Quebecor Inc. (OTCPK:QBCRF) Q2 2022 Earnings Conference Call August 4, 2022 11:00 AM ET
Company Participants
Pierre Peladeau – President and Chief Executive Officer
Hugues Simard – Chief Financial Officer
Conference Call Participants
Maher Yaghi – Scotiabank
Jerome Dubreuil – Desjardins
Drew McReynolds – RBC
Tim Casey – BMO
Matthew Griffiths – Bank of America
Stephanie Price – CIBC
David McFadgen – Cormark Securities
Vince Valentini – TD Securities
Aravinda Galappatthige – Canaccord Genuity
Operator
Good day, everyone, and thank you for standing by. Welcome to the Quebecor Inc.’s Financial Results for the Q2 2022 Conference Call. I would like to introduce Hugues Simard, Chief Financial Officer of Quebecor Inc. Please go ahead.
Hugues Simard
Ladies and gentlemen, welcome to this Quebecor conference call. I am Hugues Simard, I am the CFO and joining me to discuss our financial and operating results for the second quarter is Pierre Peladeau, our President and Chief Executive Officer. Anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast and access details are available on Quebecor’s website at www.quebecor.com and the recording will be available until November 11 of this year.
I also want to inform you, as usual, 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.
Let me now turn the floor to Pierre Peladeau.
Pierre Peladeau
Merci, Hugues, good morning, everyone. Before going into details of our operational and financial performance, I would like to state our complete commitment to participate actively in ISED, Minister Champagne and CRTC Commissioner Scott exercise and efforts to provide a reliable response plan should Canadian face another unfortunate telecommunication outage like the one Canada had to deal with recently.
Today, more than ever, as we clearly reminded, telecommunication represent a pillar of the Canadian economy and one of the most important services in our daily lives. We are calling on our competitors who historically benefited from a monopolistic situation to also participate in this worthy process and work with us as opposed to trying to maintain its dominance through unnecessary confrontation at the detriment of Canadian.
On the strategic front, I would like to reiterate our commitment and motivation to expand our telecom services across Canada. As we have stated before, we believe that the comparatively high pricing environment as well as the TPIA quasi nonexistent competitive and promotional intensity have created an opportunity in Ontario and the rest of the country. It is time for an agile competent well-funded operator with a proven track record to disrupt this cozy country club and start bringing down prices both in wireless and wireline for all Canadians who I am sure are getting increasingly frustrated to be paying among the highest telecom prices in the industrial world, especially as inflation concerns, interest rate hikes and general economic prospects are getting more worsen.
As clear evidence of our strong commitment to grow outside our historical Quebec market, as it matures and having already become the most competitive region in Canada, we decided to accelerate our expansion by acquiring The Media, a TPI offering Internet services, of course, and also both regulated and unregulated video services through River TV. We will soon bring competitive offers in areas where the Big Three incumbents’ current pricing presents the biggest upside for us.
The MVNO process would be another way to foster competition. You will remember that more than a year ago, the CRTC through telecom regulatory policy 2021/130, elected to open the incumbents’ wireless network for competition through a MVNO process. Along with other telecom operators, we are still waiting for a facility-based MVNO framework, defining pricing as well as other terms and conditions to be able to decide whether to launch such a service and create new competition, again, to the benefit of Canadian.
As we announced in June, we reached an agreement with Rogers to acquire Freedom Mobile, including several sites agreements that will position us favorably and give us the wherewithal to offer attractive bundles of wireline and wireless services at much lower prices while continuing to invest to improve Freedom’s network to a competitive level, including 5G capability. As you know, the Competition Bureau opposed the larger Shot Rogers transaction on the basis that even the sales of Freedom to Quebecor would not provide a remedy and thus impact negatively the level of competition in telecom in Canada.
I should tell you, we don’t share this perspective. Quebecor is uniquely positioned to become the successful and long-term four players that Canada so need. Our unassailable track record of marketing agility, market share growth and price disruption while continuing to grow cash flows, combined with Freedom network, market position and further adding the ability to offer multi-service bundles at lower prices, positioning Quebecor much more favorably than Freedom or any of their predecessors were ever.
Just look at what happened in other markets in the U.S., Europe or elsewhere disruptors prevail and have successfully brought down prices for consumers. It is incomprehensible to us that the Competition Bureau believes that the level of competition in telecom in Canada will be higher if the Shaw Rogers transaction is rejected, and we will back to Freedom alone, who will then be a much weaker competitor having been much less present and aggressive in the market for the last 18 months as the CEO of Bell stated during his last conference call and not having invested in crucial 5G 3500 megahertz spectrum then with the addition of Quebecor operational track record spectrum portfolio and financial strength.
We respectfully think that the Competition Bureau and the CRTC should realize that the longer they wait to add either by improving the sales of Freedom or by finally establishing a competitive MVNO framework, the longer they encourage the current oligopoly that is actively limiting competition outside Quebec. It is high time to give a chance to operators who are capable and willing to jump in and break the strong ole of the big 3 who in the meantime, have been increasing their revenues in EBITDA quarter after quarter at the expense of Canadians who are left with very little choice and very expensive telecom services. We must act and we must act now. Let’s get this show on the road. Let’s start attacking this cozy telecom country club and start bringing down prices for Canadian.
I will now review our operational results, starting with our telecom segment. As the war in Ukraine continues, sadly [indiscernible] has been actively supporting the Ukrainian community by offering a 6-month all inclusive 20 gigabyte per month mobile plan at no charge, which has helped more than 4,600 community members to date. We also continue to suspend charges for all calls made to Ukraine from Canada to our mobile, residential and business clients.
Our 5G deployment in the province of Quebec is well on track with an increasing number of operational sites deployed and coverage already in places for larger urban areas. In addition, our project Operation High Speed to deliver high speed internet to 37,000 households in several municipalities across the province is proceeding well with significant work underway on 70% of total planned kilometers. Despite challenges caused by the inclement weather, our deployment intensified during the quarter and will continue to ramp up, delivering significant increases in connected homes over the next few months. Moreover, we are also investing in numerous network extensions, both residential and business to continue to improve our network coverage, performance and reliability.
Turning to wireless. We registered a solid growth of 35,000 net adds during the quarter, which represent 8,000 more additions than in Q2 last year. On a year-over-year basis, we added 131,000 new mobile lines, bringing our total lines just shy of 1.7 million as of June 30. Once again, we captured the largest combined share of gross adds in Quebec with 32% for our 2 brands, Videotron and Fizz according to [indiscernible] Survey. Wireless EBITDA increased by 12% in the quarter compared to Q2 2021.
Consolidated wireless ARPU for the quarter improved by $0.53 or 1.4% over the same quarter last year due to higher planned mix, especially for Fizz, lower discounts and higher roaming and data usage revenues, offsetting the diminishing diluted effect of Fizz. In wireline, we’re continuing our efforts, which we mentioned last quarter to maximize the ARPU by better positioning our brands and optimizing the pricing story of our illico and Helix platform.
As a result, Helix activation slowed to 33,600 for the quarter, still keeping our total video subscriber at 1.4 million as of June 30, but our PV ARPU increased from $46.52 to $47.74 sequentially compared to the first quarter. All in all, we were able to reduce video cord cutting for a second consecutive quarter by nearly 20% compared to the same period last year. We also managed to reduce cord cutting in our high-margin wireline telephony service by almost 30% compared to Q2 last year.
Internet subscriber growth was flat during the quarter and 36,000 year-over-year, resulting from continued intense competition, especially at the lower end of the market and from a return to a more “normal” moving season in Quebec after 2 pandemic years, which has historically translated into lower net adds in the second quarter, followed by a pickup in Q3, which our favorable net adds result in July are proving the case again this year.
While Internet ARPU decreased by $0.48 or 0.9% over the last year, essentially due to the dilutive effect of sales and lower client mix, we recorded a significant sequential ARPU increase by $1.08 from Q1. OTT video subscriber decreased by 16,000 this quarter, a usual seasonal variance in Q2. Still, the interest for new and original content remained strong, as demonstrated by 11% subscriber growth for Vrai, our new platform dedicated to exclusive unscripted lifestyle documentary and entertainment content.
Now turning to our financial results, our telecom segment generated $369 million in cash flow from operations in the second quarter, an increase of 12% over the same quarter last year, with EBITDA growing 1.2% year-over-year and EBITDA margin reaching 53.4% compared to 51.9% last year and still the highest in the industry.
I would like to reiterate our increasing focus on free cash flow and not only on EBITDA, which we consider a secondary measure. And I emphasize this, on cash flow, it’s not all to the detriment of key investments in our networks to ensure their performance and reliability and the high quality of our services. In fact, we continue to invest as much, if not more, to deploy our 5G network, numerous network expansion as well as redundancy and backup assets to minimize the risk of any potential outage. Market analysts and other stakeholders continue to look at EBITDA, but the most important measure is surely the capacity to generate the free cash flow necessary to pay down debt, pay dividends and buy back shares.
Revenue decreased slightly by 1.7% in the quarter as compared to last year, mostly due to lower Helix equipment sales resulting from a slower Helix growth as we optimize our two brands, pricing to improve margins. On the OpEx side, we are starting to see material reduction from the various initiatives implemented over the last year, translating into our increasing and industry-leading EBITDA margins.
Telecom CapEx spending, excluding spectrum, was down $33 million for the quarter as compared to Q2 last year as we continue to focus on our strategic priorities as we operate more efficiently by continuing to lower our cost structure while maintaining or increasing our investment level, as I said earlier, on key initiatives such as LTE advance and 5G rollout, profitable network expansion and much needed IT platform migration to be able to decommission legacy systems and thus optimize our cost structure.
Turning to media. Our second quarter results were significantly affected by the soft advertising on all our platform and the lower profitability of the TVA network as a result of our ongoing strategy of enhancing our investment in content to maintain our market-leading position. During the quarter, viewers were able to enjoy a wide array of new content, including major reality shows such as [indiscernible], a hit which drew an average audience of over 1.5 million as well as new exclusive reality shows and programs.
Our strong programming enables the Telia network to grow its market share by 0.7 points during the quarter and to stand out with the advertisers and thus limit the impact on the network advertising revenues, which declined by slight 1.7%. Our digital platform increased their revenue by 19.9% during the quarter due in part to the growing popularity of TV A+. We intend to continue to invest in our programming to maintain our leading position in broadcasting. Speaking of media, I have to say how dismayed we are by the recent decision by the CRTC to allow CBC/Radio-Canada more flexibility when it renewed its broadcasting license and most importantly, to ignore the calls to remove advertising from its television services as we’ve done with its radio services years ago.
CBC/Radio-Canada has been even more competitive lately, both on the air by carrying infomercial in addition to its existing advertising vehicles and on the web as it develops its presence online. The status quo that the CRTC is maintaining allows them to capture even more of the advertising dollar, which, as you know, are the sole source of revenues for the over-the-air television station that brings Quebec finally together in front of their television screen. It can only lead to the weakening and continued decline of private television in Canada in the face of foreign competition. We call on the Minister of Canadian Heritage to intervene to ensure that Canadians continue to have access to multiple sources of news and entertainment and to protect our society, pluralism and diversity.
Finally, turning to our sports and entertainment operations. Many activities resumed this quarter, like the Roger Waters concert a couple of weeks ago at the [indiscernible] Videotron and prospects are continuing to improve with a full calendar lineup exports and music for the fall and winter.
I will now let Hugues review our telecom and consolidated financial results. Hugues?
Hugues Simard
Merci, Pierre Karl. For the second quarter, Quebecor’s revenues reached $1.1 billion, down 1% from last year. Revenues from our telecom segment was down 2% to $913 million, mainly due as we said to the decrease in the volume of equipment sales related to our wireline telecom services and more specifically, Helix.
Revenues from the Media segment decreased 5% to $188 million in the second quarter, while our Sports & Entertainment segment grew 34% to $45 million for the quarter. Our adjusted cash flows from operations increased by $23 million for the quarter or 7% to $361 million, once again demonstrating our continued operational and financial discipline.
Adjusted cash flows from operations for our Telecom segment grew $39 million or 12% to $369 million. Quebecor’s EBITDA was down 2% to $491 million in the quarter, mainly due to the $13 million decrease in EBITDA from our Media segment, which is explained, as Karl mentioned, by the increase in our investments in content production and acquisition for TVA Group in order to maintain our leading position in the TV market.
Our Telecom segment posted EBITDA up $6 million or 1% to $488 million. Quebecor reported a net income attributable to shareholders of $157 million in the quarter or $0.66 per share compared to a net income of $124 million or $0.50 per share reported in the same quarter last year. Adjusted income from continuing operations, excluding unusual items or gains or losses on valuation of financial instruments, came in at $162 million or $0.68 per share compared to an adjusted income of $158 million or $0.65 per share in the same quarter last year.
For the first 6 months of the year, Quebecor’s revenues were down 1% to $2.2 billion, and EBITDA was down 2% also to $934 million. EBITDA from our Telecom segment grew 2% to $948 million for the same period, an improvement of $50 million over last year. As of the end of the quarter, our net debt-to-EBITDA ratio was 3.27x, up from 2.71x reported at the end of the second quarter last year, mainly explained by the $830 million investment for spectrum acquisition across the country in the second half of 2021.
Recently, we amended and extended Quebecor Media and Videotron’s revolving credit facilities to July 2025 and 2026, respectively. Available liquidity of more than $1.5 billion at the end of the second quarter and our growing free cash flows are more than sufficient to fulfill our commitments and maintain a very strong balance sheet.
During the first 6 months of the year, we purchased and canceled 4.2 million Class B shares for a total investment of $123.1 million. Please note that the Board of Directors upon termination of the August 2021 program, has approved the renewal of the NCIB program for an additional year. Since we initiated our normal course issuer bid program, more than 11 years ago, actually, approximately 53.8 million Class B shares have been purchased and canceled.
We thank you for your attention, and we will now open the line for your questions.
Question-and-Answer Session
Operator
Alright. The first question comes from Maher Yaghi from Scotiabank. Please go ahead.
Maher Yaghi
[Foreign Language] Thank you for taking my question. I wanted to ask you first that quickly the definitive agreement with Rogers, how are we doing on that? And do you have any idea or any view on when we should see it coming out? And following up on that, I wanted to ask you, Bell and Rogers indicated both that they have been seeing a higher proportion of wireless net adds coming on the higher-end side of the brand, i.e., Bell or Rogers and sericite or Virgin. Are you seeing improvement in the type of customers you see – you have coming in or are we still seeing a lot of the new adds coming on the Fizz brand? Thank you.
Pierre Peladeau
Thank you, Maher. I will ask Hugues to answer the second question. I’ll do the first one. So it is – and it’s unfortunate. I try to emphasize the fact that, again, we believe that Quebecor is with the track record that we’ve been able to show. It’s not a wishful thinking. We’ve been able to deliver significant performance for the last 10 years and in a very competitive environment. So we still believe that we should work with the burial to make sure and Rogers will convince them about the strength of our proposal. So then therefore, we will keep this situation under confidential purpose because our goal and our objective is to succeed to get the approval as quick as possible for us to operate as quickly as possible. As we mentioned – as I mentioned also earlier, regarding the other aspect of the different other assets that we can line up.
Hugues Simard
Maher, as to your second question, we’re also seeing that phenomenon to be sure, in Quebec as well this quarter with our main brand, Videotron, performing very well. And we – I think one way to look at it is we’re seeing the difference, the average price difference between the main brands and the flanker brands as being reduced a little bit, but that being said, we continue to have a very good performance from our Fizz brand. So we’re actually seeing good performance in – and you saw the performance in wireless for the quarter, so very good performance from both of our brands. But yes, a little bit of a better performance, I would say, by the Videotron brand this quarter as opposed to perhaps the last few quarters. So that’s probably in line with what our competitors were saying to you.
Maher Yaghi
Thank you.
Operator
Alright. Next question comes from Jerome Dubreuil from Desjardins. Please go ahead.
Jerome Dubreuil
Thanks for taking my questions. First question for me would be that I would suppose that you’ve had conversations with your credit agencies following the announcement of your – the agreement to acquire Freedom, probably not as big a problem for you since you’re not investment grade, but are you still confident that you can realize these acquisitions with the current terms without issuing equity?
Hugues Simard
Yes…
Jerome Dubreuil
I think you should talk about the – our credit facility renewal.
Hugues Simard
Yes, for sure. Jerome, yes, we have obviously – we have an ongoing dialogue as to all the players in the industry, of course, with our two credit agencies. And the acquisition of Freedom, the eventual acquisition of Freedom would certainly bring in a very interesting growth potential and potential for growth of EBITDA as well enough cash flows. So, we are – the conversation with both agencies was very productive, and they are very supportive of this transaction. And so we are certainly confident that we can achieve the plan without – to your question, without having the need to issue equity for sure.
Jerome Dubreuil
Okay, great. And then second question is on your Media acquisition, we haven’t got the MVNO rates yet. And Roger Shaw isn’t fully settled. There are many reasons that can explain that. But it seems a bit early or maybe it seems like you’re absolutely convinced that either a big merger will definitely work or MVNO will be economically viable. So why didn’t you think it was early to acquire the Media here?
Pierre Peladeau
Yes. It’s a good question, Jerome. I think that what we should answer is that we are opportunistic – and this opportunity presents an in front of us. I know obviously that the CPI financial situation has not been the best more recently. The interesting thing that we have there is the technology, which is also driving – and I tried to mention it in my speech, in my conference regarding regulated and unregulated television. More than ever, I would say that then we’ve been out and clear with the CRTC, the regulation of television is unfortunately, from our perspective, being a factor, an additional factor, which is basically putting RMs in a kind of end cost not being able to propose original formula. We need to distribute the base. And to turn the out of the base, there is probably 99%. It’s not it’s not smart to say this, but it is what the reality is all about. So 99% of – with the different programs are not lots, but we’re forced to distribute it. In an unregulated environment, where we are facing the streaming services out of the Americas, this is a technology that could position ourselves in a relatively interesting position if we were to increase the content in an unregulated environment. This is what we are working on, and this is what we’re looking also to introduce in our Fizz proposal where we can bundle services already with our own services that we’re offering. So yes, it’s true that it could be considered early in the process, but we look forward to be able to catch on with the situation, given that it’s not impossible that we can build in the future as we are expecting eventually to do in EBITDA, where we started as a PPIA. And since our customer base is high enough, we’re considering building and moving from a PPIA to a facility-based operator. So it’s in a nutshell and I can spend more time on it. But in a nutshell, this is what I can say at this moment.
Operator
Perfect. And next, we have a question from Drew McReynolds from RBC. Please go ahead.
Drew McReynolds
Yes. Thanks very much. Just a couple of questions for me. With respect to, I guess, for you, Hugues, there is a one-time provision reversal just in telecommunications EBITDA this quarter. Just wondering if you could quantify that? And then secondly, good to see, obviously, some cost efficiency come through the telecommunications margin again this quarter. Just wondering how far through are you with your ongoing migration and IT projects? And then lastly, just on CapEx for the full year, Videotron CapEx, presumably you are still comfortable with that being stable year-over-year? Thank you.
Hugues Simard
Thanks for your question. Yes. Yes, I’ll take that. Firstly, the – yes, there were a couple of – there was a reversal, and it was a new provision on a couple of ongoing lots – well, one settled and another ongoing lawsuit. So there was a little bit of back and forth in provisions. But all in all, when you net them all, it really is not material. In terms of cost efficiencies, yes, as we said, and you mentioned it yourself, Drew, I think we’re starting to see both on the OpEx and on the CapEx side. The result of our ongoing initiatives that we have been discussing with you guys for a few quarters now. And – but we’re not quite there yet. I think you can expect the momentum to continue and see further improvement on that because we are – it’s an ongoing as you know, it’s an ongoing process, and we continue to find efficiencies throughout the company and throughout the system and should be in a position to continue to improve margins going forward over the next few quarters. In terms of CapEx, yes, we are still comfortable with stable CapEx for Videotron for the year 2022 for sure. Yes.
Drew McReynolds
That’s great. Thank you very much.
Operator
Alright. Next, we have a question from Tim Casey from BMO. Please go ahead.
Tim Casey
Yes. A couple from me. Thanks, good morning. Karl, can we just go back to the Media a bit. And just – I mean, are you looking at this primarily as an expansion, a platform that you can leverage with your various Fizz products out of the province or how should we think about that? And can you also – I recognize it’s a small private company, but can you provide some transparency on how much you’ve paid or some indication of any free cash flow drag that might come out of VMedia going forward? And my second question, Pierre Karl, relates to the process with respect to the Competition Bureau. I recognize you’re not going to negotiate on a public forum like this, but just your thoughts on the likelihood that this process will go full tribunal? And if that is the case, your appetite for that, given that Freedom itself will lose out on the two major selling seasons in 2022. And presumably, there’ll be value implications there. Any thoughts you’d have on that would be interesting? Thank you.
Pierre Peladeau
Yes. Good. Tim, so first of all, I would say, regarding VMedia, I understand that you’d like to have more some parity. What I would say is it’s not material. So you should not expect any kind of surprise in the balance sheet or goodwill or whatever. And again, what I would like to emphasize on is that we were really interested in the technology that we found. The company is run by individuals in Toronto have ester origin connections. We’ve been able to get technology very – let’s call it cheaply when we compare about IT costs in North America, and proving at this stage very interesting. This is certainly something that took us our attention and for which, coupled with the fact that they already have all the interconnections with the different telecom operators in many locations in Canada that give us the agility to launch the service, depending about what will come from the MVNO or if we were design a private agreement with telecom operators, which we’re still expecting to do – unfortunately, at this stage, the telecom operators that have been always against competition are refusing to negotiate with us. They are saying that they are waiting for the framework to be established in understate CRPC. We respect that. Unfortunately, we think that it’s not in the best interest of them or of us, but it’s their decision. So we will look forward to have an additional asset if we need it, and we will continue to be prudent. We’re not going to consider launching our full service, which will be a drag on our expenses or our financial results. We’re going to go slowly, prudently as we’ve been doing in the past.
In terms of Competition Bureau, again, this is delicate. We are not running the show. I’m not going to say that we are in the bleachers, but we are far from being on place, and we’re not playing directly with the Competition Bureau. For sure, we’ve been part of it because the Competition Bureau asked us even before the announcement of Freedom Mobile from statistics regarding the market, the wireless market, which obviously, we answered with as much as a good numbers and good statistics than the one that we’ve been experiencing for the last 10 years, and we will continue to do so. We were in front of them, making sure that they understand all the way with all of our plan. Are they still working on it? For sure. Are we still working on it? Yes, for sure. And we will continue to work with Rogers to make sure this transaction will move forward. Then we’re not in control of the game. And it’s true that depending how long the process will take, that could be – that could have an effect on the subscriber and the commercial strategy that Freedom is now using. I guess that Shaw and Roger should conduct our business as business as usual was – will they put more emphasis on Shaw Mobile than on Freedom. Yes, we don’t know. This is a matter of how they would like to be positioned in front of the bureau. These things could send a strong message to the bureau depending the attitude that they will get or they will adopt moving forward for the transaction to close. And I guess that we expect them and we anticipate that they would like to see the transaction both as soon as possible.
Tim Casey
Thank you.
Operator
Alright. Next, we have Matthew Griffiths from Bank of America. Please go ahead.
Matthew Griffiths
Hi. Good morning and thank you for taking the question. Just maybe focusing on wireless for a second, maybe we’ve seen others in the industry have report large benefits to ARPU in recent quarters, returned to roaming being the largest contributor, but underlying kind of plan migrations, also chipping in there. Maybe you’re obviously benefiting less from the roaming. Maybe you could like kind of highlight a little bit about what you’re seeing in terms of planned migrations, whether you’re seeing consumers trying to like save on their monthly bill given the overlying macro environment? And whether you see there being continued room to move higher as we go through the year into next? And then also, just as we look into Q3, just what did you see in the early part of Q3, especially given the network issues that you alluded to with Rogers. Did you – were you guys in that beneficiary of that? Do you see that continuing? Was it a blip? Just any kind of color on what you experienced in the market would be helpful?
Pierre Peladeau
Okay. Hugues, would you answer the first part of the question, I will ask – I will answer the second part. I think that what we keep saying is as we seen, experience in the last few years and actually even more than a few years. I would say that’s a general trend that the beginning of Q3 has been very strong. And we look forward to continue in that trend. We will remain competitive. We will make sure that we do we keep our fair share as we described earlier, which have been the biggest market share of gross net add to continue to do this. On the ARPU side, Hugues, did you have some comments on this?
Hugues Simard
Yes, for sure. On the roaming, as you point out yourself, Matt, and we’ve said this in the past, we don’t benefit from roaming in as much as our national competitors, for sure. So, as much as we didn’t – we weren’t impacted as much at the beginning of the pandemic well just now of course, we are not – we don’t benefit from as big a pickup as they are currently benefiting on the way back up, which is normal. I think what we are seeing in the market, I mean we continue to be aggressive. We continue to win, as you saw, 32%. That’s pretty stable. I mean that’s amazingly high to me, but it still is pretty stable over the past few quarters where we continue to – our two brands together get about a third of the market of gross adds. And we are seeing people – in terms of price packages, people are – there is some stability, some people moving up both brands being maybe a little bit better positioned in terms of the pricing now. So, that helps us a little bit on the overall ARPU and margin. But we are seeing some – it continues to be a competitive market. I mean we have said this and it’s been for quite some time. But we definitely have all the tools and all the ammunition to be able to successfully compete in this market that we see. When we see our competitors’ results, we could only conclude that it’s not the case in the rest of the country. But for sure here, it continues to be quite competitive, but we continue to win most of it. So, we are very pleased with the continuation of the wireless market right now.
Matthew Griffiths
Okay, great. Thanks so much.
Operator
Alright. Next, we have Stephanie Price from CIBC. Please go ahead.
Stephanie Price
Hi. Good morning. I was hoping to ask a similar question on the wireline competitive environment. How do you think about competing with the fiber offers here? And is there a plan in place for fiber and fixed wireless in your longer term strategy?
Pierre Peladeau
I am sorry, Stephanie, would you repeat your question. I am not sure that I…
Stephanie Price
Sure, I was taking about the wireline competitive environment and how you think about competing against fiber offerings that are in the market and whether there is a place for fiber and fixed wireless in your longer term strategy for wireline?
Pierre Peladeau
Okay. I understand the first one, the first part of it, so – well, it’s been competitive. Probably in Québec, this is where we have been seeing the highest amount of TPIA. And this is the reason why we launched an Internet service out of our Fizz offering, which was at the beginning only dedicated to wireless. In fact, what we are seeing in terms of achievement for Internet has been good, especially when we couple our offer, wireless and Internet. And we look forward to continue to do this, and that would be also certainly one of our strategy that we look forward to propose when we will be in a position to offer our services outside of our historical area being in Québec. I am not sure that I add unfortunately, the second part of your question, which was referring to a six competitor in the wireline?
Stephanie Price
Yes. I was asking more about Québec in terms of competing against fiber offerings and whether you are considering putting in place more fiber and fixed wireless in Québec as part of your longer term strategy?
Pierre Peladeau
Fixed wireless, at this stage, we are investing, as I mentioned and we have been doing it for the last few quarters on wireline. In fact, we are to [Foreign Language] in a position to close about 37,000 new doors, new potential, which we look forward to offer. And with that, we don’t think that we would made fixed wireless since we will go down directly to the customer. These are subsidized program. We out of this program were the biggest operator – well, the operator with the biggest amount of availability. Cogeco was there also. But we look forward to start. And in fact, we already have new customers that already are connected with this new fiber. But I would say, anecdotal for the moment. We are certainly going to be in a better position in Q3 and Q4. We look forward to have a very high level of penetration on this area, which were previously only serviced either by Xplornet or either by the telecom incumbent with DSL technology or dishes or television. So, this is of great interest for us in the upcoming quarters. I don’t know, Hugues, if you have anything to add?
Hugues Simard
Maybe just one comment, one thing – a small thing to add, Stephanie on the first part of your question, as to the wireline competitive environment in light of the fiber. Just one thing to remind you, I mean fiber companies – I mean competition from fiber, I mean there is nothing new to us. I mean our main competitors started laying down fiber to the home in the Québec City area more than 8 years ago. And we also, in some cases, don’t forget that in some network extensions, we also go all the way to the home. But because of our technology, we can afford in many cases to go to the node. So, economically, it makes more sense for us to do that. But depending on the competitive environment in that area, we sometimes lay down more fiber. So, I mean I guess my point is that we have been dealing with this for many, many years. And I think we have demonstrated that we can successfully compete against our main competitors, very well-funded development and fiber layout. And the overlap is very high in Quebec compared to the rest of Canada, close to 90% overlap. So, I think our numbers show that we are quite successful in competing with them on that front. So, I mean for sure, it continues to be competitive in wireline as well. But again, as to our comment on wireless, we believe we have all the right tools to win there.
Pierre Peladeau
And I would add also and we like to focus on the fact that the fiber expansion out of the Bell had been there for many, many years. But if you look in light of the quarterly results release this morning, I mean the IP television increase was not significant. In fact, what we have been seeing is certainly a kind of a flat number. And from the Internet, the increase, we don’t know where it comes from. Is it coming from Québec or Ontario, what we are seeing basically in Québec regarding the competitive aspect is a matter of price. It’s certainly not a matter of quality. Bell is making big noise regarding 5 or 5B or whatever. We certainly have a very strong technology, whatever it’s goes up and find, which we also offer to our customers. Basically, the main driver here is pricing. And when we survey our customers, when we survey the market, the first reason to change or to move from one supplier to the other, from one company to the other would be the pricing equation.
Stephanie Price
Thank you for the color.
Operator
Great. Next question comes from David McFadgen from Cormark Securities. Please go ahead.
David McFadgen
Okay. Thanks. I have two questions. First of all, Hugues, I was wondering if you could comment on the debt that you have arranged to buy Freedom, assuming you can do so. Just wondering if it’s short-term, long-term in nature, what kind of debt it is? And then secondly, just on the Internet net adds, they were flat in the quarter, but you indicated that in July, you are seeing a pickup. And I was just wondering, are you seeing a pickup similar to last year? Thanks.
Hugues Simard
On your first question, David, the debt that we have arranged that we have had committed for the Freedom acquisition is the – actually, to give ourselves flexibility. It’s bank debt, but it’s bank debt over a certain number of different lengths and time to be assured to have some flexibility over the next few years to repay that debt and/or to replace it with a different instruments should the markets evolve and get better in certain other areas. So, we have afforded ourselves, I think some very interesting freedom on that front. No pun intended to make sure that we have got a very flexible debt instrument should the acquisition of Freedom materialize. On the Internet, as to your second question, yes, we are seeing, as we said in our script, that phenomenon that we used to talk about pre-pandemic of the Q2 being living through a little bit more disconnect and then reconnect in Q3. So, we are seeing this more this year certainly as compared to last year. And our numbers in July so far look pretty good. So, we are clearly proving that this is the case again this year.
David McFadgen
Okay. And then just a follow-up on the bank debt, so, there is no requirement that you would have to finance a large amount, say, within the first year. So, you have got time more medium, long-term kind of debt financing?
Hugues Simard
Yes, that’s correct. We have a bunch of – yes, it’s some – we have extended over the next few years to make sure that we have the flexibility and no big tower over the next couple of years, for sure.
David McFadgen
Great. Okay. Alright. Thank you.
Operator
Next, we have Vince Valentini from TD Securities. Please go ahead.
Vince Valentini
Yes. Thanks. First, I just want to clarify. So, 90% of your cable territory is passed by a fiber-to-the-home solution from the telcos. And I just reiterate that here and ask again because Bell gave a number of 56% on their call this morning, and I don’t think that applies to you guys?
Hugues Simard
Yes, I know it was brought to my attention by one of your colleagues and because I didn’t listen to the call, unfortunately. But yes, so clearly, in Québec, and we have been saying this. It just proves what we have been saying for many years. The situation – the competitive situation and even the technology situation is different here because our overlap is 87%. And I checked it again with our CTO this morning. So, when they refer to 56%, I assume that I was referring to the whole of Canada. So, clearly, we are – and it makes sense, Vince, because as you know, they started here. They started in Québec City and Montreal before going to Ontario and elsewhere. So, yes, so we are – the overlap is much higher here than in the rest of Canada for sure.
Vince Valentini
Great. And if you said this in your opening remarks, I apologize, I missed it. But did you give any clarification on retail Internet adds in the second quarter relative to wholesale and reseller where you may have lost customers, but the retail was positive?
Hugues Simard
No, we did not give that level of detail, but it is – it certainly is true the situation that we mentioned a little bit last quarter, certainly continued this quarter, not as much, but it’s – that phenomenon, it still exists for sure.
Vince Valentini
Okay. And one last one, a bit of a clarification as well. In your opening remarks, Pierre Karl, you said the Competition Bureau has said that they don’t believe Quebecor as a buyer is a sufficient remedy. Can you just clarify that? I am not aware of them saying anything. They rejected the deal prior to Quebecor getting involved, and they said the remedy proposed then was not good enough. But since then, to my understanding, they are just investigating and deliberating and they haven’t really said anything definitively. Are you aware that they have come out and actually said they have reviewed the terms of your deal and they don’t think it’s good enough for competition?
Pierre Peladeau
Well, this is our understanding. Do we have it from the mouth, the answer is no. And again, this is why we are still working on it. And we want to make sure that we will bring the arguments to convince them that you will remember at certain points, they said, well, they were not going to be in a position to bundle. So, we are emphasizing the fact regarding the file with the media, we now are in a position to do so. We negotiated, but we don’t want to go too much in detail, but arrangement with Rogers, where we will also have access to wireline. So, unfortunately, as I mentioned earlier, I would not be able to give details in terms of negotiation. But what we are looking for is to be able to map as much as issues that were raised by the bureau and finding out how we can give them a positive answer that for them will be a key element to move forward and get their approval.
Vince Valentini
Yes. Thanks for that clarification. That’s it for me.
Operator
Alright. And the last question we have in the queue comes from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.
Aravinda Galappatthige
Thanks for taking my question. I wanted to go back to the cable margin. I think it was mentioned earlier, it was definitely a meaningful strengthening, I think of about 150 basis points. Can you maybe give us a little bit of a breakdown in terms of what proportion of it came from the core cable business as opposed to wireless so that we can perhaps better appreciate the benefit on the cost side from your streamlining initiatives. And then when you look at the second half, can we sort of anticipate similar magnitude improvement? And I asked particularly because I think many of us remember Q4 was a bit of a step-down last year. So, you have the benefit of that sort of a lower base as well. Any color on that would be helpful.
Hugues Simard
Yes. Thanks for your question, Aravinda. I just want to make sure maybe on the first part of your question, you are talking about cable margin or wireless or both? I am sorry, maybe I misunderstood the specifics of your question.
Aravinda Galappatthige
Yes, I was referring to, I mean obviously, what you reported is the total telecom margin improvement, but I was trying to get a sense of some proportion of it was sort of the core cable business as opposed to wireless.
Hugues Simard
Okay. Well, I mean, the – a good chunk of it is obviously on the wireless side. But the margin, and I think we have clearly given the numbers. I mean 12% more EBITDA in wireless. But we are also pointing out that on the wireline side, that the margin has picked up. I mean there is the hit due to the equipment that we talked about. So, certainly a hit on revenue due to the slower Helix migrations that we talked about, which obviously draws a little bit to the margin. But if you look at service margin in wireline, there is an improvement this quarter, finally. And this is what we had talked about that we had some struggles there as we were investing in a number of platforms. And our initiatives of cost reductions had not fully gone into place. But I think on this – in this quarter, you are starting to see some nice momentum on both wireline and wireless margin. One, in the case of wireless, it continues to grow, of course. But even on the wireline margin issues that we had talked about in the past, I mean you are finally seeing an improvement in margins, which to your – I think to your second part of your question, we are expecting to continue because we are continuing to work on a number of these initiatives that are increasingly bringing out or bearing fruits perhaps, I should say. So, we are certainly more optimistic on margin for the next couple of quarters.
Aravinda Galappatthige
Thank you. And just a quick follow-up on the buybacks. I mean you stepped up buybacks in Q2 relative to Q1. In light of the transaction, should we sort of anticipate a little bit of a slowing until we have clarity on that front, or does that kind of continue unabated? Thank you.
Hugues Simard
On buybacks, it’s not – it is something, as we said in the past, where we are opportunistic. And we believe that our stock is and we continue to believe that our stock is undervalued. So, it’s hard to see or to decide today and we certainly haven’t decided today what we are going to do. But we should – I don’t think it’s unimaginable that we can think of continuing buybacks for a while as our stock continues to be undervalued.
Aravinda Galappatthige
Great. Thank you.
Pierre Peladeau
Good. So, we thank you very much all, and we are expecting to talk to you again after Q3. Thank you and have a nice day.
Hugues Simard
Thank you.
Operator
This concludes the Quebecor Inc.’s financial results for the 2022 Q2 conference call. Thank you for your participation and have a nice day.
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