Quebecor Reports Higher Q2 Earnings and Raises Quarterly Dividend 12.5%

Quebecor (TSX: QBR ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This content is powered APIs. For comprehensive financial data and transcripts, visit Access the full call at Summary Quebecor Inc.

reported strong financial results for Q2 2026, with free cash flow up 12% to $419 million, EBITDA up 10% to $691 million, and net income up 24% to $200 million. 87. 2% and EBITDA margin improvement to 52%, driven by subscriber growth and ARPU increases. The media segment saw improved performance with adjusted EBITDA up $18 million, aided by strong advertising and subscription revenues from TVA Sports.

Strategically, Quebecor increased its stake in Etiya, enhancing its digital business support systems capability, and continues to expand its telecom footprint, particularly in Western Canada. Management expressed confidence in maintaining financial stability and growth, with continued investments in network expansion and operational efficiencies. Full Transcript OPERATOR (Operator) Good day, everyone, and thank you for standing by. 's financial results for the second quarter 2026 conference call.

I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor Inc. Please go ahead. Hugues Simard, Senior Vice President Ladies and gentlemen, welcome to our conference call this morning. My name is Hugues Simard, and joining me to discuss our financial and operating results for the second quarter of 2026 is Pierre Karl Péladeau.

Anyone unable to attend the conference call will be able to access the recorded version by logging on to the webcast available on our website until the 4th of November, 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 the regulatory authorities. Let me now turn the floor to Pierre Karl. Pierre Karl Péladeau, Président et chef de la direction Merci, Hugues, and good morning, everyone.

So I'm happy to report once again solid operational and financial results for Quebecor in the second quarter of 2026 in all our business sectors. We're continuing to improve our performance quarter after quarter through disciplined execution and rigorous management, resiliently delivering on our expansion plan, growing our wireless market share in all markets across Canada, generating consistently strong cash flows, and maintaining the best balance sheet of the industry on a consolidated basis. In the second quarter of 2026, Quebecor continued to improve all its key financial indicators. Free cash flow increased by 44 million, or 12%, to 419 million.

EBITDA excluding stock-based compensation improved by 62 million, or 10%, to 691 million, and net income attributable to shareholders grew by 53 million, or 24%, to 200 million. 87, still the lowest leverage of the Canadian industry by some margin. After buying back nearly 100 million of our stock in the quarter and investing 174 million in capital expenditures for growth projects, investment in our core systems, and the continued improvement of our network and best-in-class client experience to fuel—I'm sorry—our resilient, profitable growth.

Moreover, we did not issue any hybrid debt or perform any financial engineering of any kind in the quarter, or ever, as we always manage our balance sheet so as to minimize our interest expenses quarter after quarter. 5% increase, reflecting our strong confidence in our consistently growing cash flows. I will now review our operational results, starting with our telecom segment. I'm very pleased to report a record second quarter for our telecom segment.

In the second quarter we delivered adjusted EBITDA of 642 million, up 32 million or 5% over year, the highest quarterly growth we ever recorded for a second quarter. Our adjusted EBITDA margin was 52%, an improvement of 60 basis points. 2% in service revenues to 1 billion. 1%.

We're proud of these results, the product of a focused team executing with consistency and discipline quarter after quarter. And what makes this quarter particularly meaningful is not just the headline numbers. 62. Let me put this in its proper context.

As our competitors are losing revenue per subscriber, we are improving ours while also expanding our subscriber base. We added 53,200 net mobile subscribers in the second quarter, a significant acceleration from the 28,800 in the first quarter. Although the conventional wisdom in the industry has long been that you must choose between loading and ARPU, we are proving it wrong consistently, measurably, and concurrently—growing our subscriber base and our ARPU rather than sacrificing one to achieve the other. I'd also like to add that our ARPU is clean and honest, without any subtraction or creative calculations that seems to be the norm for our competitors.

While Q2 has seen a return to somewhat more disciplined pricing—certainly a pivot away from the aggressive promotional offers that defined Q1—some competitors still resort to hefty discounting in select channels, automobile clubs being a prime example, which we believe is an inefficient and disingenuous way to build a loyal and durable customer base. Our continued ARPU growth is the clearest possible evidence that authentic value creation is a more resilient and ultimately more successful strategy than manufactured promotion or fake employee purchase plan.

Building on the successful rollout at Fizz and supporting our ongoing deployment of a common BSS platform across our Videotron and Freedom brands, Quebecor increased its equity interest to a majority position in Etiya, a global software company based in Turkey with more than 1,500 employees and a leading provider of digital business support system platforms powered by artificial intelligence. This transaction, which doubles down on our initial investment in 2021, will also strengthen its ability to deliver large-scale BSS transformation projects worldwide, a sizable and yet untapped opportunity.

As I pause to survey our telecom performance in the first half of 2026, I see a business executing with remarkable consistency. 3 billion, and adjusted cash flow from operations reached 963 million, up 7%, showing our continuing ability to lower our cost structure and reflecting an investment strategy geared towards long-term growth and lasting performance, not short-term results. Videotron Mobile, our national growth engine, is keeping up its momentum, and Fizz continues to establish itself as the leading digital wireless brand in Canada.

Three years after the game-changing Freedom acquisition, we are performing ahead of every plan and commitment we made, integrating our operations efficiently and positioning our brands even more strategically. Looking ahead to the second half of 2026, I am confident in our trajectory. The Videotron network leadership in Quebec remains strong, Fizz is reaping the rewards of an ever-expanding digital consumer market, and Freedom Mobile national expansion continues to mature in Ontario, with significant opportunities still ahead of us in British Columbia, Alberta, and Manitoba.

Furthermore, as our rigorous cost management continues to improve operating leverage, and as our 5G investments are delivering the increased speeds, the network differentiation, and best-in-class client experience that will drive ARPU for years to come, we continue to execute on our expansion plan with the confidence of an operator who has already demonstrated it can beat its competitors and grow profitability in any competitive market.

Turning to the media segment, I'm also quite happy to report a much improved performance, with adjusted EBITDA reaching 27 million in the quarter, up 18 million year over year, driven primarily by TVA Sports, where the Montreal Canadiens playoff run boosted both advertising and subscription revenues. Our numerous cost-efficiency initiatives throughout all of our media sectors also contributed to our improved financial results, along with higher, long-overdue fairer rates on the NHL rights renewal process. We have nothing else to say; we're still to finalize our negotiations. 2% market share.

While several challenges persist in the media business, we remain focused on operational discipline and premium content to provide Quebecers with homegrown entertainment, news, and sports content produced by Quebec creators and crews. However, we cannot ignore the structural challenges facing the industry, which remain as daunting as ever. We will continue making our case to government and regulatory bodies, since building a viable and sustainable model for our entire industry is requiring the involvement of all stakeholders. I will now let Hugues review our detailed financial results.

4 billion, up 4% from last year, and EBITDA reached $627 million, up $22 million or 4%, despite a $40 million increase in share-based compensation expense across all of the corporation’s segments. Excluding share-based compensation, EBITDA is up $62 million or 10%, free cash flow is up $44 million or 12% to $419 million, and cash flows provided by operating activities increased $32 million to $570 million, up 6% compared to the same quarter last year. In our Telecom segment, total revenues increased 4%. 03 billion, up 4% year over year.

Wireless service revenues were $476 million, up 9%, driven by continued subscriber and ARPU growth across our three brands. 1%, partly offset by the continued structural decline in traditional services. 1%, a marked improvement compared to recent quarters with rigorous cost management. Adjusted EBITDA reached $642 million, up 5%, our highest adjusted EBITDA ever recorded for Telecom in the second quarter and with our adjusted EBITDA margin reaching 52%, a 60-basis-point improvement year over year.

More critically, our adjusted EBITDA grew at a rate significantly higher than our revenues, which is a natural consequence of the structural efficiency gains embedded in our platform. 3%. This is not a one-time optimization and it has not come from headcount reductions. It is the compounding effect of the continued optimization of our cost base while improving the quality of our revenues, and we expect AI, including our ATF BSS platform, to which Pierre Karl referred earlier, to generate further efficiencies going forward.

Telecom capex spending, excluding spectrum licenses, was up by $18 million or 12% in the quarter, primarily reflecting the accelerated build-out of our Internet infrastructure and the continued 5G rollout, including the expansion of Freedom Mobile's national footprint. We deploy capital where it creates genuine competitive differentiation and lasting network value for our customers and shareholders. Despite these additional investments, quarterly adjusted cash flows from operations still increased by $14 million, or 3%, to reach $474 million.

This sustained cash flow generation gives us the flexibility to keep investing in our networks, expand Freedom Mobile nationally, and create long-term value for our shareholders. 4 million year over year. Driven by strong advertising sales from the Montreal Canadiens’ long NHL playoff run and higher subscription revenues, EBITDA improved by $18 million to $27 million, reflecting this revenue growth as well as the benefits of our cost reduction initiatives in sports and entertainment. 6 million to $3 million.

95 per share reported last year. 99 per share in the same quarter last year. 2 billion, held back by an $87 million increase in stock-based compensation charges. Excluding SBC, EBITDA would have grown $136 million or 11%.

In our Telecom segment, EBITDA grew 8%, an improvement of nearly $100 million year over year, excluding SBC. 87x, stable sequentially, still the lowest among all Canadian telecom operators by quite some margin. As we continue to proactively optimize our capital structure, the US$1 billion commercial paper program we established at the start of the quarter is now fully operational, diversifying our funding sources and providing additional flexibility at very attractive short-term rates. We also paid down debt during the quarter.

Videotron repaid the $500 million balance on its term loan tranche maturing in April 2026 and $300 million of the $700 million tranche maturing in April 2027, followed by a further $100 million early repayment on July 8. All in all, we have a best-in-class balance sheet with available liquidity of $926 million at the end of the second quarter. 1 million Class B shares for a total investment of $185 million. And more importantly, upon termination of the August 2026 program, the Board of Directors has approved the renewal of the program for one additional year.

5%. We thank you for your attention and will now open the lines for your questions. OPERATOR (Operator) Thank you, ladies and gentlemen. If you'd like to ask a question, please press star one on your telephone keypad.

If you'd like to withdraw your question, press star two. One moment please for your first question. P. Morgan.

Please go ahead. P. Morgan Hi, thank you for taking the question. If I could just perhaps ask you, in terms of outlook for capex and free cash flow for the year, any updates relative to prior commentary?

Just given the pacing and phasing of investments that you're making to expand the network and expand the geographic reach of Freedom as well as your other investments there and free cash flow, obviously. So stock-based comp was a big benefit last year, I think year to date as well. Just help us think about maybe. I think stability ex stock-based comp is generally how I think we were told to think about it for the year in 2026 relative to 2025.

Any reason to think that things would deviate from that? Thank you. Pierre Karl Péladeau, Président et chef de la direction Thank you. Thank you.

Sebastiano, I'll ask Hugues to give you some more details on the numbers you've been talking about. Hugues Simard, Senior Vice President Yeah, Sebastiano. Yeah, I think stability, as we've talked and as we've said many times over the last few months, is the right way to think about it. We're quite confident.

Our momentum is good, our execution is good and efficient. And as I said, from a balance sheet standpoint, we are continuing to lower our interest expense. So I'm generally confident and to a stable, yet maybe slightly better than stable, cash flow generation towards the end of the year. P.

Morgan Then just on capex, in terms of phasing or, you know, balance of the year, I mean how should we think about it? Maybe pick up in spend as network investments maybe perhaps pick up the geographic reach, or any help on phasing. Thank you.