Quebecor Inc.

Thank you. Ladies and gentlemen, welcome to this Quebecor conference call.

I am Hugues Simard, the CFO, and joining me to discuss our financial and operating results for the first quarter of 2024 is Pierre Karl Péladeau, our President and Chief Executive Officer. Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast.

Access details are available on Quebecor's website at www.quebecor.com. The recording will be available until August 9th of this year.

As usual, I want to inform you that certain statements made on this 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 the regulatory authorities. I will now turn the floor to Pierre Karl.

And good afternoon everyone. So how quickly times fly.

Does it not? Especially it seems in the telecom world.

A little more than a year ago already, we closed one of the largest and most strategic transactions for Quebecor, the acquisition of Freedom Mobile, propelling us as the fourth national wireless carrier and telecom operator in Canada. And perhaps more importantly, establishing us as the one true alternative to the big three incumbents for the benefits of all Canadians.

The first quarter of 2024 will mark the end of the first cycle of integration of Freedom Mobile's operation and financial results, and thus provide the last clear image of the impressive leverage impact of that historical acquisition. On a consolidated basis, in the first quarter of 2024, Quebecor increased its revenue by 22% to $1.36 billion, its EBITDA by 26% to $560 million, and its cash flow from operation by 21% to $419 million.

We reduced our debt by $145 million and thus improved our debt to EBITDA ratio to 3.3 times, while investing more than $140 million in CapEx to continue to improve our networks and invest in growth projects. Specifically in telecom, we are once again very proud to report the strong operational and financial performance.

On the last 12-month basis, wireless revenues increased by 104%, wireless EBITDA increased by 80% and wireless free cash flows also increased by 80% to $681 million. On the regulatory front, we are disappointed by the CRTC last arbitration decision for the access rate on TELUS wireless network.

The MVNO rates set by the CRTC and the regulated domestic roaming rates, which are among the highest in the world, are far from reflecting current industry realities. Since this decision will increase our cost considerably, we are forced to reconsider our pricing in some regions, most notably Manitoba, where we do not currently have a network but want to build and focus on offers that are profitable.

Moreover, this decision is not in sync with the government of Canada desire, as stated in its policy, to enable Canadians to enjoy better prices for the wireless services. Sadly, this will increase two classes of Canadians, those who live in areas covered by Freedom and Videotron network, who will enjoy healthy competition, and those who will be denied the benefits of full presence as Canada for its mobile carrier.

While on the regulatory front, I would like to repeat that access to FTTP on an aggregated basis should be mandated quickly all across Canada and not only in Ontario and Quebec. In addition, the commission needs to approve rates that are just and reasonable, and also take into consideration the predatory retail prices offered by Bell for its fiber network and its 1.5 gigabyte speed.

On that note, it is interesting to see in Bell's latest financial disclosure an increase of more than 300,000 wireline RGUs over the last 12 months, but with barely one, I'm sorry, $11 million of added revenue to show for. Unless I am mistaken, the underlying ARPU seems much lower than the CRTC mandated rates.

Turning to our operational results, starting with our Telecom segment. I am proud to report that our 100% digital brand Fizz finalized its beta phase in early April and is now currently offering its services to more than 26 million Canadians in Quebec, Ontario, Manitoba, Alberta and British Columbia.

The reach of the service is expected to increase in the coming months as sales will become available in new cities and regions within these provinces under the MVNO framework. In addition, adding to Freedom's growing suite of affordable service, we just launched new affordable home Internet and TV services, making Freedom a three-product player and giving Canadians better Telecommunication options to foster healthy competition in more markets.

This technological capability was made available to us due to our acquisition of VMedia two years ago. For example, we are offering a very attractive TV sports package at $29 a month, which compared to similar offers from the incumbent at $70 a month.

Eligible Freedom Mobile customers in select areas within Ontario are the first to experience both services before they are rolled out to other markets in the coming weeks. We might be fourth in size, but we are undoubtedly number one for customer experience as we have been for many years.

The latest midyear report of the Commission for Complaints for Telecom-television Services, the CCTS is a tribute to the exceptional quality of service provided by Videotron and Freedom to its customer and the care it takes to resolve issues promptly. While the volume of the complaints identified by the CCTS and the Telecommunication industry as a whole increased by a whopping 43%, Videotron stood out from the other major competitors with a significant decrease of 11%.

Already at the lowest level of complaints among the top five providers, Freedom saw complaint decrease from 6.5% to 4.7% of the industry, while others saw their numbers of complaints double. This clearly demonstrate the failure of their tactics to acquire customers with low price in the short term, but ultimately frustrating them with deals only available to new customers, unfair price increase surprises, and confusing terms and conditions leading to contract disputes and invoice mistakes.

Beware of the small print and press releases footnotes. As further evidence to our unique approach to customer experience, Videotron received several awards during the first quarter of 2024.

First, Videotron remains the Telecommunications companies most admired by Quebecors for the 18 years in a row since 2006, according to Leger's 2024 Reputation Study. In addition, according to Leger 2024 WOW Index study, Videotron offered the best in store experience in Quebec, while Fizz ranked first in Canada for the best online experience for the fifth consecutive year.

From a customer standpoint, continuing to build on the success of Freedom, we recorded 60,000 net addition in the first quarter, compared to 26,000 in the same period last year. This gain is not only attributable to Freedom, but also to a strong performance by our cost-efficient brand, Fizz, with its fully digital experience.

In Quebec, wireless was the star of the show, with Videotron and Fizz capturing 21% of gross ads -- I'm sorry 31% of gross adds, once again the largest combined share according to the new ads quarterly tracking by Leger. As expected, wireless ARPU decreased by $2.97 to $35.94 as compared to Q1 last year, without any creative accounting, I might add, which is largely attributable to dilutive impact of Freedom prepaid services and Fizz and also due to the market's higher promotional intensity benefiting all Canadian consumers.

I would like to point out that, contrary to the incumbents, we do not adjust our ARPU calculation to exclude lower-priced customers in a disingenuous attempt as disguising a very real ARPU drop. Speaking of promotional intensity, a lot has been said regarding wireless pricing in the first quarter.

In fact, the situation that prevailed in Q1 started last fall when the incumbents lowered their price substantially and start copying Freedom's strategy. One should not forget that we are the latest in trend in the wireless market, the four players still building market share and establishing itself against the big three who have been at this for multiple decades.

Our progress at increasing our network footprint has been used and we're extremely proud of the improved quality and performance of our network. But the reality is that we still need a price differentiation to keep the momentum as we continue to improve and gradually change the customer's perception of Freedom in terms of network quality, performance and client experience.

The incumbents clearly resisted this in the first quarter, immediately matching our offers and retaliating with exclusive bottom-price offers in Quebec. The irony is not despite our success, and even though we are continuing to build market share in Quebec, their tactics are still more detrimental to them than they are to us.

In any case, however, this highly competitive environment evolved over time. We are uniquely positioned as the lowest-cost operator to continue to generate decent margins and significant cash flows.

Consolidated churn rate on postpaid customers were remarkably stable this quarter, unlike our competitors investing in the challenging trend in the market. Demonstrating the strong performance of our two brands, Fizz and Videotron in the Quebec market, as well as major improvement on the Freedom side, where our efforts on network and customer experience improvement are paying off.

On the wireline front, it is obvious that we are facing a desperate competitor in Quebec. Despite all the investments made in the past, our competitors only wait to lure new customers seems to be by offering prices that are lower than anywhere else in Canada, using the tried but dangerous bait-and-switch strategy, where they attract customers with low prices just to raise them a few months later and sometimes even twice in the first year.

While this has a direct impact on our customer base, we choose a much more disciplined strategy, differentiating ourselves with our trusted customer service along with great network experience, translating into an increase in ARPU for our three wireline products. Turning to the Media segment.

Our performance, while improved in all sectors, remains greatly affected by the decline in revenues affecting the industry as a whole and as evidenced by negative adjusted EBITDA of $17 million for the first quarter of 2024. That being said, our digital newspaper magazine and out-of-home businesses all improved their profitability despite the ongoing difficult revenue environment.

For Group TVA 2024 is a transitional year during which we will continue to implement our major reorganization plan announced in November to refocus and optimize our activities around our mission as Quebec-leading broadcaster and provider of the quality news and entertainment. We will continue to generate significant cost reductions during the next quarters as our initiatives come on stream.

In this context, we're pleased to have reached agreement on the renewal of labor agreements for our employees in Montreal and Quebec City, and also with the regions. Despite the many ongoing challenges facing the media and broadcasting industries, Group TVA continue to hold the highest market share in Quebec with very close to 41% for the first quarter in terms of market share.

This winter, TVA Network remains the most popular channel every day of the week with 7 of the 10 shows in Quebec. This success is due to its main original production, eight of which reached the 1 million viewer mark.

The reality show Sortez-moi d'ici! Get Me Out Of Here!

ranked first with an average audience of more than 1.6 million viewers. La Voix, which is The Voice stood out with 1.5 million viewers, and was the regular program most watched live, our daily script show Indefendable at 1.4 million viewers and the police drama Alertes attract more than 1.1 million viewers.

In terms of news, TVA Nouvelles remains the leader in all-time slots with 4.1 million viewers on a weekly basis. Finally, our Sports & Entertainment division had an excellent performance this quarter with revenue and EBITDA of $47 million and $4 million respectively.

Junior hockey attendance remained high throughout the quarter and major shows at the Videotron center including Pantera, City and Color and Disney on Ice were great successes. I will now let Hugues review our detailed financial results.

Yes, Pierre Karl. On a consolidated basis in the first quarter of 2024, Quebecor recorded revenues of $1.4 billion up 22%, EBITDA of $560 million up 26% and adjusted cash flows from operations of $419 million, up 21% from the same period last year.

In our Telecom segment, total revenues grew by $255 million, or 28%. EBITDA increased by $101 million or 21%, and adjusted cash flows from operations improved $63 million, or 17%.

Our Wireless EBITDA reached $241 million, a 78% growth in the quarter, and wireless revenues increased by 95% at $544 million, reflecting the addition of Freedom Mobile revenues as well as increases in service revenues and equipment sales. As we continue to increase our margins, we're also making significant investments to develop our brands for the long term, such as taking on additional domestic and international roaming costs, investing more in advertising and branding, as well as reducing handset profit margins and forfeiting some overage revenues.

On the wireline front, despite the previously described hostile competitive landscape, we continued to generate growth in our wireline service revenues and gross margin. In terms of OpEx, the 32% increase this quarter is due, of course, to the consolidation of Freedom Mobile as the cost containment initiatives at Videotron and Fizz continue to pay off, as evidenced by a 2.4% decrease in our operating costs excluding Freedom.

Telecom CapEx quarterly spending, excluding the acquisition of spectrum licenses is up $38 million as compared to the same period last year, which is essentially due to the integration of Freedom Mobile as we continued to invest in the network as well as LTE-advanced 5G network expansions and revenue growth opportunities in targeted areas. Our Media segment recorded revenues of $169 million, or 1% decrease and a negative EBITDA of $17 million, a $10 million improvement compared to the same quarter last year.

Our Sports & Entertainment segment revenues decreased 4% to $47 million and EBITDA grew 15% to $4 million in the quarter. Quebecor reported a net income attributable to shareholders of $173 million in the quarter, or $0.75 per share, compared to a net income of $121 million, or $0.52 per share reported in the same quarter last year.

Adjusted income from operating activities, excluding unusual items and losses on valuation of financial instruments came in at $163 million, or $0.71 per share, compared to $136 million last year, or $0.59 per share. As of the end of the quarter, Quebecor's net debt to EBITDA ratio decreased to 3.31 time the lowest of all of our telecom competitors and peers.

In the first quarter alone, we reduced our debt by $145 million, whereas our main competitor increased theirs by the tidy sum of $1.6 billion. Since the closing of Freedom Mobile, we have repaid more than $500 million in net debt and already brought down our leverage ratio from 3.6 times at the time of the acquisition to 3.3 times now.

Finally, I am proud to report that Standard & Poor's announced a few days ago our long-awaited upgrade to investment grade status. We are very proud of this important achievement, a tribute to our longstanding operational excellence, financial discipline and very strong balance sheet.

We thank you for your attention and we'll now open the lines for your questions.

[Foreign Language] And again congratulation on your rating increase, rating upgrade on the credit side. I wanted to first ask you about your Internet loading in the quarter, which saw a sequential decline.

It's obvious that you are trying to balance subscriber loading and profitability. Can you discuss how you see the market moving forward in Quebec and how we should expect your cable business revenue, but more importantly, profitability, to behave given the current competitive environment?

And as a second question on wireless, close to 30% of net additions, all competitors included, nationally, a very strong number, hard not to like it, but I would like you to talk about the quality of the loading that you're seeing. And do you feel that you're pushing too much?

It's a weird question, but, you know, 30% in a Q1 you know, are you happy with the quality of the loading that you're having? And do you think maybe stepping back a little bit and getting a better pricing for the whole market in general might be a better option?

Thank you.

I will -- thank you, Maher. I will answer the last part of your first question regarding the competitive environment.

I guess that we should repeat the fact that Quebec has been always competitive. Is this more competitive than ever?

Probably we should say, yes. And should we consider that as a consequence of us being more involved in the wireless business and now in bundle services in the rest -- in other provinces of Canada, one should say, probably.

So it's tough for us to know what the future is all about. But again, I will repeat the fact that we're a low-cost operator.

We've been running our business always with tight tension about how we spend our money, and we will continue to do this. And then, therefore, whatever the situation went or goes, we will remain in a good position to generate profitability.

And more importantly than anything else, positive cash flow. For the other part of the question, since...

On wireless, yes, I think you're referring to our 60,000 being 30% of net additions, right, of the industry, Maher?

Exactly.

I mean, we're happy with this. We've said a number of times that we keep striving for a good equilibrium between growth and profitability.

And we feel that we're actually performing pretty well on that front. If you look at our churn, our churn is stable, whereas our competition is increasing.

I think that's a very important -- and continues, you will remember it was the case last quarter as well. So I think that continues to be a very encouraging KPI.

So you know is 60,000 the right number? You know, we feel that it is the right balance right now.

When you look at our profitability and our momentum, our momentum going forward, you know, it's not -- our prices continue, as we've said in our remarks, as Pierre Karl said in his remarks, we believe we still, as we are changing the perception, and that takes some time, we feel that we still need a price advantage, and we feel that we've probably struck the right balance between, as I said that price advantage and the momentum that we're getting from it.

Great. Thank you.

[Foreign Language] Thanks for taking my question. The first one is on the investment grade rating from S&P.

We'll see about the other agencies. But if you get the total upgrade, does that changes anything in terms of your strategy for, your ways of operating or steady as she goes?

Thanks, Jerome. No, we will continue to perform as we've been performing.

And this is certainly something that we've been working on for many, many years. And when we took over Videotron well now 22 years ago or even more than that, I was saying that we will reduce our debt and we will continue to invest on our network.

Fortunately, I guess that we took a right decision to enter the wireless business early as a cable company late in the process in 2006, and today is certainly for us a significant flow of growth for revenues and cash flow. I think that with the Freedom acquisition, we've been able to realize and close.

We're basically showing that this transaction was fruitful for our shareholders and for our balance sheet. We always focus on cash flows.

I know you guys sometimes look on EBITDA, yes, this is certainly something that we should look at also. But at the end of the day, what's the kind of cash that you're bringing back to the bank to reduce your debt compared to the kind of money or the payout that you're giving away or seeing your debt increase instead of reduce.

So in a nutshell, no, it's not going to change our perspective. You know, we will continue to work, but we can't ignore the fact that, you know, we're happy having the status, given that for future issues, the cost of funding will be lower than historically took place.

Great. And speaking of the difference between EBITDA and free cash flow, you also announced recently that you partnered with the government to deploy towers in the Laurentians in the great region of Abitibi.

So I'm just wondering if that was already included in the CapEx guidance that you provided, saying that it's going to be approximately stable or a bit higher in 2024.

Just, I should mention that, as we've been doing with our share in many areas in Quebec where we've been able to connect 37,000 homes, we did it with the government of Quebec and government of Canada help, and therefore it's the same for the new Wireless network. So, clearer answer, I don't think it's...

No, it is not in there. No.

Because it's going to be almost a zero-sum equation.

Okay. Thank you.

Thank you, Jerome.

All right, thanks for taking the question. Just on the credit rating, I just had a quick follow-up.

Is there any requirement to reach a certain leverage target over a certain amount of time? I know that during the -- I noticed during the prepared remarks the amount of debt repayment since the acquisition close was referenced a few times.

So just curious if there's like a level that you're aiming to achieve in relation to the upgrade? And then just, you know, as it relates to Fizz, just kind of remembering the launch when it occurred in Quebec.

And obviously, it has a negative impact on ARPU, which is widely followed. But, you know, I thought maybe you could set some expectations on the positive side, perhaps, about what you expect, you know, the impact to be for subscriber growth and margins as this gets more widely rolled out and brand awareness kind of increases outside of Quebec.

Thanks.

I will answer the Fizz aspect, and Hugues will come for the first part of your question. I guess that we should repeat your Fizz as a pretty good example of what we can consider being actions or operation that brings ourselves as a low-cost operator.

The way that digital works, and this is the lowest price to deliver a service once you're a BSS, how would you say a BSS, or stack is established, yes, obviously you need to maintain it and paying licenses on the different software that you operate. But compared to any other source of distribution sources, it's far from being very, very interesting.

So we will continue to do this, and then therefore we look forward to experience the same success that we've been able to achieve in Quebec. And we've been able to do a pretty interesting and terrific job in a little more than three years, where you've been seeing our loading on the Internet side being also quite interesting for us, and position ourselves pretty well in a certain market share where we can obviously face competition with interesting tool and great weapons

On the credit rating, no, there's no specific, to answer your question, there's no specific commitment, to answer your question. I mean, we've said publicly last time, and we're continuing to say it, that we have been delevering and we intend to continue to operate in the low 3s because we're very proud of how far we've come since many years, and more specifically since the acquisition of Freedom, having been through one of the most transformative acquisitions for us in our history and coming out of it in the low 3s in terms of net to EBITDA ratio.

So we're very proud of what we've done, and we intend to, and we've said this, we intend to continue to operate in that sweet spot of the low 3s. But there's no specific commitment linked to the upgrade, no.

Yes, we will continue to work on this. Always I'm happy to think about where we were in 2,000 about seven times, and from there we bought the 45% owned by [Foreign Language], we built a network, we bought spectrum and we delivered growth.

And here we are, you know, with the lowest debt-to-EBITDA ratio. And I think it's quite an interesting accomplishment.

Any other question, Matthew?

No. Thank you so much for the color.

I appreciate it.

Thank you, Matthew.

Good afternoon. I was hoping you could provide some color on the recent Freedom Internet announcement.

Just looking for timing in terms of broader rollout and whether you expect growth to come from penetration in your mobile base or from subscriber acquisition after the broader rollout? And I guess related, how do you think about the expected ramp in subscribers from that Freedom Internet offer?

Well, you know, given projections, as you probably know, Stephanie, it's not our cup of tea, but I guess that, you know, what we can say is bundling. And we mentioned it at the beginning of the Freedom transaction, as Fizz being a standalone product, but also a dual product with the Internet, we believe that bundle is also an interesting proposal for our customers now.

So we really have a full offer, a standalone, we have bundles and we will continue to make sure that we negotiate the best prices to make this a proposal to our customers viable, affordable and interesting. So we know that and you know this also, Stephanie, because we've been seeing, and we experience it also that, you know, once you got a bundle of customers, you have a much better possibility to reduce your churn.

And we experienced this in Quebec, and there's no reason we will not be able to share the same experience elsewhere.

Thanks for the color. And then just related, on your higher value offerings from Freedom, just curious if you're seeing -- what kind of uptake you're seeing on the plans with the higher data allotments and roaming perks.

Are you seeing a good uptake or consumers more focused on the lower-tier data plans at this point? And how do you think about that mix shifting over time?

Well, I think that we will continue to offer the widest possibility. Yes, we should mention, and I will repeat that we should not be shy of saying the truth.

Freedom was not probably the company where investment was the priority for the last two, three years. We know that.

We knew that this is the kind of experience that we will face. And then therefore we have our CapEx plan for the upcoming years.

We should say that fortunately all the regulatory front we mentioned, and for which obviously we made a lot of representation saying if the new government of Canada would like to have competition, if new Government of Canada would like to see prices going down, then certain things need to be done. And the MVNO and the auction or the auction conditions for the spectrum are considering this, and then therefore is offering four company of our perspective an interesting frame.

Is it perfect? Certainly not.

But it's certainly something that we will use and continue to use again to make sure that at the end of the day we'll be able to offer the best proposal at the largest scale as possible and continue to build and improve our network.

Okay. Thank you.

I think the next question is from Vince.

You still there, Vince?

Yes.

Okay. I was afraid that you have some problem and we're not listening to you.

Good. You can hear me now?

Absolutely, yes.

Great. Sorry.

So I just want to start to clarify a couple things, Hugues, in your opening remarks you referred to Telecom CapEx up $38 million, which I'm pretty sure relates to $132.9 million, that was in the press release. And in your supplemental you show $161 million.

I just want to understand the difference there. Is that the government subsidies for Abitibi and any other rural projects?

No, I just said it was up $38 million. So we're up to $161 million.

That is what I meant in my remarks.

So 160 -- yes, go ahead.

Total CapEx -- yes, the total CapEx was $161 million from the disclosure, correct?

$161 million is in the supplemental in the press release, in the statements there, in a couple of places it's $132.9 million.

No, the number is $161 million. That is the total CapEx.

Okay. So when you're thinking of no more than $600 million for the full year, that relates to the $161 million, in the first quarter?

It does, absolutely. Yes.

It's in the ballpark.

Yes.

And is that -- is there any other adjustments or is there any nets off of that from government subsidy money in the $161 million?

No, no, no, there's no adjustment for that.

Okay. That was clarification number one.

Number two, if your postpaid churn was 1.1, your prepaid churn obviously had to be higher than that. It's like if we make some kind of estimate, it seems like your gross adds in wireless in the first quarter somewhere 200,000, 210,000 range, does that sound reasonable?

It does sound reasonable. You're certainly in the ballpark.

I don't have the exact number in front of me. But yes, it does sound reasonable, though, Vince.

Great. So when you're -- Pierre Karl, when you're thinking about market share gains and how well Freedom is doing, would you be looking at that gross add number, which is about 13% of the total industry adds in the first quarter, or are you thinking of the net number even though churn is a much bigger number for your three competitors because their base is so much bigger?

Vince, I would say, all your answers are right. I mean, growth and adds is certainly something that we look.

We know what the churn cost and we will continue to work our own cost. We know where we can improve our operation and we're working on.

And again, I know that you would like to have probably even more outcome from our side, but first of all, projections, again, it's not something that we're strong for. And secondly, I think it would not be appropriate to mention to our competitors where are we going?

But the thing is, and I guess that we've been working always in this direction, is to improve our operation, to grow our customer base, and to offer them the best network and the best quality. This is no doubt where we will continue to work.

Fine, thank you for that, try to clarify something else, Hugues, the subscribers in wireless increased 7.4% year-over-year. We should be able to get that exactly because we have your numbers from last year and we can just back out the Q2 sub adds to get what the pro forma number was at the end of March last year.

And now at the end of March this year, it's up 7.4%. You've reported ARPU down 7.6, but I don't think that's organic because some of that is the distortion.

So it may seem on the surface like your revenue actually declined on an organic basis, but what did you actually see if you pro forma Q1 last year is your service revenue in wireless up 2% or 3%?

Well, first of all, the one thing you have to -- we just have to -- you have to understand, Vince, is that in your numbers what you're taking is the total net adds from last year. I think you're using 35,000 and you have to recognize that only 6,000 of those were from Freedom.

29,000 were Shaw Mobile, which we never got. And even within the 6,000 of Freedom, to be honest, it was actually more prepaids were up and the postpaid were actually down.

And I'm referring of course to Q1 2023 now. So I think that's the first difference that we have, I think between your analysis and our analysis of the 60,000 of this year.

Is 60,000, you were saying, well, it probably compares to 61,000 last year. It does not compare to 61,000 last year.

It compares -- if we include the prepaids, it would include, you know, it would compare to 32,000 and not 61,000.

You know what, that is not the question I asked, but that's extremely helpful. Hugues, thank you for that extra disclosure.

I'll definitely fix that going forward. I do have two other questions, but just the billion-dollar, I'm surprised it wasn't asked yet, but the $1 billion in free cash flow that you talked about on the last call, I assume that is still your -- you don't give guidance, but that's your ambition, let's call it, for the year.

As you know, we don't give guidance, but I'll call it an ambition. I like the term.

That's fine. And I'm sure you will agree that the numbers that we are releasing today are if anything, strengthening our, you know, our, how would I say that, our optimism towards achieving our ambition.

Okay, last thing, look, you take this as a comment, if you don't want to talk to your competitors on a call. I understand that.

But in the month of March, you mean the flanker brands for Fido, Kudo, Virgin were all at $34 and you at Freedom were at $29. You had a $5 price cap and you achieved respectable subscriber growth.

You're now at a $10 gap because they've all moved up to $39 and you're still at $29. So I just don't quite understand why -- how you think that, that is sustainable.

$10 is too much. You're going to get more share, but it probably doesn't last.

They're probably going to go back to -- if you don't go up, they're going to go down. So I'm hoping that, that is a message that resonates that your ARPU growth, I think, could be better and not necessarily impact your subscriber growth much.

But I'll leave it with that.

Thank you. Thank you.

Vince, we listened you.

Just on the ARPU, you're making me realize I wanted to say something on the ARPU as well, which I failed to mention to you. Yes, on the 297 decrease of ARPU, two-thirds of it $2, basically out of the $297 is due to the dilutive effect of Freedom.

I think you were mentioning that was maybe one of your questions I did not answer. But just wanted you to have that number.

That's helpful, too.

And we've heard your comments. I'm looking at Pierre Karl also, he's heard your comments on pricing.

But we're not surprised of your comments.

You have been, if anything, determined in your approach.

As always.

Thanks, guys.

Next question, please.

Yes, hi. A couple of questions just following on the ARPU discussion.

Is there a certain point in time that you expect ARPU to sort of stabilize anytime soon? I was just wondering on that.

Well, David, I think, you know, just the mathematical effect of dilution, as you know, we are in the midst of launch. We just launched Fizz, we are growing or our growth is in good part happening through Freedom, which has a lower ARPU.

So it would be difficult to say at this point when stabilization, if stabilization happens. just as a first -- as a first answer, on the basis of that mathematical dilution effect.

Where will prices go? I mean, nobody has a crystal ball.

As we've said, we believe that we are reaching that balance, that good balance, that good equilibrium between momentum and profitability. We are comfortable with the environment as it is today.

We feel that as a low cost, as Pierre Karl has mentioned earlier, we are -- have been for many, many years the lower-cost operator in this business. And we feel that gives us an advantage, and that allows us to continue to strive and to generate the cash flows even in an environment where the top line is still pressured.

So, I mean, who knows what will happen? But, you know, we're very happy, you know, we feel very comfortable in this environment.

And, you know, ARPU is an average -- is an average, as you know. And we believe that Fizz will be a great success in Canada.

And mathematically, you know, Fizz have been dropping our ARPU directly. And there's no reason it will not -- it will be a different effect than the one we experienced for the last three years with Fizz.

And again, I will repeat that, we can afford that because Fizz is a low-cost operator, and it runs on a digital base and with costs associated with it much lower. The thing is, right now, we just launched, Freedom is an established brand.

Freedom has been there, as you know, for many, many years in Ontario and not as much here in Alberta and BC, but Fizz is new, and Fizz is launching its advertising campaign. Fizz is in a mode of letting know the people that, you know, it's existing.

And again, we consider that we're running for great success with that brand, too.

Okay. So then just on the wireless business, should we assume that you're focused on maintaining an EBITDA margin, say in 40%, low 40%, then that's kind of a primary metric you want to maintain.

Is that true?

Well, I'll answer that. David, I think we've been talking, you and I, with all the analysts for many, many years of our EBITDA, of our industry-leading EBITDA margin.

It -- of course, again, I'll give you the same answer with respect to the EBITDA margin as I gave a few minutes ago with respect to ARPU, of course Freedom having a lower EBITDA margin, the -- it had a dilutive effect on our global margin, but we are improved -- we will continue to improve. We have generated and will continue to generate synergies.

And we feel that this is something we were particularly good and at, and I think we will continue to perform better than our competitors on that front. And then we will continue to generate the highest margin going forward.

And the cash flows that come with it, and that allowed us to de-lever over the years as Pierre Karl mentioned before, even though we're continuing to invest in our networks and continuing to invest in revenue-generating projects.

Okay, all right. Thank you.

Thank you, David.

Hi, Drew.

Yes, good afternoon. Thanks for fitting me in here.

First just Hugues, just a clarification. I think I missed it.

The wireless EBITDA, was that $241 million on the quarter?

Yes, that's correct. $241 million, yes.

Okay, thank you. I guess just following up on kind of the recent questions around wireless and maybe to Vince's point on the $29, I fully appreciate a lower cost to operate here, but the big question in the investment community is, can you make money down at those price points on a per unit basis?

I mean, I'm assuming the answer is, yes, but if you want to kind of comment on that, the bigger picture is just trying to understand the 12% CapEx intensity that you're running at within the context of still presumably wanting to be facilities-based three, five, seven years from now. And so the question is, I think, Hugues, you talked about a gradual increase or an eventual kind of increase in that 12% CI.

I'm assuming that will be success-based decided as you kind of go forwards, just because you're figuring out all the things you need to do on Wireless outside of Quebec. So the question is, like how do you determine success in terms of investing behind that success.

So hopefully, that's clear. If not, let me know.

Well, yes, you're right, Drew, you know, we're not going to do business if we're not making -- if we're not able to make money. Yes, I will use an example, but I don't know if it's comparable to the Canadian landscape, but when you look at the competitive environment and you compare this with other countries.

And I think of France, there was a company called Free, they came in with a EUR2 service many years ago. And now Free coming from nowhere, they all became an incumbent in the wireless market in France, from nowhere they became an incumbent.

I'm not saying that we're going to do this, but certainly as a low-cost operator they were. As a low-cost operator we are, definitively we're not going to do, and in fact, we're not here to record RGUs.

We're here to make money out of our customers and we're going to continue to do this because we can operate at a low cost structure. Look simple way, but I guess at the end of the day, it's simple.

We're not spending money that we do not need and we have discipline. And we'll continue to have it.

Not saying other companies do not have, but this is certainly something that we've been focusing on. And as of today, we're seeing debt reduced, cash flow increasing, revenue is going up, customers are happy.

There's not too many of the things that we can do or we can expect realizing. Right now we have not challenges, but I would say opportunities, which is the bundling, the bundling with Freedom, Internet and Television.

This market, Drew, had been very expensive. When we compare market prices for Internet and for Television, compared with the one we experienced throughout decades and decades and decades, we've been competing against satellite and now we're competing against fiber.

We still are the lowest television package proposer, so we see great opportunities moving forward in the bundling service. Do we have objectives?

Our objectives will be, you know, having the best proposal to our customers. But we feel that we had good reason to think that we will be successful.

And just on your second or your second question, or second part of your question, absolutely success-based. I mean, we've said this in the past.

Yes, we have a comparatively low, perhaps you can call it that, capital intensity. But as we said, you know, this is, right now we are focusing on making our networks better, focusing on revenue generating projects and will on success base, it's absolutely success-based.

As we continue our development, we will see where it makes sense for us to invest. And we know we have an investment cycle in front of us in terms of, you know we've launched the MVNOs, and at some point building a network will be required.

But we've always said that we will build on the basis of our success of us, we will first build market share in these areas, and then it will make sense for us to invest. And to, because we will already be generating the cash flow that will fund the investments going forward.

So I think, you know, we -- I think it's a good business, a good way to run a business. And that's how we've always said we would do it.

And I can tell you something, Drew. We have at Videotron, a very tough CFO, and he's telling us, you know, where we should go and where we should not go.

I have full confidence in his judgment and so we're following his advice.

Okay. All right, thank you both for the extra context.

I appreciate it.

Thanks. Because he's right -- he's right beside me.

Yes.

Thank you very much. Thank you very much, Drew.

And thank you all for being with us this afternoon. We look forward to hear you again the next quarter conference call.

Thanks.