing, nothing points to a change in our, in our approach in terms of dividends and same comment on the share buyback. I mean we are currently continuing our NCIB program and certainly intend to continue.

I mean our cash flows are solid and strong and at this point, nothing points to us altering any of these two strategies

Hi, thanks. To clarify a couple of things already been talked about.

You mentioned you can’t give Cogeco an MVNO on your own, Rogers would have to agree, let’s say that’s unlikely. Is another strategy to get that bundle in other regions of Quebec, is it possible that you could put up fixed wireless Internet access or perhaps take advantage of the 3rd-party Internet access rules from the CRTC, so you could effectively bundle broadband with wireless throughout 100% or throughout all of Quebec where cable system exists.

Well, I’m not sure I got the second part of the question but the first part of the question, Vince. I haven’t spoken about Rogers in my previous answer, so I don’t know where that is coming from.

Well, you said that it will take two to tango, so you just meant it would take Cogeco too long to do that.

Yes, that is correct. That’s what I meant, yes.

Okay. I think we took that as an obvious that Cogeco would be interested, had been asking for.

Okay, under the 4G network sharing deal, are you allowed to do an MVNO without multiple speakers .

That is a confidential agreement, I cannot spoke about that, I cannot speak about that, yeah.

So, the second part is still valid, Jean-Francois, is can you do, can you get broadband bundled with wireless using wholesale access or fixed wireless access.

I guess you know, the answer is yes, we did it we did launch a reseller model in B2B earlier this year and obviously Quebec is a large market. Our network covers essentially 80% of the population, but there is still 20% that is uncovered by our network.

So, yes TPIA, our reseller model is, is obviously something that is from a technical perspective possible.

And I would add, Vince, that, I want to make sure that we’re clear with that. We’re not against the TPIA, we’re not against MVNO, we’re just against, I mean, unreasonable pricing.

As unfortunately and this is why I call, in my, my speech that it was an equitable solution, so we want something that makes sense and we will continue to move forward in that. So yes, we have a wholesale business and we will continue to do so.

So, we should not be forced to sell at unreasonable prices, which is mandated by kind of a strange experience.

I agree with you. While we’re on regulatory, Pierre Karl, you may want to answer this too, I don’t think I heard you in your opening comments talk about the review of the Broadcasting Act and the proposals by the Heritage Minister earlier this week, do you--do you like what they’ve done there, do you think they’ve gone far enough?

Well, you know what, Vince, it looks to me it’s highly, I guess, the positioning, there is nothing there. I mean it’s just words and sentences as we use to listen to what the [indiscernible] government is all about.

I mean, to say that we need to deregulate the industry or, but in fact, they’re not saying this at all. They’re not raising the question of [indiscernible] Canada, which is an unfortunate illegitimate competitor to the private sector.

I was, it was funny for me to read the people in the Toronto Star going against some CBC initiatives because the public broadcaster should have his own mission and certainly his mission is not to compete and to fragilize what private broadcasters is all about. So imposing certain burden on companies that are not participating in the economy, I guess this is just natural and saying that the Finance Minister is responsible for imposing you know sales tax to companies that are doing business in Canada, just, again, it’s worth in sentences without real actions and they say they’re waiting and the pending International taxation to move forward, where in Quebec, the Quebec government decided many months ago, I guess, it’s even more than a year, to impose sales tax on Netflix and other operators, other streaming services like they do with all other services.

So I guess that, again, there is nothing there and it’s just positioning to me.

So you’re undecided on whether you like it or not, I get it. Thank you.

I guess so.

Okay, one last one, sorry to be a bit critical, but your Internet sub adds are fantastic, but your revenue growth in Internet is 2%, Bell reported this morning that they saw are a 10% year-over-year increase in their Internet revenue, and I know they have some different dynamics going on there, playing catch up on market share in some areas, but still they seem to be getting some sort of lift in net pricing and usage, it is not showing up for you guys. Is 2% Internet revenue growth all we can expect or is there some hope that we translate this higher usage and higher subs into better broadband revenue growth in future periods?

Yeah, well, from a long-term perspective, I think I definitely think that broadband is service of the future, and people will be consuming so much on broadband and wireless that there is definitely some pricing power that we -- that we own and that we have. That being said, from a short-term perspective, I was telling you about the success of Fizz and the broadband service and the discount nature of Fizz proposal command the same kind of, I would say, the same kind of trends that we’ve seen and we continue to see in mobile, which is ARPU dilution because it is a discount service.

So I think that’s -- that’s something that you should be and we should be looking at for future periods.

Fair enough. Thank you

All right, thank you.

Thank you, Vince. We’ll take the next question.

Operator, please.

All right, thanks for taking the question. As you celebrate 20% market share after ten years, I was wondering if you want to make any comment on what you think the next, maybe not 10 but maybe 5 years can bring in terms of additional growth.

So how much more runway there is there. And also if you could comment on, just on the ARPU, ABPU drag from Fizz.

I know you’re waiting -- well we’re waiting for when the number of subscribers stabilize, but you -- do you think this is something in 2021 that will see a stabilization or is that likely going to carry on for maybe a fair number of periods going forward? And just finally on 5G, I know you mentioned the rollout at the end of the year or the launch, end of the year.

I’m wondering if you could elaborate a little bit on the pace of the rollout, of whether you’re thinking of introducing a similar type of monetization or lack of monetization model like the peers are doing or if you have something else planned that might be differentiated. Thanks.

Okay. I can’t remember what was the first one.

But I’ll start with the last two questions and then if you could repeat the first one afterwards. But with respect to Fizz erosion impact in our ARPU growth, we, like I said, about 70% of our total customer take up this quarter was BYOD and Fizz combined.

It’s obviously lower ARPU and impacting our growth and overall we’re not yet at 70% customer base being Fizz and BYOD. So that will continue to increase.

Do I think that it’s going to last -- it’s going to be fixed in, if we can call it that way, fixed, do I think it’s going to be fixed by 2021, I don’t think so, I think it’s probably something that will be like 12 to 28 months probably, based on our expectations, but I don’t think that in 2021 we’re going to see the end of it. With respect to 5G, it’s a slow rollout.

We think that for now 5G is just, it’s just marketing, let’s put it that way. So in terms of the rollout and the CapEx program, which is back in line with that comment, I think you can expect that we’re not going to be [Indiscernible] middle with respect to our CapEx program in 5G and as for the monetization plan, I think that because it’s just marketing for now, it’s just a question of reducing our stabilizing churn, let’s put it that way, but we’re going to have to see some more user case on the residential front or on the business front, to be able to see real true monetization plans from us and from all players around the planet, because essentially today it seems very hard to monetize the 5G investment.

And can you repeat, please, Matt, the first question?

I was just curious you celebrating the 20% market share in the 10 years of offering wireless, which is a fast accomplishment and just wanted to see if you could make any comment or wanted to make any comment on how far you think that could go in the next pick a number of years, say 5 years, how much more runway there is, there to keep expanding market share as there is multitude of brand for players and so on, so anything you wanted to comment on?

Well, before we launched and I’ll do some, I’ll make some mystery here. Before we launched Fizz, remember that our share of gross adds was always between 20% to 23%.

So obviously with market share in the 15% then, our market share we’re still growing to this, slowly but surely to this, towards this 20% to 23%. After we launched, we clearly saw an increase in share of gross adds from firstly 26, 27, 28, but over the last two quarters and essentially in 2020, we’re beyond 30% when we combine Fizz and our premium brands.

So I really think that if we can continue to post 30% plus share of gross adds, that overall 20% market share will continue to grow and obviously we have to look at churn rates and not to lose control over churn rates, but like I said, churn rates are improving or stable this quarter even though it was a very aggressive promotional period or quarter from our competitors. Churn rates are stable, so I really think that it bodes well for the next 5 years and I think we’re going to continue to see our overall market share continue to grow.

Thanks.

Thank you very much, Matthew, I think that we have another question and other, and maybe last. I think it’s, Drew.

Thanks very much. Thanks, Pierre Karl, for fitting me in.

I guess a question for you, Jean-Francois, and you just alluded to it in your last question commentary. On the wireless competitive environment, it seems, it sure wasn’t somewhat of an unusual Q3, would love to get your comment on what you’ve seen through October here and particularly, Shaw has I guess indicated that they’ve never seen promotional intensity like they did in September.

So when it comes down to a question of enough oxygen in these pricing umbrellas for the regional operators to continue to get good a loading, a good ARPU, we’d love to get an update from you on that, clearly in your metrics, it all looks fine, but any additional comment there would be helpful. Thank you.

I confirm, Drew. Q3 was great.

In Quebec, the third quarter was totally crazy. From the equipment side, it was crazy and there was a thing that we didn’t want to follow and we did not and it’s not, it’s obvious when you look at the revenue growth from our, from our competitors or peers on the equipment side, which is truly wireless, it’s pretty obvious that they really bought subscribers and the accounting rules made them posting very good numbers on the revenue side, but bear with me, the next 24 months if nothing has changed from a service, from a revenue perspective, it’s going to be tough on their profitability, so, but we didn’t want to follow except for a very short period of time because of the one-year anniversary of, the 10-year anniversary of our mobile services, we had a very short period of time in September where we had a promotion that was associated with that period, with that 10-year anniversary so we were quite aggressive for that period but the rest of the quarter, I can tell you that we were pretty much disciplined.

In October, usually October is a quiet period in terms of, in terms of promotions, and we’ve seen less aggressive promotion than there was in the third quarter, but what I’m looking for, what I’m looking for is how is it going to be for Black Friday, is it going to be again as crazy as it was in Q3, hopefully not. I think that it’s very important that we keep an orderly market, we’re trying to, and hopefully our competitors will follow suit.

Thank you.

When you compare pricing, regarding the French market in Quebec compared to the English market in Canada, we’ve been seeing always for how many years, forever, I would say, a lower pricing. So, and the Government of Canada, Minister Bains, and the CRTC and many other reports always said that pricing was lower in Quebec than it was compared to other parts of Canada and then therefore, I guess that this is certainly something that the peers will consider moving forward.

I think, we’re over now. So I would like to thank you all and for you to have a nice day and we’ll talk to you at the next quarterly results.

Thank you very much, and bye, now.