QUEBECOR INC Q1 2026 Earnings Call: Complete Transcript

QUEBECOR INC (TSX:QBR) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.

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Summary

QBR.A reported strong financial performance for Q1 2026 with a 10% increase in adjusted cash flow from operations to $444 million, a 13% rise in EBITDA excluding stock-based compensation to $577 million, and a 19% increase in adjusted net income to $220 million.

The company reduced its net debt to EBITDA ratio to 2.86, maintaining the lowest leverage in the Canadian telecom industry while investing $133 million in capital expenditures to enhance network and client experience.

The telecom segment delivered record results with a 6.6% year-over-year increase in adjusted EBITDA and an 11% increase in adjusted cash flows from operations.

Wireless service revenues grew 8.8% year-over-year, with mobile ARPU increasing for the second consecutive quarter, attributed to customer satisfaction rather than promotional offers.

QBR.A launched the Total Freedom Plan, offering 5G connectivity across Canada and 120 international destinations, and is expanding its B2B services nationally, leveraging its network.

The media segment showed improvement with a $20 million better EBITDA compared to the previous year, despite ongoing industry challenges.

The company repurchased 1.5 million Class B shares and announced an increase in its share repurchase program, maintaining a strong balance sheet with over $1.7 billion in liquidity.

Management emphasized a disciplined approach to growth, focusing on profitability and maintaining a competitive cost structure, with a cautious outlook on market conditions amid aggressive promotions by competitors.

Full Transcript

OPERATOR

Good day everyone and thank you for standing by. Welcome to the Quebecor Inc.'s financial results for the first quarter 2026 conference call. I would like to introduce Hug Simard, Chief Financial Officer of Quebecor Inc. Please go ahead.

Hug Simard

Ladies and gentlemen, welcome to this Quebecor conference call. My name is Hug Simard. I'm the CFO. And joining me to discuss our financial and operating results for the first quarter of 2026 is Piercar Piladaud, our President and CEO. Anyone unable to attend the conference call will be able to access the recorded version by logging on to the webcast available on Quebecor's website until July 13th of this year. As usual, 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. I will now turn the floor to Pierre Carl.

Pierre Carl

Good afternoon, everyone. I'm happy to report once again solid operational and financial results for Quebecor in the first quarter of 2026. We're continuing to deliver on our plan quarter after quarter, profitably growing our wireless market share across Canada, generating superior cash flows and reducing our leverage to maintain the best balance sheet of the industry on a consolidated basis. In the first quarter of 2026, Quebecor increased its adjusted cash flow from operation by 40 million or 10% to 444 million, its EBITDA excluding stock-based compensation by 74 million or 13% to 577 million, and its adjusted net income by 34 million, or 19% to 200 million and 20. We reduced our debt by more than 120 million in the quarter after buying back more than 85 million of our stock and thus improve our net debt to ebitda ratio from 33.26 times in the same quarter last year to 2.86 times, still the lowest leverage of the Canadian industry, while investing 133 million in capital expenditures. To continue to improve our networks, our system and our client experience to fuel our resilient and profitable growth. I will now review our operational results, starting with our telecom segment. I'm very pleased to report what I believe is one of if it's not the strongest first quarter in our company's history. Our telecom segment delivered adjusted EBITDA of $620 million, up 6.6% year over year with a margin of 50.9%, up 80 basis points. Adjusted cash flows from operations reached 489 million, up 11%. Total revenues came in at 1.2 billion, up 5% with service revenues of 1 billion growing 4% year over year. These are record results for a first quarter and a pretty good start for the year. Impressive performance was once again fueled by our wireless operations where service revenues were up 8.8% year over year at 466 million, we consolidated mobile ARPU growing for a second consecutive quarter and reaching $35.99 up 1.4% up, not down like all our competitors in a market where the dominant narrative had been price compression and ARPU erosion for some time, our ARPU is actually growing and growing. Not because we're attracting or retaining customers with short term, unsustainable and ill advised promotional offers. Growing because our customers are increasingly happy with our reliability, performance, service and prices and are thus choosing to stay and upgrade. This is the difference between a customer base earned with value and one rented through discounts. In terms of subscriber growth, we added 28,800 net mobile lines in Q1 2026. While this is much lower than the 52,900 net additions we reported in the first quarter last year, it is the result of our continued disciplined focus on profitable growth as opposed to buying short term loading. As you know, this quarter unfolded as one of the most aggressively promotional wireless environments in recent memory, with the incumbents maintaining deep discounting campaigns in all channels well into April, which made little sense to be honest, unless their compensation is tied to unit growth, which is not how we operate at Quebecor. Basically a slow organic growth quarter where the big three stole customers from one another at ridiculous prices. This is simply unsustainable. The map doesn't work. We much prefer our model, which led us 37% of the total market loading in the quarter at prices that are improving our ARPU and service revenues. With the lowest cost structure on the market, the lowest ARPU to defend, we have significant pricing flexibility to compete aggressively while maintaining compelling units. Economic this structural advantage, which we have built over many years, is durable and will continue in our favor for quite some time as our competitors struggle with expensive cash flow draining, heavy restructuring and workforce reduction. As we mark three years since the Freedom Mobile acquisition, the evidence is clear. Canadian families are paying less for wireless. We have accelerated our infrastructure investment and extended our network footprint. These are not projections. These are measurable outcomes of a decision that reshape the competitive dynamic of Canadian telecommunications. We are not done. Actually, we are just getting started. On February 24th we launched our Total Freedom Plan, offering seamless connectivity across Canada and 120 international destinations powered by our 5G network with a price freeze commitment in a market where consumers have been conditioned to expect annual price increases, this is a genuine differentiator on the B2B front. Videotron's service offerings has been a trusted technology partner for Quebec businesses for over 20 years. We are now expanding that expertise nationally, bringing our business services to Ontario and Western Canada. Leveraging Freedom Mobile Expanding national Network we're still in the early innings, of course, but this is a vast and largely untapped opportunity for us. Turning to wireline, still our largest cash flow generator, we delivered service revenues of $565 billion in the first quarter, up 0.4% year over year and the first increase since Q3 2023. This inflection reflects the cumulative effect of widest network investment and a broadband strategy that is beginning to deliver measurable revenue improvements. On April 5th we launched Internet 2Giga, delivered download speed of up to 2000 megabytes per second and upload speeds of up to 200 megabytes per second in the greater Montreal area, Laval and Quebec City. This is not a feature enhancement for a niche audience. It is a significant step forward in residential broadband based on our existing infrastructure, deployed efficiently and designed to serve the rapidly expanding bandwidth needs of household and business in our core markets. In TV distribution, we're able, contrary to the industry, to maintain our revenues and margins thanks to the strength of our Helix platform and our eligible plus revenue growth. With the recent publication of Leger 2026 reputation survey, Videotron was recognized as the most respected telecom provider in Quebec for the 20th, 20th time since 2006. Two decades of stop recognition not by an industry panel, but by the Quebec population, rendering its verdict independently year after year on how this company treats the people who choose to do business with it. The customer trust and appreciation that underline this recognition is the same strong foundation that produce our industry low churn, our growing ARPU and ultimately the superior financial result we're reporting today. It is a hugely valuable asset that does not appear in our balance sheet, but one in which we have been wisely investing for many years and now among the most durable competitive advantages we possess. As I look ahead to the reminder of 2026, I am confident in our trajectory. Our wireless platform with our three complementary brands, idotron, Freedom Mobile and Fizz, is generating both volume and ARPU growth, keeping our churn rate among the lowest and most resilient in accelerating our service revenue momentum. Our wireline business had returned to revenue growth with our recent network innovation positioning us for a continued broadband leadership. Our cost structure remained the most competitive in the Canadian Telecom sector and our increasing cash flows give us the financial flexibility to invest wisely to fuel our continued growth and create long term value for our shareholders. Turning now to the media segment, Droekte Ver is beginning to see the concrete results of the sustained efforts deployed over the past several years to simplify our structures and streamline our operations in order to better face the ongoing crisis affecting the entire media industry. In the first quarter of 2026, OPTAVIA reported negative adjusted EBITDA of 1 million, an improvement of 20 million compared to the same quarter 2025, mostly driven by the benefits of these initiatives. While we welcome these results, we remain extremely cautious in the context of deep structural crisis that continue to shake Sorry to shape yeah and to shape the industry. The strange hold of the GAFAN and the advertising market, the erosion of television subscriptions, a significant reduction in support from the Canadian Media Fund, the unfair competition from the cbc, RAO Canada and the heavy regulatory burden imposed by the CRTC continue to undermine private broadcasters. Faced with these persistent challenges, a mobilization of all stakeholders, including the Governments, CRTC and industry association and unions is needed to rebuild a viable model adapted to market realities in order to preserve our collective ability to produce and deliver local news, entertainment and sports content and to support the entire ecosystem that depends on it. I will now let VIC review our detailed financial results.

Hug Simard

On a consolidated basis. In the first quarter of this year, Quebecort recorded revenues of 1.4 billion, up $52 million or 4% from last year. EBITDA reached 577 million, an increase of 27 million or 5%, or a $74 million or 13% increase when excluding the unfavorable impact of a 47 million rise in share based compensation expense across all of the corporation segments. Cash flows from operating activities reached $420 million stable year over year as the EBITDA improvement was partially offset by high current income taxes.

Hug Simard

In our telecom segment, Total revenues increased 5% or $57 million, with growth from both wireless where revenues were up 9.5% to 608 million, and wireline with revenues up 0.4% to $565 million, marking the first positive wireline revenue quarter in nearly three years. Total service revenues, the primary indicator of our recurring revenue base, reached $1 billion, up 4% from 992 million a year ago. This acceleration reflects the structural improvement in wireless ARPU combined with the wireline revenue inflection.

Hug Simard

A second competitive quarter of year over year service revenue growth with rigorous cost management. Adjusted EBITDA reached 620 million, up 38 million or 6.6%, our best performance ever in the first quarter with adjusted EBITDA margin reaching 50.9%, an 80 basis point improvement year over year. Telecom capex spending excluding spectrum licenses was down by $12 million or 8% in the quarter, essentially due to a timing of a number of investment projects underway this year. Our 5G 5G rollout remains on track and the recent commercial launch of Internet2Giga, as mentioned, is a clear example of the high impact investments we continue to make as a result.

Hug Simard

Quarterly adjusted cash flows from operations increased $50 million or 11% to reach $489 million. Our media segment revenues came in at $157 million, down 5% or $8 million year over year, while EBITDA improved by 16 million to a $2 million loss. Reflecting the benefits of the cost reduction initiatives and a favorable impact from the federal government's cancellation of the digital services tax, our sports and entertainment Segment revenues decreased by 1% to $49 million and EBITDA was down $2 million for the quarter was down 2.

Hug Simard

$2 million for the quarter. Quebecor reported a net income attributable to shareholders of 225 million in the quarter or $1 per share, compared to a net income of $191 million. $0.82 per share reported in the same quarter last year. Adjusted net income excluding unusual items came in at $220 million. 97 cents per share, compared to an adjusted net income of $185 million or 80 cents per share in the same quarter last year. As of the end of the quarter, Quebecor's net debt to EBITDA ratio decreased to 2.86 times, still the lowest among telecom operators by quite some margin.

Hug Simard

As we continue to proactively optimize our capital structure, we launched on April 1st of this year a US $1 billion commercial paper program in the United States, further diversifying our funding sources and providing additional flexibility at attractive short term rates. The very next day we used available liquidity to repay the $500 million balance on the second tranche of our term credit facility. All in all, we continue to preserve the best in class balance sheet with available liquidity of over 1.7 billion at the end of the quarter. In the quarter we purchased and canceled 1.5 million Class B shares for a total investment of $85 million and we are pleased to announce that on May 13th we receive approval from the TSX to increase the maximum number of class B shares that may be repurchased under this year's program, which ends on August 15, to 7 million shares. We thank you for your attention and we'll now open the lines for your questions.

OPERATOR

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press Star followed by the 1. On your touch tone phone, you will hear prompt that your hand has been raised. If you wish to decline from the polling process? Please press Star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Sebastiano Petty with JP Morgan.

OPERATOR

Your line is now open.

Sebastiano Petty (Equity Analyst)

Hi, thank you for the question. Just real quick on mobile phone. Average Revenue Per User (ARPU) up for the second consecutive quarter. Pierre Carl, you talked about focusing on profitable loadings. Should we anticipate or despite the competitive environment, do you think the Average Revenue Per User (ARPU) trajectory, the growth profile can kind of continue through the balance of the year and then you on the capital expenditures (capex) expectations a little bit lighter for the year, for the first quarter rather.

Sebastiano Petty (Equity Analyst)

But I think you said that was partially due to timing. I think you provided some context on how to think about capital spend for the balance of the year. On the 4Q call, remind us, is that still the right level as you're kind of thinking about the 2026 spend? I think there's a year on year increased target or figure you kind of cited last quarter. Thank you doctor.

Pierre Carl

Yes, good afternoon, Sebastiano. Sorry. I guess you know what I would say is that we stayed of course. I mean we don't know what the market will be tomorrow. We in fact we expect the worst to be ready for the best. So yeah, I've been focusing on our cost base. This is something of importance and we believe that our cost base will continue to go lower and therefore if the market was to go more aggressive or as aggressive as it was before, we think that we will be able to keep the track where we've been going, which is growing with profitable direction.

Pierre Carl

And again you guys have been looking at the market. We follow you obviously, as you can imagine. And it looks like you're watching the market every day, probably in different areas Canada. So you're well aware of the situation. We are never. You're going in this sometimes aggressive discount direction. What we do is we try to innovate and in fact this is what we did by proposing new formulas, new packages, new things that will make the market more interesting and more vibrant.

Pierre Carl

And I guess that, you know, at the end of the day we should say that our results not too bad. And this is why, you know, our ARPU grew instead of going in the other direction like we've been seeing, you know, with our competitors, we have room to grow. This is very interesting then therefore the roots and the base are solid and we look forward to continue in the same direction

Hug Simard

on Capex. Sebastiano. Yeah, a little light in the quarter. $12 or $13 million light as you saw a bit of timing as I said in my, in my remarks and also to be honest, you know, some prudence as the quarter was going, you know, in our view, crazily, a little bit crazily and unnecessarily competitive and we just wanted to keep some powder and we're very, we're very disciplined on, on some of the projects that were less revenue related or, or growth related. But it's if, if you know, as Gekka said, depending on what, what's going to happen in the market going forward, we should be, there's no change at this point in our mind in terms of our capital expenditure guidance. But you know, it's always good to be, to be a little prudent at the beginning of the year so that you can adjust if things get out of control.

Sebastiano Petty (Equity Analyst)

Thank you doctor. I'll go to the next question please.

OPERATOR

Your next question comes from Drew McReynolds with RBC. Your line is now open.

Drew McReynolds (Equity Analyst)

Yeah, thanks very much. And obviously a great result. A couple for me. Maybe Hugh, just unpacking, you know, wireless ARPU clearly return to growth which looks sustainable. Can you comment on just mix versus price and what kind of dynamics you're seeing on that front across you know, the various brands versus kind of core price increases on average within each brand. And obviously there's a little bit of an ARPU restatement.

Drew McReynolds (Equity Analyst)

I'm just assuming that's a base adjustment of some sort but maybe you could clarify that and then I just have one more afterwards.

Pierre Carl

Before you answer the question, I think that you mentioned it. One of the great advantage we have other than the one that we've been mentioning also is our brands. So we have many brands and all brands are looking for a certain segment and we certainly not cover all the segments well, we cover most of them with Fizz, our digital brand.

Pierre Carl

On top of being low cost operator, it also brings the capacity to move forward in this segment of, let's call it techie, more techy people than usual, normal population as you know, it's been very successful in Quebec since its launch and we expect the same success with the other markets that we're servicing in Canada. Would you, Would you.

Hug Simard

Yeah, yeah, yeah. On your, on your wireless ARPU question, Drew, I think you're asking about the various brands, right. If I understood your question correctly. So, yeah, growth on our, on, on, on our main two brands. Fizz is, you know, Fizz grew particularly strongly in the quarter and Fizz is the brand. Remember me saying this before, where we have a bit more of that flexibility that Piakal talked about a little bit before due to the. Our low cost structure.

Hug Simard

Our low cost structure is. It's a true statement across the company. But I'm sure you will remember that it's particularly true in the case of fis, that has a very, it's a lower price brand, but a lower cost structure as well, which allows us more flexibility to be more aggressive when we need to be. So, you know, generally, I mean, directionally our view improving in our two main brands, both in Quebec and in Ontario in the west, with Fizz taking advantage of, you know, of the competitive situation that was out there and in terms of, you know, of profitability, which ultimately is what we look at, turned out to be, turned out to be positive.

Hug Simard

As you can, as you're continuing to see in the numbers.

Pierre Carl

And I would add to that, Drew, that it's interesting. Obviously, you know, it's easy to understand, but you know, every investment or additional capital expenditures that we're doing in our network, building our network, extending our network, brings to the other side of the equation a reduction or even reducing our roaming cost, which is obviously down the road, quite interesting. Profitable business or perspective?

Drew McReynolds (Equity Analyst)

Drew, I just want to come back to your comment about restatement because we don't, we have made no restatement that we know of. So perhaps you can tell us what you're seeing. But we're actually.

Hug Simard

No, I was going to say, I was going to say that we're actually, you know, if anything, we're quite proud of the fact that contrary to all of our competitors, I believe this quarter and a number of quarters before, I can assure you that there was no restatement, no change of calculation in any of the KPIs we put out. We didn't deduct anything or added anything in any of these, in any of these measures and we're quite proud of that. So if you saw a restatement, please tell me where it was because I'm sitting beside The CFO of Videotron, who assures me there was no restatement.

Drew McReynolds (Equity Analyst)

Well, I'll chalk that up to our mistake, because I was surprised this morning when I saw something, but. No, that's good to hear. One last one, Hugh, on my end. So interesting to see the sequential improvement in TV revenue, which I think has been many, many, many quarters since we've seen that. Can you just kind of talk to that kind of success? It seems like maybe a little bit more than just kind of a price increase flowing through. And then that's it for me. Thank you.

Hug Simard

Are you referring to TV distribution? You're referring to cable TV? yeah. The revenue increase in cable, it was rather flat. Right. If I looked at the numbers, which in and of itself is a good performance in this environment. You know, cable has been more resilient over the past few quarters. Performance has been better. It's, you know, there are a number of seasonal issues. You know, hockey is. Has been, you know, very popular, as, you know. Does it. Does it help us reduce the churn rate on cable? Perhaps a little bit. There are probably some seasonal, some other seasonal reasons for that, but it's definitely a trend that we've been seeing. And if you look at our results, our performance rather over the last few quarters, you will see that we have been rather outperforming other cable cos in terms of our cable performance, you know, negative growth performance, if I can refer to that.

Drew McReynolds (Equity Analyst)

Yeah. Thanks very much.

Hug Simard

Thank you, Drew.

OPERATOR

Your next question comes from Matthew Griffiths with Bank of America. Your line is now open.

Matthew Griffiths (Equity Analyst)

Hi, thanks. Good afternoon. Thanks for taking the question. I guess first I was hoping you could share sort of what you saw in Churn Wireless Churn this quarter. I mean, everyone else, on a blended basis seem to be, you know, somewhere in the, you know, close to 20bps range increase. And be interesting to hear what you saw and obviously how that relates to the net ad performance. So was Churn up which drove lower net adds, or were gross ads down and churn stable? That dynamic would just be interesting to hear how the competition amongst the larger three kind of ended up impacting you guys. And then one question on satellite, sort of topical to have to see announcements coming from wireless providers about partnerships or joint ventures that they're entering into to kind of service that relatively small part of the market, but it's perhaps additive overall. Do you feel as though you're at a disadvantage without any type of offering or what do you think about how urgent it is to sign a deal perhaps to add that to the overall offering that you guys have. I would just be interested to hear your thoughts.

Pierre Carl

Want to start with the. Is that okay? Yes. Good afternoon, Matthew. Well, certainly, obviously, you know, this is an important and an interesting matter. Obviously, as you can imagine, you know, we're considering it. You know, we're looking at it, we analyze it, we're looking what's happening in the marketplace. But I guess that, you know, you answered a little bit of the question when you mentioned is it urgent? We're not considering it in urgent. And this is true that it's a small market, but that doesn't mean that we should not look at it. In fact, you know, we're considering this is complementary or down the road probably also of importance. So this is why we are reviewing few avenues. But I would say that, you know, it reminds me a little bit, you know, when 5G came in, 5G will change the face of the world. You know, I remember a CEO that there was betting on it will change the landscape and many people were considering it. I guess that at the end of the day we were all, we were all deceived or having a different perspective than the one at the beginning we had in our side. We don't, we didn't change our mind. We said that, you know, 5G obviously is a technology. It will take place like 5G replace 4G, LTE 4G replace 3G. It's a continuing continuum, I would say. And from where the technology appears, we picked the bus and we came and followed. We all knew that some people were considering that this will be monetized. We all know that it was not monetized. Competition is competition, pricing is pricing and the market is not changing in the New York minute. So we've been investing steadily without being rushed, and we kept our market share. And with Freedom Mobile, we continue in the same direction. So we think a little bit of the same in terms of satellites and we will continue to look at it, surely smoothly, without any rush, but certainly, you know, without any doubt.

Hug Simard

on Matt, on Churn, on Churn. Just a couple of comments. We're globally quite pleased with the evolution of our CHURN rate during the quarter, especially when we look at how we compare with our competitors. We've been more resilient in our quite, it's quite obvious that we were more resilient. And I think you can see it partly as, you know, higher churn leads to lower arpu. As, you know, people turn out to lower ARPU than they came in with. And I think our trajectory on this is. Is continuing to be very good. So I think the signs are continuing to be positive on Churn. I will just point out to maybe some. We had some concerns on FIS again during the quarter and we found out, I'll be honest with you, we found out a bit of an odd situation where we had more than a few customers who came to Fizz for and I'm literally talking about a few hours to be able, you know what to get out and benefit from the new customer only promotions that were out there by our competitors. So that's how crazy it was, to be honest. So, you know, a bit of an odd situation, an odd issue on that front. But other than that, we believe that our fundamental, our base business continues with industry low Churn and we're quite happy because we think, as I just said, that it bodes very well for the continuing ARPU trajectory.

Matthew Griffiths (Equity Analyst)

And just so that I understand, it sounds like the competitive element in the market was more about the big three pulling people from one another. And it doesn't sound like you were experiencing any of their promotions pulling any subscribers to you, but were you noticing on the gross ad side that that was. So if Churn was stable then, you know, while there was a lot of switching activity, like gross ads were lower and that's what resulted in the year over year decline in nets.

Hug Simard

Well, yeah, I know we said it, I think Jakart said it in its prepared remarks. You know, this was a, this was a little bit of an unusual quarter and we thought unnecessarily crazy. Probably sparked by the fact that as we said, immigration being significantly lower and organic growth being lower, it seemed to have prompted our competitors to launch into things that we just weren't willing to follow on because they just didn't make. As we said, the map didn't work for us. But anyway, let's see how the rest of the year goes. It seems to have calmed down for the moment, but who knows? So let's, you know, keep. Yeah, we're certainly going to stay the course for sure. As just said.

Matthew Griffiths (Equity Analyst)

Yeah, I appreciate it. Thank you. Thank you.

OPERATOR

Matthew, your next question comes from David McFadden with ATB Core. Mark, your line is now open.

David McFadden (Equity Analyst)

Oh, great. Yeah. So a couple of questions. So just based on your comments earlier in the call, does that mean that maybe FIS was the biggest contributor of net adds on the wireless side?

Hug Simard

Not necessarily the biggest contributor. I mean, Fizz is, as you know, is on a different, I wouldn't say trajectory, but it's on a different market. Or pieces of the market. So not necessarily the highest, but it just, it was more prone to, it was more, it was facing steeper both, you know, ARPU situation and Churn for some, for some, for some reason. But I think all of our brands, especially picking up on the. In the case of Fizz, don't forget that it's starting to pick up very interesting volumes outside of Quebec, whereas in Quebec it keeps. It's really very interesting growth trajectory which we had. You know, I think I said that last time, and I'll repeat it, which is proving that our model was done right. That's the very reason why we launched fiscal, was to appeal to what we believed was going to be the next generation and the new way how people wanted to get wireless and to manage their own accounts on wireless. And I think Phys is responding to these needs and to these wants of the market and that's why it's continuing to develop very strongly both in Quebec and outside of Quebec.

David McFadden (Equity Analyst)

Okay. Because I thought say Ontario, the focus was more freedom. Isn't that still the case? That's the primary brand that you try to grow in Ontario?

Hug Simard

Yeah, well, it's both. Yeah, yeah. What we've talked about, David, is that of course we had to be more careful in Ontario with Fizz as the overlap and the potential cannibalization appeared a little bit more acute for us at the beginning. So we just thought we needed to be a bit more careful. But I think what we are actually seeing as we're developing Fizz and it's now in more than, you know, it's in the second, if not third gear right now that we're actually seeing surprisingly low cannibalization between Freedom and fis, which is very good news for us.

David McFadden (Equity Analyst)

Okay, and then can you comment on just the overall market activity so far in Q2? Just kind of wondering where net adds are going to show up this quarter say versus the year, the prior year, quarter.

Hug Simard

Well, it's mid May, so there's the half of the quarter coming in. Yeah. Who knows, David? I mean right now it is, as I said a bit earlier, it seems to be quite. Well, in terms of promotional activity. I mean, our intensity seems to be quietening down, to be honest. On the other side of the equation, are we really seeing increased market growth? Not really. And there are still pockets of crazy offers in the market. So you know what, who knows? I think it's a bit early to call the quarter at this point.

David McFadden (Equity Analyst)

Okay. And then lastly, just on the stock buyback, so you're obviously active in the quarter and you've increased your NCIB up to 7 million shares. Are there any sort of parameters where you'd be more active or less active in the market?

Hug Simard

Well, we're, you know, we're kind of staying the course on that one as well, David, to be honest. We believe that it makes sense for us to continue at a reasonable level, at a balanced, disciplined level. I mean, it's not as if we're buying crazy amounts of shares, as you. As you see, we believe we've. We're on the right level and certainly intend to continue at this point. As we've said in the past, it's something we can flex quite easily, but at this point, it makes sense for us to continue on that path.

David McFadden (Equity Analyst)

Okay. All right. Thank you.

Hug Simard

Thank you, David.

OPERATOR

Your next question comes from Mayor Yagi with Scotiabank. Your line is now open.

Yagi

Parfait. Merci d'. Avour. Premier, I wanted to ask you, so. So you mentioned that the lower loading in the quarter was mostly due to gross loading being down year on year. Not really a churn issue that your peers have had problems with. Now, if I look at your top line, obviously you're growing very fast, helped by a lot of loading that you did over the last two years. As we look forward, how should we think about your wireless revenue growth rate in a time when subscriber loading, which you've been relying on to grow, is slowing down? Do you think that we need to start to see ARPU actually improve from here to offset that lower growth in subscribers or. That is hard to, you know, expect in the current environment that we're in in Canada right now?

Hug Simard

You know, that's a tough one to call. But before I get there, just to your first point, I just want to make sure I don't forget to address your first point. I mean, you didn't necessarily say, I mean, we went through the same, you know, we live the same quarter as our competitors. We're not saying it was all about gross loading coming down. I mean, churn was up. And so I'm not, you know, just to make clear, I mean, it was part of both, for sure, in terms of loading and churn. But back to your question. You know, it's a. We, it's, it is something that, you know, our view keeps increasing. I mean, we are definitely, I agree with your statement that we are living through right now. The higher, the benefits in terms of our view of the higher loading at the right prices that we saw in the past few quarters. But I think you will agree that we haven't changed our strategy and we're continuing to grow at different volumes. Maybe lower net adds and maybe net adds continue to slope down a little bit. But if, you know, if you're doing it at the right price, then nothing prevents arpu. On the contrary, ARPU should continue to improve positively.

Yagi

Let me ask another way. Maybe. Let me ask it another way. You've been relying on a very fast revenue growth in mobile. You know, in this quarter you reported 9% revenue growth in mobility, which is really phenomenal. 8% or 7.5% of that is on subscriber growth. Are you as a company, do you see yourself accepting that this growth might come down into the 4%, 5% range because the overall subscriber growth in Canada is slowing down and it's hard to extract yourself from that environment as a company. Do you accept that you can live with a 4 to 5% mobile telephony revenue growth or you need to continue to post those kind of growth rates to offset the pressure that you're seeing on the cable side? That's really my, the question I'm trying to figure out.

Hug Simard

You know, Maher Piakal said it. Well, I think in his remarks we're about the bottom line and the cash flow at the end of the day. And that's why we said in Q1, is it a problem for us to have gone from 52,900 to 28. Eight? No, to be honest, we think we made the right call because the 28. 8 is at the right price, which still allows us to continue to improve ARPU and cash flow as we continue to lower our cost base and increase our cash flow generation. So, you know, I don't think we're managing. I think maybe the disconnect between what you're saying is we're not managing the company according to what you're saying. I mean, we're not looking for a percentage growth to make up or to counter or to help the fact that on a lower number we may be expecting on the wireline side. You know, that's not how we on both. We look at each business separately to maximize profitability and ultimately cash flow on both sides and work on the cost structure on both sides independently and have our pricing strategies on both sides independently, you know, to maximize. We're adjusting all the time these strategies and these packages. As said, you know, we keep innovating, we keep coming up with things that people are looking for or will be willing to pay for. So it's not, I mean, we're not at all, to be honest. Looking at it in terms of percentage to make up for potentially lower growth on the other side of the business. We're really driving and being very, very granular in our pricing strategies. Whether it's wireless and within wireless, depending on the brand and also in wireline does that. I don't know if I'm making myself very clear.

Yagi

That's very clear. Thank you. Thank you for that. And maybe just a question on wholesale tariffs. You know, since we discussed on the open call last time, we were still waiting for the final tariffs to come out on wholesale Internet, Internet wholesale. We have now the final tariffs. Can you update us on your strategy to bundle Internet with wireless outside of Quebec under the current tariffs that now we know what they will be going forward?

Hug Simard

I would say, you know, well, the first thing is that, you know, we're also looking for the other coax. Exactly. That's exactly right. And obviously, you know, we could say that, you know, we were not where we were looking to be. Does that mean that, you know, we are confined, I would say, to not being able to bundle? The answer would be no. We're going to look at it. We will continue to do it. We will finesse. I would say our proposal, it's something that, it's not completely crazy. Is it completely interesting? Not much. So it's balanced with the coaxial. And something that we find pretty strange is that there are different prices that depending the region where you operate. So you're in the western side. Cost of using other people network is more expensive than in the east side. So it just makes westerners in Canada not being able, you know, to enjoy the most competitive environment. And this was not really explained by the CRTC. And we're still asking ourselves why.

Yagi

So as we stand right now, should we expect to see you be more active selling bundled services outside of let's say Ontario, Quebec in the west, or do you have the agreements in place to be competitive selling a bundled product outside Quebec right now?

Hug Simard

Well, there where, where you're going, Myers is a little bit too much. I mean you will understand that we, we're not gonna, you know, publicly announce or present our commercial strategies and I guess the only you'll see in the, in the next quarters.

Yagi

That's fair enough. Sorry about it. No, no, merci beaucoup.

Hug Simard

Thank you.

OPERATOR

Your next question comes from Stephanie Price with cibc. Your line is now open. Hi, good afternoon. Internet service revenue growth of 3% was strong in the quarter. It looks like it was primarily driven by pricing Hope you can talk a little bit about the competitive Internet environment in Quebec and maybe touch on bundling your thoughts of rest of Canada. Internet expansion as well.

Stephanie Price (Equity Analyst)

Yeah, Internet was, Internet revenue growth was in good part driven by price increases. We've discussed that and we certainly own up to that. But the general competitive situation in Quebec in broadband has improved and is a lot more rational, I would say than what we've done, what we've known over the past years, you know, and I think it's clearly showing in our numbers that we there again we're not looking for crazy growth, we're looking for profitable growth. You know, our strategies are pretty simple. You know, we tend to use the same ones. And in the past when Bell was crazy pricing broadband in Quebec, you will remember that we did not follow for the most part, you know, did we pay a bit of a market share price? Yeah, probably we did and actually we did but our, but we re established the situation and our revenue situation is way better and you know, as I said, partly helped for sure by the by price increases. But we're, we're actually, you know, quite, quite bullish on this. We believe that the state of the market right now is good and our Internet service revenue performance and even stability in terms of loading was positive for us this quarter. And we, well, you know, it all depends of course how the situation evolved, the competitive situation evolves. But right now it's looking pretty, know, pretty positive and pretty encouraging.

Pierre Carl

As you know, Stephanie, you know, Bill was the, our competitor there was the last telco operator to invest in fiber. They did it, they invested significantly hundreds of million dollars. So they were looking for results. If not, you know, their, their strategy would be a completely, a complete failure. So they, they went and they're aggressively, you know, proposing pricing and splash over the place. You know, it's supposed to be better technology but they forgot the significant thing which is the customer service. We've been there, we delivered and this is tough to beat. But now I guess that after all the noise they made, and we should say also our own improvement in terms of network, were we behind? Maybe we were in certain areas, but we are just compensating now with additional investment in making sure that we'll be able to match any source of technology that our competitor is deploying. So this is also a matter of looking forward more favorably for the future because they know that if their word come to come and getting crazier other pricing, they will not achieve anything. In fact, they will probably achieve a repricing feature like the one they faced with their wireless business.

Stephanie Price (Equity Analyst)

Thanks for the color. Maybe I'll just ask one more follow up. Just on the call, you mentioned a move into B2B Technology Services in English Canada. Just curious how you think about the pace of that rollout and if you got the talent and the infrastructure, etcetera, in place at this point.

Pierre Carl

Well, Stephanie, you know, we're not the kind of organization which is the flavor of the month. You know, we've been looking at our competitors. We're very strong on this. So it's, I would say in Italian, you know, que vasanova piano valentano. So it means that, you know, going slowly, maturely and surely very long. So we're starting there, as you know, started 20 years ago and where right now is a very strong competitor to other businesses servicing operators like Bell. But Bell's not the only one. We have Rogers and we have Adelais in certain areas. We follow the course there also, we stay the course and we've been doing well. We also have the Internet of Things (IoT) segment which is of great interest also. Obviously the pricing is completely different, as you know, but it's certainly a business of the future where we acquired expertise in terms of technology, in terms of sales, craftsmanship. And so we will continue slowly in this direction and move forward with a reasonable growth.

Stephanie Price (Equity Analyst)

Thank you very much.

Pierre Carl

Pleasure, Stephanie.

OPERATOR

Your next question comes from Jerome Dubreuil with Desjardins. Your line is now open.

Jerome Dubreuil (Equity Analyst)

Thanks for taking my questions. The first one is on strategy. I mean, we do see a very long Runway of growth there. But I'm wondering if you think that Quebecor is set strategically for a long time or if you think there are missing blocks or you're happy just to be. Not just, but to be taking more market share and pricing going forward.

Pierre Carl

I guess I feel that I repeat myself. I guess my life today is stayed a course which doesn't seem to be a, you know, a bad strategy. If it's ain't broke, don't fix it. And we look forward to continue what we've been able, you know, to achieve. We'll see what the future is all about in terms of other opportunities. But if we were to stay, you know, on our regular course, we would continue of doing, you know, what we've been doing in the past. So I don't know. I'm not going to announce that we're investing billions of dollars in an AI data center. We think that our business, you know, is open for growth. So this is certainly, you know, what we think we should do and we're trying to do it as best as possible.

Jerome Dubreuil (Equity Analyst)

Yeah, no, that works. Telco investors like predictability for sure. Second one, you're generating quite a bit of cash. EBITDA is growing. Your leverage is below target. If I'm taking the 2 million additional shares that you're looking to buy back in the next three months before the program expires at current share price, I get an annualized spending of about $480 million of buybacks annually. Is this a level we should be expecting for the next year or so? If we're strategically set and we're happy with the leverage right now, or maybe even more than 500 million buybacks.

Pierre Carl

But you know, we're working for the shareholders and we believe that the best way shareholders could be served is by balancing, you know, the usage of the free cash flow that we're generating. And, you know, it's, it's easy to understand. Reduce debt, buy back shares and pay dividends. There's a decent or reasonable balance between those three items. Maybe the next question, you'll tell me that what are you going to do when you're not going to have debt anymore? There's still some way. Yeah, there's still not there yet. Not there yet, unfortunately. So this is why, I guess that, you know, the balance between the three components are still the course that we will follow.

Jerome Dubreuil (Equity Analyst)

Great. And maybe a last one for you said earlier on the call, I think I understood you said that Fizz is taking advantage of high competition. I'm wondering what that means exactly. Is it that people see good pricing out there, they start shopping around and ultimately choose Fizz, or is that what you meant?

Hug Simard

Well, what I meant is what we've said before, Jerome, is to optimize the positioning of our, of our brands, you know, and to position as best we can, as we've done in Quebec, between Videotron and Phys. You know, the difference in Ontario and the west is that we're starting from a blank page for Phys. So that's a huge opportunity for us and allows us to be maybe, as I said, a bit, a bit more aggressive in certain cases to make sure that we position it versus freedom as optimally as possible. That's basically what I meant.

OPERATOR

Yes, Your next question comes from Vince Valentini with TD Cowan. Your line is now open.