Quebecor Balances Telecom Triumphs with Media Struggles in Q1 2025 Earnings

Quebecor Inc. (QBR.TO) delivered a mixed set of results for Q1 2025, showcasing robust growth in its telecommunications division while grappling with ongoing challenges in its media segment. The company’s ability to maintain financial discipline and invest in network infrastructure highlights its strategic focus, even as it navigates headwinds in a sector where advertising revenue continues to decline.

Financial Highlights: Telecom Drives Cash Flow Growth

Total revenue for the quarter dipped to $1.34 billion, a 1.4% year-over-year decline, primarily due to lower equipment sales in the Telecommunications segment. However, adjusted EBITDA (excluding a $22.5 million increase in stock-based compensation) rose 2.3% to $549.6 million, demonstrating operational efficiency. Net income surged 10.1% to $190.7 million, bolstered by lower depreciation and financial expenses.

Cash flow from operations hit $420.2 million, an 8.1% increase, reflecting strong liquidity. The company’s consolidated net debt leverage ratio fell to 3.26x, the lowest among Canada’s major telecom providers, thanks to a $155 million reduction in net debt during the quarter.

Telecom Dominance: Growth and Innovation

Quebecor’s Telecommunications division remained the star performer, adding 54,400 new mobile connections (1.3% growth) and 34,300 total revenue-generating units (RGUs) in Q1. Year-to-date mobile growth stands at 9.6%, with 367,500 new lines added in the past year. This growth outpaces competitors, positioning Quebecor as Canada’s fastest-expanding telecom player.

Strategic investments in 5G+ infrastructure are paying off. Freedom Mobile’s rollout of 3,800 MHz spectrum in key provinces has enabled download speeds exceeding 1 Gbps, while all mobile plans now include 5G+ technology at no extra cost to customers. Regional expansion efforts, such as extending wireless coverage to parts of the MRC de Témiscamingue, further solidify Quebecor’s market reach.

New product launches, like Fizz TV—an all-digital, pick-and-pay streaming service—added 12,000+ subscribers within weeks, signaling demand for flexible digital content. Freedom’s expanded data plans and "Roam Beyond" international roaming in Manitoba also highlight the division’s focus on customer retention and satisfaction.

Media Struggles: Calls for Regulatory Reform

The TVA Group media segment reported a $20.5 million negative adjusted EBITDA, driven by declining advertising revenue and reduced studio income. TVA’s Winter 2025 TV season retained 42.4% viewership in Quebec, but advertisers continue to shift spending to foreign streaming platforms. Management emphasized the need for policy reforms, including ending tax deductions for foreign platforms and restructuring CBC/Radio-Canada’s advertising practices to level the competitive playing field.

Balance Sheet Strength and Shareholder Returns

Quebecor’s financial health remains a key advantage. The company repurchased 1.83 million Class B Shares for $60.8 million during the quarter, demonstrating confidence in its long-term value. A quarterly dividend of $0.35 per share was maintained, underscoring its commitment to shareholders.

Conclusion: Telecom Momentum Outweighs Media Headwinds

Quebecor’s Q1 results reflect a company strategically focused on its core strengths. The Telecommunications segment’s 9.6% annualized mobile growth, 5G+ infrastructure investments, and innovative digital services like Fizz TV position Quebecor to capitalize on Canada’s telecom market. Meanwhile, its lowest-in-sector leverage ratio (3.26x) and strong cash flows ($420.2 million) provide a solid foundation for future investments.

While media challenges persist, Quebecor’s advocacy for regulatory reform and its ability to generate consistent telecom revenue suggest resilience. With a 12-month price target of $39.50 (4.4% upside from current levels) and a dividend yield of 2.3%, investors are likely to remain optimistic about Quebecor’s trajectory. The telecom division’s growth, paired with disciplined capital allocation, makes Quebecor a compelling play on Canada’s evolving digital landscape—even as it navigates the rough seas of media sector decline.

Final Note: Quebecor’s results highlight a clear path forward: leverage telecom dominance to offset media struggles while pushing for regulatory changes that could turn the tide for its broadcast division. For now, the balance sheet and cash flows suggest this strategy is working.