Quebecor Inc.

Ladies and gentlemen, welcome to this Quebecor Conference Call. My name again is Marc Tremblay.

And joining me to discuss our financial and operating results for the second quarter of 2019 are Pierre-Karl Peladeau, President and Chief Executive Officer, Hugues Simard, Chief Financial Officer, Jean-Francois Pruneau, President and Chief Executive Officer of Videotron and France Lauziere, President and CEO of TVA group. You will be able to listen to this conference call on tape until November 8, 2019, by dialing 877-293-8133, conference number, 1247666, and passcode 48006 pound 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 move on with our first speaker, Mr. Pierre Karl Peladeau.

Merci, Marc and good morning, everyone. Starting with our second quarter results, we're pleased with the financial performance of all our operations.

In the Telecom segment, our wireless services continue to outperform with a 12% service revenue growth in the quarter. Our new brand Fizz, which offers both mobile and fixed broadband services, clearly resonates with the younger urban crowd, fulfilling their need for flexible packages at a reasonable price, while being in full control to our unique 100% digital channels.

In the wireline, on the eve of launching our Helix platform, which will further differentiate our superior offer, we continue to leverage successfully our unique ability to offer value-added and local content. On the regulatory front, I would like to weigh in, once again, on the ongoing debate with respect to the mandatory resale of telecom services, which we think is more largely likely to harm consumers than to help them.

Especially in wireless, any move to create artificial MVNOs though wholesales regulation, will weaken the regional new entrants’ carriers, the very competitors that have been driving all recent consumers gain in the marketplace. In our view, the CRTC focus should be on leveling the playing field and entering the facility based competition works efficiently.

One way to do this is to ensure that certain competitors and certain business models do not gain regulatory habit advantage by accident as in the case with the launch of 36-month financing option for wireless handsets. We are happy that the CRTC has decided to examine this issue and should they decide that 36-months contract are acceptable, they should declare them acceptable regardless of the business model.

This is -- there is no reason 36 months should be a good timeline for a financing option, but not for a subsidy option. Turning to Media.

I'm particularly pleased with our newspaper operations, which delivered in significantly improved profitability through operational optimization and a rigorous cost containment despite the continued market-wide decrease in advertising revenue. At the TVA Group, we also performed well with a 6% increase in broadcasting revenues and a significant increase in earnings as our recent acquisitions continue to deliver the expected growth and our operational discipline delivers bottom line improvement.

While we continue to perform well, I must remind you that it is despite strong headwinds as our specialty channels LCN and TVA Sports in particular have been short-changed for years with subscription fees, VAR and barrier based on the respective audiences that FDE, the competitor of LCN and FDS, the competitor TVA Sports. The Canadian Broadcasting regulatory model must implement a more equitable and clearer fee for carriage framework that no longer protects broadcasting services that benefit from decades of regulatory fees and monopolies to the expense of new competing services that exhibit similar viewership performance while remaining financially fragile.

I would also like to comment on Bell's recently announced intention to purchase the WE network, which in our view would further weaken an already competitive and fragile media environment in Quebec. The arrival of hugely powerful competitor with far superior financial might will inevitably lead to a not very competitive landscape in terms of content production and acquisition capacity as well as breadth of advertising offer likely resulting in the ultimate choking of the smaller local competitors.

We are counting on the Competition Bureau and the CRTC to prevent this potentially dangerous situation. Finally, we're pleased to see that the performance of our sports and entertainment operations continue to improve the quality of our relationship with artists, agents, producers and tour managers have been consistently on the rise since the opening of Videotron center, increasingly benefiting our event lineup and gate performances.

We look forward to presenting even more over the next few months, such as Michael Buble, Iron Maiden and Celine Dion Courage Tour. I will now let Hugues review our consolidated financial results.

Hugues please.

Merci, Pierre Karl. Quebecor's revenues were up 2% in the quarter to $1.06 billion while revenues from our Telecom segment grew 1.4% to $854 million.

Quebecor's EBITDA was up 7% to $455 million. Our Telecom segment recorded a 5% EBITDA growth to $450 million and our media operations recorded an EBITDA of $6 million, an improvement of $5 million over last year.

Effective January 1 2019, we have adopted on a fully retroactive basis the new rules under IFRS 16, which set out new principles for the recognition measurement, presentation and disclosure of leases. Had we not decided to restate the impact of IFRS 16 retroactively, Quebecor's and our Telecom segment's EBITDA growth would have been respectively 10% and 7%.

We reported a net income attributable to shareholders of $140 million in the quarter or $0.55 per share compared to a net income of $42 million or $0.18 per share in the same quarter last year. In addition to the EBITDA improvement, this increase is also explained by the loss on valuation and translation of financial instruments recorded last year, mostly related to our convertible debentures.

Adjusted income from continuing operations excluding unusual items or gains or losses on valuation of financial instruments came in at $136 million or $0.53 per share compared to $106 million or $0.45 per share reported in the quarter last year. This 29% increase reflects the financial leverage obtained by the CDPQ repurchase and also the improvement in our operating profitability.

For the first six months of the year, revenues were up 2% to $2.08 billion and EBITDA was up 4% to $876 million. Without restating the impact of IFRS 16 retroactively, Quebecor's EBITDA would have grown 7%.

Adjusted income from continuing operations excluding unusual items or gains and losses on valuation of financial instruments for the first half of 2019 came in at $248 million or $0.97 per share compared to $195 million or $0.83 per share reported last year. Quebecor Media's consolidated free cash flow from continuing operating activities decreased from $180 million for the second quarter of last year to $127 million this quarter, explained primarily by an unfavorable variance in the non-cash balances, partly offset by EBITDA growth.

As of the end of the quarter, Quebecor's net debt to EBITDA ratio was 3.1 times, down from 3.4 times reported at the end of the second quarter last year. Pro forma, the increase in drawings on Videotron secured revolving credit facility in connection with the repayment on July 15 of QMI's Term Loan B, available liquidity was more than $750 million as of the end of the quarter.

This available liquidity as well as our growing free cash flows are more than sufficient to fulfill our commitments and fuel our growth. During the first six months of the year, we purchased and canceled 1.3 million Class B shares since we initiated our normal course issuer bid eight years ago, approximately 32.4 million Class B shares have been purchased and canceled.

Please note that the Board of Directors upon the termination of the August 2018 program has approved the renewal of the program for an additional year. Finally, I would like to highlight that on July 30, Standard & Poor's raised QMI's the issuer credit rating from BB to BB plus and at the same time, it also raised QMIs and Videotron's instrument ratings.

Along with Moody's upgrade to Ba1 in April, this uplift is a clear vote of confidence in our ongoing financial discipline and favorable outlook. I will now let Jean-Francois review our Telecom segment's operations.

Thank you, Hugues, and good morning everyone. So before reviewing our operating and financial results for the second quarter, I'd like to highlight a few notable distinctions that we received in this second quarter.

We're pleased to announce that Videotron is Number 1 and indeed list of top rated workplaces in Quebec. We are also pleased to announce that Fizz, our new mobile and Internet brand has been awarded the prestigious TM Forum Price Disruptive Innovation Award.

We are obviously very proud of these distinctions as they reflect the day to day commitment of our employees and our continuous efforts to innovate and deliver the best experience to our employees and customers. Coming back to the second quarter results, despite a seasonally weaker quarter on the subscriber statistic fronts due to the annual moving season, we exhibited solid operating and financial metrics, fueled by revenue growth from our wireless and internet services and strong operational leverage.

We continue to succeed in striking the right balance between subscriber growth and profitability as we posted EBITDA growth of 5%. It is important to note that 2018's financial results were restated to reflect IFRS 16 adoption.

Had we not retroactively applied IFRS 16, our EBITDA growth would have been 7%. Our wireless services performance remains impressive.

As of June 30, we activated 1,232,000 mobile lines supported by a growth of 38,000 lines during the quarter and 153,000 lines over the last 12 months. We reported service revenue growth of 12% driven mainly by solid subscriber growth.

This quarter, we posted our best second quarter an LCN performance in terms of gross adds since launching our mobile services in 2010. For the 10th consecutive quarter, the brand Videotron maintained the leading market share in gross adds.

Given that the market environment continues to be aggressive, especially on the handset subsidy front, we adopted a disciplined pricing strategy in order to ensure sustainable results. Wireless ABPU decreased to $52.56 from $53.70 recorded in the second quarter of last year, resulting from the increasing proportion of our BYOD customers in our total base, which represented two-thirds of our new adds during the quarter.

Fizz success is now undeniable with the caveat of putting some pressure on ABPU growth. Generally speaking, we are tailoring our value propositions with our premium brand and Fizz in order to continue to maintain our leading market position while responding to our -- to customer needs for simplicity and peace of mind and data consumption.

As a result of our proactivity, we captured more than 26% in total gross activations in our market in the quarter, representing a significant improvement over last year and our monthly churn rate went down year-over-year to 1.3% despite the continuing increase of our BYOD customer base. The third quarter is also off to an excellent start as our growth in net adds exceeds that of last year by more than 5,000 subs, as of this week.

The consumer market continues to welcome our new mobile brand Fizz, which now also offers fixed broadband services. We are successful in attracting a consumer segment that is complementary to Videotron's customer base, namely younger and more urban in nature.

After experiencing some technical glitches with our mobile platform, I am pleased to inform you that we recently implemented the required action to improve the stability of our platform, thereby expected to improve the overall Fizz customer experience. Accordingly, we will be looking to revisit our current pricing structure when our platform stability will be fully assured.

In broadband services, we recorded an overall decline of 4,000 customers during the quarter. Over the last 12 months, we exhibited growth of 33,000 customers.

We recorded service revenue growth of 3% during the quarter, driven by both subscriber and ABPU growth. In cable television, we recorded a decline of 24,000 customers in the second quarter while we exhibited a decline of 22,000 customers in cable telephony.

With the imminent launch of our Helix brand and products, we have witnessed a relative spike in competitive intensity from Bell and the resellers, especially in the month of June, but we remain disciplined and have mostly focused our efforts on customer retention and maintaining high lifetime value from new subscribers. As of the end of the quarter, 431,000 customers subscribed to Club illico, our OTT video service.

We recorded growth of 39,000 customers over the last 12 months. Our strategy continues to focus on local, original and exclusive content and we are pleased to announce five new original productions that will soon be available on Club illico like the Apartment and the third season of two teen series like [indiscernible].

Club illico boasts over 443 million viewings since its launch, making it an uncontested leader in the Quebec-on-demand video entertainment landscape. The development and integration of our new service, Helix is getting to an end.

More than 3,000 employees have been using and testing [indiscernible] and no doubt in everyone's mind that we will completely redefine the home entertainment and broadband experience by enhancing our value proposition and also attracting technological savvy customers into our ecosystem. Very soon, we will announce our commercial launch date and our Helix offers that I am very confident will be appealing to our existing and future customers.

We also recently announced our intention to enter the 18:20 market, which so far suffers from a monopolistic wireline service offering. By offering video, broadband and IP telephony services on top of our existing mobile services, our fixed network will be interconnected to the incumbents' network and our plan is to use the incumbent's last mile connection to reach our future end customers.

To that effect, we just filed a complaint to the CRTC as the incumbent affiliated to bill is unduly trying to force us out of that market. On the wireless side, despite ongoing negotiations with our LTE network partner to extend our agreement to the 5G network, we are already active in the preparation of our LTE-Advanced 5G ready network.

Should our negotiations not be conclusive, the additional CapEx required to support the 5G infrastructure that our partner would have built is not expected to be detrimental to our overall financial profile as it can be dealt with within our usual CapEx program. I remain, however, convinced that infrastructure sharing is the best scenario, especially when considering access to our multiple sites, fiber network backhauling and our extensive spectrum portfolio.

We continue to be a pioneer in the development of new 5G services by way of our open-air lab for Smart Living initiative where a wide range of researchers, startups and more mature enterprises combine their export efforts to create and test next generation services. As we speak, an operating 5G site is in place and tests are currently being performed for various Smart Living applications.

On the financial front, consolidated revenues amounted to $854 million in the second quarter compared to $842 million in the same quarter of 2018. Revenues were up more than 1% or 2% when excluding equipment sales primarily due to RGU growth mainly in mobile and Internet services as well as from our B2B segment, which continues to benefit from an expanded product offering meeting the needs of businesses.

For the first six months of 2019, revenue grew 2% to $1.7 billion. In the quarter, we recorded EBITDA of $450 million for year-over-year growth of 5%.

Had we not restated 2018 financials for IFRS 16, EBITDA growth would have been 7%. 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 six months of the year, EBITDA grew 3% to $873 million or 6%, had we not restated for IFRS 16.

For the second quarter excluding acquisition of wireless spectrum licenses, we generated $298 million in cash flow from segment operations compared to $273 million during the same quarter last year. For the first six months, we generated $543 million in cash flow compared to $597 million for the same period last year.

Net capital expenditures, including acquisitions of intangibles -- intangible assets, I should say, but excluding the purchase of spectrum licenses amounted to $152 million in the second quarter, a decrease of $5 million from the second quarter of last year and in line with guidance. For the first six months of the year, net CapEx amounted to $330 million.

Wireless CapEx amounted to $19 million in the quarter and $45 million for the first six months. I will now turn it over to France to review the Media segment performance.

Merci, Jean-Francois and good morning. TVA Group recorded operating revenues of $146 million in the second quarter of 2019, a year-over-year increase of $6 million.

Broadcasting revenues increased by 6%, essentially due to the addition of operating revenues from the Evasion and Zeste channels since their acquisition in February and an 11% increase in the advertising revenues of our other specialty channel. On the ratings front, our overall viewership market share reached 40.5%, up 0.3 point from the same period of 2018.

TVA Network held its Number 1 position with a 23.5% market share, while our specialty channels had a combined market share of 17%, a 0.6 point increase mainly due to the acquisition of Zeste and Evasion. LCN stands at 5.5% market share, still far ahead of its main rival.

Magazine publishing revenues declined 14%, mostly due to a decrease in advertising revenues and the discontinuation of the publication of Les Canada and Les Quebec magazines. The last issues of which were released in May 2019.

Mels revenues decreased 2% due primarily to an 18% decrease in revenues from some stage mobile units and production equipment rental, partially offset by revenue growth from both production and visual effects. Our new production and distribution segment created following the acquisition of Incendo on April 1, 2019 added $3.5 million in revenue in the second quarter.

TVA Group's EBITDA reached $3.8 million from the second quarter, an improvement of $6.6 million compared to the same quarter last year. Our broadcasting segment reported negative EBITDA of $1.9 million, a favorable variance of $6.2 million.

The Magazine segment recorded EBITDA of $3.5 million, up $0.7 million while Mels segment posted EBITDA of $1.8 million, $0.7 million lower than last year. Our new production and distribution segment made a positive contribution of $0.3 million EBITDA to our quarterly financial results.

Cash flow from segment operation was close to zero in the quarter, an improvement of $6 million over last year, due to our EBITDA growth. Let me turn the floor back to Pierre Karl for the conclusion.

Merci, France. So conclusion, we are pleased with our operating and financial results for this second quarter.

Telecom results remain solid as expected. Media results are improving despite the strong headwinds and our sports and entertainment results are on the right trend.

That said, it is imperative that our competitor and the regulatory body acknowledge the issues facing our entire industry and we will continue to fight for an equitable treatment and a fair competitive landscape to protect our local competitive environment. I thank you for your attention and we will now, operator, take the question.

Yes, sir. Thank you for -- can you hear me?

Yes, we can hear you.

Okay. Thank you.

So my first question I wanted to ask you is on the two-third of your net adds that you mentioned or BYOD, are those net adds or gross adds, I did not remember if you're saying it and wanted to know if that includes Fizz or just the Videotron brand?

I just missed the beginning of the question Maher, can you repeat it please?

Yes, no problem. So I just wanted to ask you, -- when you mentioned that two-third of your wireless adds or BYOD, did that include sales or just the Videotron brand?

And are those net adds or gross adds?

It does include the Fizz and its gross adds.

Okay. So definitely nice pickup in net adds, how much would you say -- I know you don't break the Fizz and Videotron brand, but, and again I'm asking this because you mentioned on the call that you're running 5,000 ahead of what your run rate was at this time last year.

How much of that gross year-on-year in net adds just coming from sales particularly?

Yes, now we will certainly not disclose that. Our offers for Fizz and the premium brand are work together, and so there is definitely no way for us to disclose at this stage.

And in fact, we'll never do it, disclose the Fizz and the premium brand separately. That being said, you have to recognize that Fizz is a relative new service that wasn't there in the second quarter of last year.

And same for this in the third quarter of this year -- of last year. So obviously, there is a significant impact coming from Fizz.

Okay. The reason I'm asking it is because we noticed that your ARPU growth started to turn negative, very closely in line with the launch of Fizz, but you mentioned that your first reason for this decline in ARPU you mentioned is the BYOD factor.

So I know these are related Fizz and BYOD. But wouldn't you say that the biggest reason for this move into the ARPU line going negative is Fizz itself.

Well, let me tell you a few things about our ABPU growth and, yes, the dilution is mostly coming from Fizz. As you know, we went through some stability problem with our core network or mobile core network in the beginning of the second quarter and as a result we have extended our discounted pricing for Fizz and it's heavily discounted to the regular pricing that we will put in place.

So it's certainly had a significant impact in our overall dilution. That said, I think that where we're getting closer to that tailwind that you guys are looking for.

Starting with Fizz, the stability and the platform has been replaced. So the stability should be good now.

It's just been done though. So we're going to have to work at least for a few weeks of making sure that the stability of the platform is assured and then we will, like I said previously, we will be looking to revisit our pricing structure and obviously, it's not to revisit downwards, to revisit upwards.

So that's some kind of tailwind coming from Fizz. At the current volume that we get from Fizz or net adds that we get from Fizz and even with the current discounted pricing, on a run rate, Q2, we were breaking even with Fizz specifically.

So any increase in ARPU that we will get in the future should translate into a positive EBITDA contribution coming from Fizz. Second thing, if we talk about the premium brand, we're getting very, very closer or very, very close to the BYOD proportion of new adds being equal to what we have in our whole customer base.

So we're sort of getting at the tipping point where the dilution of the ARPU coming from BYOD or the increased proportion of BYOD customers is getting to an end. And what's interesting is if we look on a year-over-year basis, our net adds for BYOD subscribers are signing up at a higher ARPU or ABPU that they were signing up the previous year.

So once we reached that tipping point, I mean, obviously we should get a positive impact of debt. And then thirdly, what I would say is on the handset subsidy front, we've been very careful and prudent in the course of Q2 and not being overly aggressive as some of our competitors were in fact.

And, obviously, if we were not that aggressive with respect to handset subsidies in terms of total revenue collected on a monthly basis from our subscribers, we don't have to recoup the same kind of subsidy and, obviously, charging less on a monthly basis. So when you look at the ABPU lift, it's obviously been limited with that impact.

So overall, I don't really mind really that our ABPU is decreasing because the business model is getting to an inflection point, I would say. We're protecting profitability and lifetime value of our customers and what's more interesting is, even though we'll have a higher base of BYOD customer, churn is continuing to go down.

So, obviously, means that we have something to offer to our customers that make them stay even though they are not under a two-year contract. So I'm not -- I'm really not worried about the ABPU trend right now.

Thank you, JF and I wanted to ask you a question regarding the unlimited plans that were launched in Quebec recently, noticed that you have not embarked on those kind of plans, you still have actually quite attractive plans to compete. But you still have those limited amount of gigabytes in your plans.

Can you talk a little bit about what you're seeing on the competitive front and on 5G, I know nothing is set in stone and negotiations are still going, but is there any timeline that could slip if you were to have to deploy it by yourself?

Yeah, okay, let's start with unlimited. Well, as you know the incumbents launched 10 gig at full speed and then traveled down at 256 kilobytes per second for $75.

Our response was -- or our view of that was once you get to 10 gig, you are unlimited, but the customer experiences is not that great. In fact, I think it's a bad customer experience because let's put it that way, people are buying big data buckets not to do emails and SMS.

They're buying big data buckets to do video and whatnot, so if you can consume video once we reach the cap, it's not a really good experience for the customer. So what we've decided to do though is to offer bigger data buckets at full speed.

So our reaction was we launched a 17 gig data bucket at full speed for $65, so lower price, bigger data bucket with obviously a notification to the customer once you get close to its limit for him to know that, we're going to start charging overage fees once you reach that limit. But 70 gigs compared to 10 gig, we have to admit that it's much larger and currently the average data consumption from Videotron customers is much lower than 17 gig on a monthly basis.

So that was the way for us to answer to the incumbents initiatives and, in fact, if you look at our results in July, it looks like our offers are pretty good, because we are way ahead of last year, our argument with the customer is being at full speed is better than throttled down. 17 gigs is a lot and the savings is going to be realizing on a monthly basis, $10 a month.

Well, if at some -- if for some month or one month or two months, unlikely, but if it happened, take the savings and reinvest it in other additional buckets or data buckets. So I think that we've chosen the right path and future will tell.

In terms of 5G? Okay, that's right.

In terms of 5G and, obviously I will not discuss publicly our negotiations with Rogers, discussions are ongoing, but in terms of timeline, we're making sure that we're not standing still and waiting for them to get a conclusion or whatever conclusion on the negotiation. We've already started to work.

So we already started to work on the architecture of the network with or without them. So whatever happens, we will be ready.

And as I said, we will be able to take care of the 50% you don't remember or remember I should say. Rogers piece of the investment was 50%.

So the part that I have to cover if we're alone is their 50% and I have the fiber network for small cells connection, so that's something that they don't have obviously. So I don't have to invest in the backhauling.

I have several, several sites of wireless sites that we have available to us to do our work, to do our network. So it's not like we're waiting for them.

Well, we've already started and I still believe that it makes a lot of sense to share infrastructure, to share spectrum, but if it doesn't happen, I don't think we're in trouble.

Okay. Thank you very much.

Thank you. Next question please.

Thanks, Good morning. Just to follow up on your comments, JF, about ARPU and Fizz from the previous question, when you take all that into consideration, the discount pricing that's on Fizz, the stability of the system and then moving forward, expect to see some price changes.

Should we think about ARPU growth in the second half improving from what we saw in Q2? Or should we think about it as somewhat consistent.

And then to your comment about the breakeven with Fizz, I'm just curious, was there any start-up costs still related to Fizz that was in the quarter or was this breakeven comment just about the scale and subscribers level that you're at today and with more subs and with perhaps a change back to normal pricing that you'll get to positive EBITDA contribution.

Yes, based on volume and prices.

Okay. And then on the ARPU trend?

On the ARPU trend, I think, at least we have to expect a declining reduction, A reduction in the declining ABPU growth that in my mind is something that is going to be certainly feasible. Obviously, when you look at Fizz, it's a Franco brand.

It's a discounted service and it's priced lower than our premium brands. So if we continue to see some increase in proportion of Fizz, I'm not saying that it's going to grow.

The ARPU is going to necessarily grow when you look at the overall base but from a new adds perspective, it will be going up.

And just a follow-up to on the 5G question on network sharing. Just to clarify, I think there are and then correct me if I'm wrong, I mean there are several levels of different sharing arrangements, there is passive sharing, there is active sharing.

I guess your comments regarding sharing infrastructure is still related to the passes. So am I -- is it fair to think that that passive sharing on 5G will continue and the issue may be more related to other aspects of sharing?

Well, I'll be truly honest, there is nothing settles as we speak. Obviously, we respectively have assets in our hands, Rogers and ourselves, we ascribe certain value out of our assets.

They ascribe a certain value to their assets and at the end of the day, if we don't feel respectively that we get the buck for the value of our assets, there will be no deal. That's the end of it for anything.

And then on your CapEx?

Let me add something. I'm sorry, Jeff, let me add something.

That being said, we are talking about the 5G network, we're not talking about the LTE network or the LTE network sharing arrangement that we have with them, which is not at risk. That's something that will not change is we're really talking about the next generation network.

And just one final one on the cap, you mentioned even without a sharing that wouldn't impact materially the CapEx or that it would be still within your CapEx program. Can you just help clarify what the reference point is like, are you talking about the current spend that you won't increase, how should we think about that relative to your currently spending?

Yes, it's probably what would be the base, the current spends. Don't forget that building the 5G, it's not something that we do in a single year.

It's going to be spread over several years. We're going to be obviously starting with the urban cities.

The bigger cities of the province, and then we'll go on the fringe and in the regions. So it's going to be spread over several years and I am confident that we can deal with that inside of annual CapEx program.

And this year, your CapEx for wireless is -- I believe it's roughly around that $120 million, if I'm not mistaken.

We haven't provided any guidance for 2019. But for 2018, I think you're in the ballpark, yes.

Okay. Great.

Thanks.

Next question please.

Hi. Just a couple other questions.

So first of all, when I look at the telecom EBITDA, it's up about $20 million. And then when I think about Fizz being breakeven and EBITDA for the quarter and most of the revenue growth is driven from wireless.

It would seem to me that despite Fizz being EBITDA breakeven, the wireless EBITDA is still growing nicely, and I guess just wondering if you could confirm that.

I confirm.

Okay. Is there still some small growth at telecom outside of wireless?

Like, is it up very modestly?

Yes, there's a modest growth, yeah.

Okay and then just a question for Hugues. Once again in the cash flow statement, there's obviously been quite a negative working capital drain for the first six months.

I was just wondering if you're seeing for the full year drain being flat.

Yes, well, it's mostly related to income taxes. We had put some fiscal arrangements over the past few years that led us to push off some tax payments.

So compared to the previous quarter, we are now paying taxes. So that's mostly related to that, there is some inventory of boxes as well as Videotron for Helix, but it's mostly related to taxes.

So what do you think that line will sort of end up for the full year?

Well, I mean, clearly compared to paying no taxes last year. I mean, we're back to paying taxes.

I mean, we'll try to lower that as much as possible. But there should be a continuing negative variance with respect to taxes.

Okay. And then if we were to think about 2020, do you think you can kind of go back to being flat or you think there's still going to be a negative drain?

Yes, no, no, no. That certainly would come back flat.

Yes.

Yes. Okay.

All right. Thank you.

Thank you.

Thank you, David, and thank you all. We expect that you have a nice end of the Summer and we will talk to you at our next conference call next quarter.

Thank you. Have a nice day.