Quebecor (TSX:QBR) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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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.
The company increased its quarterly dividend by 12% to $0.45 per share, reflecting confidence in stable cash flows and a strong balance sheet with a net debt to EBITDA ratio of 2.87.
Quebecor’s telecom segment achieved record results, with service revenues up 4.2% 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. Welcome to the Quebecor Inc.’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. We maintained our net debt to EBITDA ratio at 2.87, 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.
On the strength of these excellent results, and considering our comparatively lower payout ratio, as well as in the continuation of our balance sheet and disciplined capital allocation strategy—that being continuing to lower our debt and improve our ratios while renewing our annual NCIB stock buyback program and continuing to buy back our stock—Quebecor’s Board of Directors have decided to increase our quarterly dividend on both A and B shares from $0.40 to $0.45, a 12%–12.5% 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. Total revenues were 1.2 billion, up 4%, driven by an increase of 4.2% in service revenues to 1 billion.
Adjusted cash flow from operations reached 474 million, up 3.1%. 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. For the third consecutive quarter, our consolidated mobile ARPU grew $0.86 in the quarter, or 2.5% year over year, to reach $35.62. 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. First-half service revenues improved 4% to 2.1 billion, adjusted EBITDA increased 6% to 1.3 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. In addition to the outstanding hockey performance, TVA must-see programs and original productions, including the daily series Indéfendable, which remains the most watched drama series in Quebec with an average of over 1.2 million viewers every day from Monday to Thursday, and Révolution, which climbed to the top spot among entertainment programs across all channels on the spring schedule with an average of 740 viewers, helped TVA Group to retain its lead in Quebec with a commanding 44.2% 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.
Hugues Simard, Senior Vice President
On a consolidated basis, in the second quarter of 2026, Quebecor recorded revenues of $1.4 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%. Total service revenues, our primary indicator of recurring revenue momentum, were $1.03 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. Wireline service revenues were $559 million, up 0.3%, with Internet revenue growth of 3.1%, partly offset by the continued structural decline in traditional services.
Though television revenues declined only 1.1%, 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.
Operating expenses thus fell to 48% of revenue from 48.6% last year and to 48.5% year to date from 49.3%. 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.
Our Media segment revenues reached $185 million, up 6% or $10.4 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. Revenues declined by $3 million to $48 million, with EBITDA down $1.6 million to $3 million.
Quebecor reported net income attributable to shareholders of $271 million in the quarter, or $1.21 per share, compared to net income of $218 million or $0.95 per share reported last year. Adjusted net income excluding unusual items came in at $241 million or $1.07 per share, compared to $227 million or $0.99 per share in the same quarter last year. Looking at the first six months of the year, our revenues rose 4% to $2.8 billion and EBITDA increased 4% as well to $1.2 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. As of the end of the quarter, Quebecor’s net debt to EBITDA ratio stood at 2.87x, 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. During the first six months of the year, we purchased and canceled 3.1 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. Finally, in light of these results and our confidence in our growing free cash flow, Quebecor’s Board of Directors declared yesterday a quarterly dividend of $0.45 per share for both Class A and Class B shares, up from $0.40, an increase of 12.5%. 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. Your first question comes from Sebastiano Petti from J.P. Morgan. Please go ahead.
Sebastiano Petti, Analyst at J.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.
Sebastiano Petti, Analyst at J.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.
Hugues Simard, Senior Vice President
Sebastiano, still along with, you know, the guidance we gave for the year where there’s a bit of timing issues sometimes between quarters, but we’re, you know, we’re in line and I would expect to reach our, you know, our guidance for the year just like we did last year. And so you’ll see a little bit more capex in Q2. There may be, there’ll be a bit more and then maybe some timing in Q4. But all in all, in line with our guidance for the year.
Sebastiano Petti, Analyst at J.P. Morgan
Thank you so much.
OPERATOR (Operator)
Your next question comes from Maher Yaghi from Scotiabank. Please go ahead.
Maher Yaghi, Analyst at Scotiabank
Merci. Thank you. I wanted to ask you, very strong, obviously very strong ARPU growth print in the quarter. In Q1, I think you guys mentioned that your most sold plans are in the $35 to $40 price range and your blended ARPU now is $35.62. I was trying to figure out how much more tailwind you have left in your subscriber base that should continue to support your ARPU growth forecast going forward. And are we to expect the same similar type of growth in the back half of the year, or any kind of directional view on ARPU metrics going forward?
Thank you. I’ll have a follow-up after.
Pierre Karl Péladeau, Président et chef de la direction
Okay, well, thank you. Thank you, Maher. Just before, you know, letting Hugues, you know, I would say it’s unfortunate, you know, that we say the usual thing about this. You know, we cannot anticipate, you know, what the market will be for the next quarters, but we will certainly continue to make sure that, you know, our brands are getting more solid, our capacity to offer what could be and should be, you know, I’m not gonna say a premium, but certainly a value-added type of service should position and continue to position ourselves, you know, of growing our customer base without being forced, again as I mentioned, you know, to get in the trenches of deep discounting. So it’s always sensitive to talk about this too much because, as you know, it’s commercially, you know, quite an important intelligence. So we’ll remain prudent about, you know, the affirmation, the statement we’ll make, you know. Hugues, something else to say?
Hugues Simard, Senior Vice President
Well, not really. I mean, I think you’ve—yeah, I think we should remain prudent. I think the only thing perhaps I would add is that, you know, we’re very satisfied with the loading, with the ARPU loading that we’re getting. And we believe that there’s still room to grow for us. And as we did not participate in the craziness, I’ll call it, of Q1 so much, I think that generally should bode well for both loading and ARPU growth going forward.
Pierre Karl Péladeau, Président et chef de la direction
We think that some managers at our competitors are receiving their bonus by having an upload at the end of quarters because this is the kind of circumstances that we’re often meeting. But that’s another ball game.
Maher Yaghi, Analyst at Scotiabank
It’s very clear in your results. The financial performance and operating leverage is quite clear in your results. And, you know, kudos to your team, finance team. But Pierre, in your prepared remarks, you provided some context on the ETIA acquisition. Is it possible for you guys to give us some, you know, guardrails when it comes to what’s the annual run rate on revenue and EBITDA from ETIA pro forma? And also, you know, are you looking for any bolt-on acquisitions to support that business and grow it—can, you know, to continue to grow it—or should we think about this acquisition as a one time off?
Thank you.
Pierre Karl Péladeau, Président et chef de la direction
It’s an interesting question, Maeve. I guess that, you know, what we need to do is try to explain a little bit better. I’m not sure the conference call is the best place to do it. So I’m sure that Hugues will make his time available to explain. But in a nutshell, I would say BSS and OSS are a significant portion of our costs in the wireless business and also in our legacy business. We look forward to get rid of this legacy which was on IBM framework.
Never forget that we’re coming from a cable environment. This is the legacy of the business. And cable was not invited last week. It’s been there for 50, 60 years. We need to make sure that we will migrate on other digital platform that will make our cost more efficient and less costly. And we found out, well, and usually it’s the kind of situation that is naturally the kind that you’ll meet buying Freedom. We’re not saying that the platform was not efficient.
In fact, it was, but certainly costly. So by getting the platforms being altogether under the same roof, you can easily understand that will generate significant savings on top of. And I know that’s a little bit of a buzzword, you know, for the last weeks or months, but artificial intelligence is bringing some significant advantages on those platforms and it will help us significantly again to reduce our cost. This is the way that we’re looking at it and we saw and this is one of the reasons of the great success of Fizz, because it built the Fizz platform and we are now in the process of migrating our other platforms under Itia.
So it will make, you know, our business even. Well, I understand it’s internally, but it brings a value added and something that we can be a kind of a showcase for other worldwide operators that are facing the same kind of situation. They’re looking to improve their BSS costs on top of which again, AI should be a significant tool to achieve it. So where this business will grow in the future, can we considering acquisitions. As we mentioned, we own 70% now.
We are in partnership with the founders, three gentlemen that we appreciate and have been doing a great job. They will continue to be part of it and we will continue to be with them to grow the business on top of our brands. Itia also has significant other customers, large Turkish customers and French customers. And we look forward because of this showcase, you know, to grow this business and have the capacity to increase our revenues in the future.
Sorry for the long answer. Long response. I don’t know if you have anything to add, but I’m sure again, you know, will make him available for further details.
Maeve, Analyst
Yeah, I think that’s great.
Thank you. Maybe, maybe Hugues, if you can give us the run rate, the annual run rate of the business.
Hugues Simard, Senior Vice President
Yeah, we’ll discuss. Because it’s. It’s a little more complicated than that. I mean, it has. It’s a. You know, it’s. You know, it’s basically a more than $100 million revenue company. But then some of it is internal, of course, because it’s now, it’s now part of our. Of our telecom segment. So it’s, you know, you need to net out a few things. So we’ll talk about that in more detail if you want. But you know, we always follow up after this call and I’ll make sure that I give you all the important numbers.
Maeve, Analyst
Great, thank you.
Pierre Karl Péladeau, Président et chef de la direction
And to close, I will finish by saying, and I think this is a great asset. You know, controlling our BSS is something that makes a difference because we all know that we need to be agile. And agile is not just a word, it’s also an action, is also an attitude. And when you’re controlling the tool that you’re working with, you’re certainly in one of the best situation to remain agile and looking forward to get the full picture of where your BSS will go in the future.
OPERATOR (Operator)
We will take the next question.
Your next question comes from Vince Valentine from TD Cowen. Please go ahead.
Vince Valentine, Analyst at TD Cowen
Thanks very much. Let me.
Hugues Simard, Senior Vice President
Hey, good morning, Mr. Valentine.
Vince Valentine, Analyst at TD Cowen
Thank you, Mr. Hugues. Stick on Itia for a second. Just to clarify something, any revenue you do include, I’m assuming, Hugues, that’s looking at your supplemental disclosure page. I’m assuming it’s part of the 54 million of other revenue within the telecom segment and I assume that’s already net of intersegment eliminations for the stuff that they’re selling to you.
Hugues Simard, Senior Vice President
Yes, yes to both questions. Yes.
Vince Valentine, Analyst at TD Cowen
Okay. And just to clarify, I assume there was some small revenue contribution in this quarter, given you bought it in April, but was there any meaningful impact to your telecom segment EBITDA this quarter from that acquisition?
Hugues Simard, Senior Vice President
No, no, nothing material this quarter. I’ll guide you a bit more going forward, but this quarter, because of the acquisition and some noise, some timing noise, there’s honestly no material EBITDA contribution.
Vince Valentine, Analyst at TD Cowen
Okay, that’s good. And also maybe just clarify a bit on the wireless ARPU. I know you don’t like giving predictions, but I want to ask about something that is probably already happening today and just get your sense as to how big it is and how you think it may continue to trend. And that’s the step-ups. As you know, after you bought Freedom for a long time you had pricing like, oftentimes at $35, but the customer contract would say it steps up after typically 18 months.
Sometimes it was a slightly different time frame, typically would go up by $5. For a while it didn’t look like you could do those step-ups because the market pricing was too low. Especially in the first quarter of this year, it seemed like those step-ups wouldn’t be accepted and customers would revolt. But are you now seeing that actually starting to come through and is it any sort of meaningful contributor to your wireless revenue growth in ARPU?
Pierre Karl Péladeau, Président et chef de la direction
Thank you, Vince. Just I’ll start and you’ll follow or you add. I think that, you know, one differentiating factor that has been very strong for Freedom was that it’s a price freeze. We built significant campaign on this. So to the opposite of our competitors which are saying that, you know, they’ll enjoy a very low price, they’ve been facing quite quickly then, you know, increases. You call that step-up, but I guess that the customer or the subscriber consider that as a price increase, which we do not.
Maybe we consider that the only increase, if increase there is, will be because you’re changing your package. So if you were to change your package, obviously you will migrate in another one. But if you remain with the same package, your price is frozen. And that’s a promise that we are. We are respecting. And certainly, you know, that gives us credibility in the marketplace for subscribers and our customers. And we remain focused on this because at the end of the day, credibility in front of our customer is part of customer service.
And therefore there’s no reason why we should change our strategy since it’s been working pretty well. I don’t know, Hugues, if you have anything else to say.
Hugues Simard, Senior Vice President
Well, maybe just specifically to. You were referring to the $5. Just. Vince, just specific on this. Yeah, some impact there because we had 18 months before, so we can. So, yeah, I mean, we do see somewhat of an impact, but, you know, other than that, I’ll stick to Pierre Karl’s answer.
Vince Valentine, Analyst at TD Cowen
Okay, fair enough. Maybe I’ll follow up with you. But one last question. Just Internet revenue up 3.1%. There’s nothing wrong with that. It’s still a good result. But it was slightly better growth in the first quarter. I just wanted to. Is this just sort of slight timing differences from quarter to quarter that are irrelevant in rounding error, or have you seen some sort of re-acceleration in promotional intensity or competitive intensity from the telcos that has caused Internet promo pricing to start to get worse again?
Hugues Simard, Senior Vice President
No, nothing like that, Vince. You know, by the way, Vince, I mean, I’m, I have to say, you know, going for you in your note and then you. And you just said it again. Going from 3.2 to 3.1, you say is a decline? I mean, come on. I mean, there used to be a time I used to call that stable and I would still call that stable, wouldn’t you? I think you’re being tougher on us. I mean, what’s going on here? No, not a meaningful.
Vince Valentine, Analyst at TD Cowen
Yeah, I agree. It’s not a meaningful decline. I just want to make sure it’s not a symptom of competitive pressures and it’s just.
Hugues Simard, Senior Vice President
Yeah, okay, that’s the answer.
Vince Valentine, Analyst at TD Cowen
That’s all I need.
Hugues Simard, Senior Vice President
Yeah, there’s no material change in the market. It’s. I think we’re continuing to execute well. And I think 3.1% is pretty good in Internet for the quarter and continuity over Q1.
Pierre Karl Péladeau, Président et chef de la direction
And may I add also, Vince, I think our products is improving every day and we continue to invest in our networks. In Quebec, on the Videotron side, cable certainly had an edge many years ago. We lost that edge and we are realistic about it. We don’t, we don’t consider ourselves fools. So we knew, we know and we knew that we need to invest to make sure that, you know, we’ll catch the speed being offered our customer by our competitors. And this is what we’re doing and we will continue to do so to have as good or par quality service than our competitor.
We look forward also, you know, to have our fixed wireless capacity. We’re moving forward certainly slowly but surely. Fixed wireless is certainly for us a consideration that will keep life in our mind and consider it as an opportunity also in the future.
Vince Valentine, Analyst at TD Cowen
Thank you.
Hugues Simard, Senior Vice President
Thanks, Vince.
OPERATOR (Operator)
Your next question comes from Jerome Dubreuil from Desjardins. Please go ahead.
Jérôme Dubreuil, Analyst at Desjardins
Thanks for taking my question. First one is on free cash flow. I just want to clarify what you said on the free cash flow comments earlier on the call in answer to Sebastiano. You said something like stable or slightly better than stable for free cash year over year. Last year we had 1,426. Just confirming that. And then is this the kind of the new base level of free cash flow generation we should be expecting going forward? Or maybe there’s some working cap items that are, that are boosting the near term numbers.
Thank you.
Hugues Simard, Senior Vice President
No, on free cash flow. Let me be clear what I was telling my answer to Sebastiano. He was asking whether he’s still working on the hypothesis that our free cash flow will be stable year over year. And I said that’s probably the best way to look at it. That being said, I added that we are confident you’ll see that we keep generating very strong free cash flows quarter after quarter without any, to your last point, without any unusual or timing related adjustments or pickups or influences or impacts.
So I’m still confident with being stable, slightly ahead of stable year over year.
Jérôme Dubreuil, Analyst at Desjardins
That’s great. And second question for me, you launched 5G recently. In the past we were talking about having to close the network performance gap before closing the pricing gap. I was going to ask specifically about the pricing gap here, but do you think you are getting closer to closing the network performance gap? Where do you see your network versus the others? Thank you.
Pierre Karl Péladeau, Président et chef de la direction
It’s an interesting question. You know, I guess that, you know, some of our competitors are building on the fact that, you know, 5G will change or dramatically change the landscape. We were not of this opinion. So instead of, you know, emphasizing—and I’m not going to say go crazy, but certainly aggressively—you know, building 5G and a 5G Plus network, we did it, you know, as we’ve been doing other kind of investment in our other businesses. We did the same in cable.
We call that modernization. And for the last 20 years we’ve been improving our products. So this is what we’ve been following as our investment strategy. We can say that—and the numbers are there to prove them—that we were not impaired by this strategy. So from 5G, for 5G we consider, and we don’t play that game. You know, I don’t remember what’s the name of the organ of the company or the study that give, you know, well, this is the best speed in this area.
That’s interesting but certainly not, you know, the considerate thing, considering things that our customers will follow on a day-to-day basis. And we still continue to consider our other features—once again, customer services, credibility, quality of the product—as the key elements to move forward and continue to maintain and sustain our growth.
OPERATOR (Operator)
Your next question comes from Stephanie Price from CIBC. Please go ahead.
Stephanie Price, Analyst at CIBC
Good morning. With the ETIA acquisition, the dividend increase, and the renewed NCIB, just curious if you could give us your updated thoughts on capital allocation here.
Pierre Karl Péladeau, Président et chef de la direction
Yeah, good morning, Stephanie. Yes, to my prepared notes I refer to them, but I think it’s worth to tell you maybe in more details the way that we consider that we will continue to operate in the future.
Hugues Simard, Senior Vice President
Yeah, Stephanie, just as you see, we’ve announced as to capital allocation. I just want to make sure I heard, because your question wasn’t terribly clear. But you were asking about how we intend to continue on our capital allocation strategy, is that right?
Stephanie Price, Analyst at CIBC
Yeah, just curious about uses of capital here when you’ve got the dividend increase, the renewed NCIB, and the curious how you kind of think about capital allocation and what the top priorities are here.
Hugues Simard, Senior Vice President
Well, as you know, for a number of years our capital allocation has been quite balanced. I would put it in terms of debt reduction to improve our ratios, stock buybacks, and modest increases in our dividends as we continue to churn out very reliable and very resilient cash flows. We have decided, the board of directors has decided on the basis of that confidence, to raise the dividend a little bit. I mean I’m sure you’ll agree that it’s our intention to become a dividend stock in any way, shape, or form.
But certainly our intent going forward is to remunerate our shareholders a little better as we have the opportunity to do it with our growing cash flows, and also the fact that, you know, our payouts and our yields are way at the bottom of the fork that we had given out. So I think in terms of capital allocation going forward, more of the same with a slight tweak in favor of continuing buybacks and increasing dividend a little bit while still continuing to invest in the network.
Our CapEx, as you see, are solid, and they will keep covering our network extensions and our growth-related projects. And there will be cash allocated as well. There’ll be extra cash allocated to continuing to delever beyond the 2.86 where we’re at. Thanks for the question.
Pierre Karl Péladeau, Président et chef de la direction
May I add, Stephanie—may I add just quickly—and refer to that, but I think it’s worth, you know, to mention it, you know, commercial paper and our capacity to reduce our debt. If you look, you know, from one quarter to the previous ones and the other previous one, you’ll see, you know, a decrease in terms of interest expenses that, you know, we face or we incur, and this improvement, I think, that should be considered. This is certainly, you know, one matter that was raised at the board as a possibility, you know, to reallocate this portion of improvement to the shareholders because at the end of the day they are the ones that is able to enjoy this balance sheet being improved and financial conditions also being improved.
Stephanie Price, Analyst at CIBC
Thanks for the color. And then maybe just switching over to the wireless environment. Pierre Karl, you gave some good insight in the beginning of the call, but just curious what you’re seeing about the start of Back to School and how it compares to what you saw last year at the same time period here.
Pierre Karl Péladeau, Président et chef de la direction
Well, you know, at this time of the year, in the few days to come, we should see how the market will move or react. Do we have at this stage a little bit of color? I would say that that would be dangerous to answer that, you know, without doubt. I think that again, as we mentioned, we will remain prudent. We know that, you know, we’re always the best positioned and there is no reason why we should change. If the market was to change dramatically—or not completely dramatically, but to change significantly—we will certainly react accordingly.
OPERATOR (Operator)
Thank you very much. Your next question comes from Matthew Griffiths from Bank of America. Please go ahead.
Matthew Griffiths, Analyst at Bank of America
Good morning. Thanks for taking the question. Just wondering if you could make any commentary on wireless churn this quarter and what you’re seeing, what you’re experiencing kind of on a year-over-year basis. Obviously with the improvements to the network as you continue investing, one would expect, I guess, a decline, and just how that expectation may have played out given the competitive dynamics in the market that may be pushing in the other direction.
And then secondly, if I could, you’ve commented in the past about areas where you have completed a network build—I’m thinking of like the Chatham example, for instance. Are there any other areas that you can call out that you’ve made, like, an investment to bring the network to a net new area? That would be interesting to hear that type of progress. Thanks.
Pierre Karl Péladeau, Président et chef de la direction
Thank you, Matthew. I’ll answer the second part of your question and I’ll ask you to do the first. So, you know, again, you know, if we refer to what Stephanie was asking earlier and what we also refer in our prepared remarks, capital allocations is of importance, and we know that each time that we’re investing in our wireless network we have the capacity to improve our costs because of roaming expenses going down. We always considered, because we are facilities-based legacy cable operators, that there’s nothing more paramount than running your own network with the best quality possible.
So we will not change our philosophy, we will not change our mind. We know that, and on top of that we have obligation—of ISED—and we will respect our obligations that building our network and using properly our spectrum is of importance. Mentioning specific areas where we will focus from one to the other could be considered as commercially sensitive. We know that we have room to grow significantly in Alberta and in B.C. We consider those markets of great interest where we have the possibility to increase our market share, to increase the way that we operate.
This is just almost an evidence, and therefore we will do what is appropriate to be able to piggyback as much as possible to those areas. So I will let Hugues answer the first part of your question, Matthew.
Hugues Simard, Senior Vice President
Yes. As to churn, Matt, improving—our churn’s improving in the quarter. A number of things. I mean, of course the performance and the quality of our networks are, you know, we’re continuing to invest and it’s continuing to improve quarter after quarter. There’s also obviously a more rational market environment in which we are evolving and also, globally, an improving what I would call customer experience. That’s not just due to a better network but also, you know, our everyday low-price pricing approach is increasingly well received by clients.
We give a lot of value in the packages that we sell at low prices, and people are recognizing this and are increasingly coming to us as opposed to going from promotion to promotion, as is the case for our competition. I think they’re increasingly relying on our approach and having more confidence in our networks and our experience and our just overall quality of our service. So churn is, you know, after a bit of a setback in Q1—and I think that was probably the case for the entire industry—it’s back on track, improving.
Matthew Griffiths, Analyst at Bank of America
That’s great. Thank you so much.
OPERATOR (Operator)
Thank you, Matthew. We’ll take the next question.
Your next question comes from Tim Casey from BMO. Please go ahead.
Tim Casey, Analyst at BMO
Good morning. I wanted to—Carl, if you could talk a little bit about the wireless strategy with respect to building out the network and capturing ownership economics, which, you know, I think you followed kind of a success-based model that, as you have density in a certain area, there’s obviously incentives to build there. But could you talk a little bit about your MVNO arrangements? How are those contracts set up as they age in time? Are there potential cost increases in terms of those carriage arrangements that further incent you to build your own network, or are you protected as you grow your volume of MVNO subscribers?
Could you just talk to us about how you’re thinking about the balance between build-out versus MVNO cost?
Pierre Karl Péladeau, Président et chef de la direction
Good morning, Tim. With pleasure. I’ll do that. MVNO—it’s not completely MVNO; it’s more of our roaming agreement with colleagues in the industry. So we’ve been seeing, and this is a significant trend worldwide, and roaming is not only domestic in Canada—and I’ll come back to that because again, you know, we have obligations that we intend to respect—but roaming is also a worldwide business. So we roam with French, Italian, British, everywhere, in fact.
Also, as you probably—and we emphasize on this—Freedom offers more locations with roaming prices that are part of our commercial offers. So I will repeat: that’s a trend that we’ve been seeing—prices per gig being reduced. We see the same in Canada. Certainly roaming was a large part—and you guys probably know that more than I do because you have the capacity to talk with the other operators—that was a significant portion of their revenues before, which is quite different today because, again, domestic prices are in a more competitive landscape.
And seeing Freedom and Videotron and Fizz being an interesting customer for them, they would see us as a quite object of adding revenues to theirs. And this is the way that they act. This being said again, and I think it’s important to repeat, that we are a facilities-based operator, on top of which we have obligation, and we prefer to build our network and assume the one-time cost of building it and enjoy running on it without being forced to pay for using it, obviously to the exceptions of maintaining our networks accordingly to the requirements of our customers to move forward.
Would you—would you have other things to add on this?
Hugues Simard, Senior Vice President
No, no, no, I think that’s fine. That’s what we’ve been—you know, what you just said, Tim, I think it’s something you and I have talked about in the past. You know, where it’s logical and where it makes sense for our business, where we’ve built a significant market share and business, we obviously believe in building and running our own network. Where it doesn’t so much, then we will have some decisions to make. So, yeah, I think that’s… Yeah, that’s all I’d say.
Thank you.
Pierre Karl Péladeau, Président et chef de la direction
Thank you, Tim. I think that we’ll take the last question.
OPERATOR (Operator)
Thank you. Your next question comes from Drew McReynolds from RBC. Please go ahead.
Drew McReynolds, Analyst
Yes, thank you for squeezing me in here. Two for me, mainly follow-ups here just on the expansion in Western Canada. Just wondering, I know you’ve publicly talked about, obviously, first network build and enhancement and then followed by, you know, clearly what will be a marketing and sales push just to build the brands out in the West. Wondering, kind of on the network side, just the status of that and then, just to level set expectations, all of the commentary you’ve had around just the positive trends, obviously, in the core telecom business and the operating leverage—once you start that Western Canadian push, do you see kind of one step back in some of that, or can all of this be absorbed within largely the trajectory you’re on? And then second question, and probably for you, Pierre—Carl, thanks for the update on all the capital allocation, great to see the dividend increase. It’s the opinion of some, including myself, that there’s some further consolidation that’s required in what kind of looks like a maturing telecom industry. So I’m just wondering how you’re positioned in Quebec for maybe future industry consolidation and how that impacts kind of your target leverage and, frankly, your payout ratio, just to make sure the company’s prepared to be opportunistic.
Thank you.
Pierre Karl Péladeau, Président et chef de la direction
Thank you, Drew. Well, that’s interesting questions—certainly the second one, maybe I should start with it. Well, you know, having a balance sheet, a good balance sheet, is certainly something that we’ve been working on for many years. I remember, you know, when we started buying Vidéotron in 2000—I guess I’m probably one of the oldest CEOs in this industry now—you know, we had seven times debt-EBITDA ratio and we, you know, throughout the years, reduced—what?
First of all, we bought all Caisse de dépôt’s position, you know, the 45% they held. We did three installments through the year, but increased the leverage during the first or the second year of the purchase. And then we had the Freedom deal, which also brought our ratio a little bit higher. But always saying that we will continue to work on it and reduce it. And again, you know, we delivered, and I think this is a strong sign of credibility to the debt market, which we have the capacity to get very quickly at—we emphasized earlier also—at very interesting conditions, without being forced, you know, to be creative and issue hybrid debt for ratio purpose. Our ratio is pure and clean. There’s no other debt than clean debt in our balance sheet. So we are at 2.87. And it’s always a question from the directors, the board, and the management: Where do we want to go? Do we want to go to two times, one and a half times, and is it logical to go there? Is it the best thing to do, or use the balance sheet to provide tools to get the proper allocation? Between dividend, buyback, and debt reduction, one portion could move from one to the other.
And if debt was continuing to reduce significantly, as we’ve been able to do, maybe, you know, the allocation for debt reduction will be reduced and provide additional fuel for the two others. I don’t want to make any projections. I’m just, you know, talking theoretically about what could happen in the future, and this is the kind of thing that we ask ourselves. If moving forward on the consolidation side—this, you know, I really don’t know. We’ve been facing, you know, consolidation taking place in the cable business—Shaw-Rogers—that gave us opportunity, you know, to get the Freedom asset.
We’ve been doing things acquisition-wise with Etio on the BSS business, business that also could be considered a direction, you know, for improving or getting our capacity to grow our business differently. And, you know, I don’t think there’s any more to say on this. And I would add to that also—and maybe we can finish on this, Drew—we’ve increased our presence in B.C. and in Alberta. I think it’s important. Freedom brand is more present than ever. We had this wonderful venue in Vancouver, which we recently inaugurated, and that was lovely and funny, and there were a lot of people there. We are still present at the Stampede in Calgary with this cool brand called Freedom. It fits very well, you know, in this landscape.
And we will continue to be, you know, highly positioned in terms of marketing our brand and advertising them with the proper offers in those specific areas.
Drew McReynolds, Analyst
Okay, that’s great.
Thank you both.
Pierre Karl Péladeau, Président et chef de la direction
Thank you, Drew. And that is ending our conference call. I’d like, you know, to thank you all for joining us. I understand that, fortunately, you know, we didn’t have a— Yeah, an overrun on our colleague’s previous conference call. Maybe we should make sure that, you know, we’re going to continue to make sure that you guys are available and not being forced to pick one instead of the other. So we’ll make sure—always to make sure that we have the capacity to talk and to share with you guys. So, in the meantime, I will wish you a nice end to the summer, and we’ll talk to each other at the QUT conference call. Thank you very much, and have a nice day.
OPERATOR (Operator)
Ladies and gentlemen, this concludes the Quebecor Inc.’s financial results for the second quarter 2026 conference call. Thank you for your participation, and have a great day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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