CA - Quebecor Inc. (QBCRF) Q3 2023 Earnings Call Transcript

2023-11-11 13:09:04 ET

Quebecor Inc. (QBCRF)

Q3 2023 Earnings Conference Call

November 9, 2023 11:00 AM ET

Company Participants

Hugues Simard - Chief Financial Officer

Pierre Karl Péladeau - President and Chief Executive Officer

Conference Call Participants

Maher Yaghi - Scotiabank

Jerome Dubreuil - Desjardins Securities

Stephanie Price - CIBC Capital Markets

Matthew Griffiths - BofA Securities

David McFadgen - Cormark Securities

Vince Valentini - TD Securities

Tim Casey - BMO Capital Markets

Drew McReynolds - RBC Capital Markets

Presentation

Operator

Good day, everyone, and thank you for standing by. Welcome to the Quebecor Inc.'s Financial Results for the Third Quarter 2023 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. My name is Hugues Simard. I'm the CFO. And joining me to discuss our financial and operating results for this third quarter of 2023 is Pierre Karl Péladeau, our President and CEO.

As usual, anyone unable to attend the conference call will be able to listen to a recording by telephone or webcast. Access details are available on our website at www.quebecor.com, and the recording will be available until February 7. As usual, I also want to inform you that certain statements made today on the call 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 [Technical Difficulty].

So, we have good news. We're being recorded again. All right. So, Pierre Karl, up to you.

Pierre Karl Péladeau

Merci, and good morning, everyone. I would like to start by addressing last week a sad announcement. Due to universal structural changes in the media and television landscape, I, as Interim President of Group TVA, announced and initiated the major restructuring of our broadcasting activities. I would like to reiterate our thanks and support for the more than 500 colleagues who will depart the company in the upcoming months. Their personal investment will be fairly rewarding. Again, thank you.

On the regulatory front, we are happy that the CRTC has announced its long-awaited decision on FTTH wholesale rates, which will foster an enhanced competition in Quebec and Ontario, but it will be essential to ensure that these rates continue to be reflective of Bell's true cost. As we have pointed out several times in the past, there are many instances where Bell sells its own service well below their supposed cost. We hope that the rates that Commission will approve on a final basis will consider the fact that Bell continues to offer its 1.5 gig access to Quebec at a retail price of $65, while Bell has filed to the CRTC a $108 rate for the same access.

Before turning to our operational results, I am happy to report today a very good financial performance in our third quarter, where Quebec on a consolidated basis generated $482 million in cash flow from operations, an increase of 20% over the third quarter in 2022, and an EBITDA of $624 million, up 21% from last year.

Videotron, with the addition of Freedom, improved its cash flow from operations by 19% to $454 million and its EBITDA by 20% to $590 million in the quarter, while maintaining the best margin in the industry. Whereas our main competitor is borrowing to pay its dividends, thereby continuing to increase its leverage ratio, our capacity to generate growing free cash flows enable us to pay a decent dividend, reimburse more than $250 million in debt in the quarter, and thus keeping lowering our debt-to-EBITDA ratio.

I will now review our operational results, starting with our Telecom segment. Upon closing the acquisition of Freedom Mobile on April 3rd of this year, we clearly announced our intention and quickly set about establishing a much more competitive mobile telephony environment across Canada. While continuing to invest in our network to keep improving its quality and performance, we introduced seamless hand-off roaming, which immediately improved our user experience and further enhanced network connectivity through nationwide coverage and affordable international mobile plans. And in addition, we added 10% more domestic data to all existing Freedom subscribers and froze prices on all existing plans for current and future customers.

On July 27th, we then launched 5G services, offering faster network access to more than 12 million Canadians in the Greater Toronto, Calgary, Edmonton, and Vancouver areas, as well as in other major cities across Ontario, BC, and Alberta. This 5G rollout will progressively expand to other markets over the next months, as is the case for Videotron 5G deployment in our own province of Quebec, which is proceeding as planned.

Capitalizing on the new MVNO regulatory framework introduced last year by the CRTC, as well as on its recent rate decisions, we just recently announced the launch of our MVNO service and the extension of the service areas of our Videotron, Fizz, and Freedom Mobile brands throughout Canada. This phased expansion will make our service available to millions of additional Canadian consumers, thereby giving them access to more choice, better service, and lower prices.

Speaking of lower prices, we could not be prouder of the most recent Statistics Canada monthly Consumer Price Index, or the CPI report, demonstrating the clear impact of Quebecor strategies on the decline of wireless service prices in Canada. Between September '22 and September '23, the CPI rose by 3.8%, but the wireless component of the index fell 12.9%.

Since April '23, when Videotron acquired Freedom Mobile, wireless prices have declined by almost 20%. Clearly, we are delivering on our commitments to Canadian consumers. Lower prices for these most essential services must be a fresh air for Canadian families who are facing rising prices on all fronts. It also shows that there is a sizeable market opportunity for us, with a product of equivalent quality at a much lower price, which generates significant EBITDA and cash flow.

Now on the topic of wireless, we recorded 89,000 wireless net adds in the third quarter, 53,000 more than in the third quarter last year, and 40,000 more than in Q2 this year. This impressive performance is clearly the result of Freedom's improving network, expanded connectivity, and more competitive market positioning, all of which were only implemented midway through the quarter and also due to the strong performance of our 100% digital brands, Fizz and Konnect.

As expected, wireless ARPU decreased slightly, which is mainly attributable to dilutive effect of Freedom prepaid services. Turn rate on postpaid customers increased 0.1% this quarter, again, due to Freedom's dilutive effect. That said, Freedom's churn rate is starting to come down with all the initiatives taken since the acquisition, a trend that should accelerate as we are committed and focus on improving quality, service, performance, and lowering prices. Wireless revenues doubled in the quarter, and wireless EBITDA reached $232.5 million.

Turning to broadband, we posted 5,000 net adds this quarter, excluding third-party resellers in a very competitive market where our competitor keeps offering lower Internet prices in Quebec than in the rest of the country. Year-over-year, growth reaches 80,000, which includes the acquisition of 61,000 VMedia and Freedom Mobile customers in Q3 '22 and Q2 '23 respectively. Despite this very competitive environment, we continue to be very disciplined in our pricing strategies, which has translated in Internet ARPU improving $0.38 over the last year, allowing us to overcome the dilutive effect of Fizz and lower plan mix.

Through price optimization, improved brand positioning, and church management, and with continued mitigation of customer decline in traditional services, we continue to generate growth in our wireline services revenues.

In a market characterized by ongoing cord-shaving and cord-cutting, we managed to slow this trend down in television for its sixth consecutive quarter by optimizing the positioning of our brands and the pricing of our illico and Helix platforms, thereby improving ARPU. Most notably, we managed to keep our television revenue stable despite these strong market pressures, built our reputation for the unmatched quality of its customer experience is well established.

In this year, Leger reputation survey, Videotron was again ranked the Most Respected Telecommunication Company in Quebec for the 17th time since 2006. Also, Fizz placed first for online experience in Canada's telecommunication industry on Leger's WOW Digital Index for the fourth quarter -- I'm sorry, for the fourth year in a row.

And adding to the list, in another Leger survey conducted between August 1st and August 7th, '23, Quebecor has raised Videotron as a telecommunication company with the best customer service. With twice as many respondent ranking, Videotron first as its closest competitor, confirming the undeniable strategic advantage we have built through the years. These results clearly explain why our competitors have no choice but to rely on unsustainable pricing strategies in Quebec, hoping to pile on customer ads but without any significant revenue growth.

Turning to our Media segment. Our third quarter results continue to be impacted by a very difficult advertising market that shows no signs of improving anytime soon, and a static regulatory environment that continues to put us at a disadvantage in our fight against the web giants and the national broadcast. Group TVA experienced a decrease of $12 million in revenues and $2 million in EBITDA for the quarter as compared to last year, adding up to a cumulative EBITDA loss of $11 million after nine months this year compared to a positive $12 million EBITDA over the same 9 months period last year.

As you know, the audiovisual and media landscape throughout the Western world is undergoing profound and unprecedented changes as a result of the globalization of television viewing, driven by the proliferation of on-demand digital broadcasting platforms and the tectonic shift in advertising spending to the web giants. These are no short-term changes, but a long-term trend that is reshaping the broadcasting ecosystem.

For over 10 years, we have been telling government bodies and regulators that the situation is dire and urgent. Canada's private media companies must be able to operate in a modernized ecosystem that can adapt to a borderless digital world. More than ever, this demands regulatory relief, flexibility and tax credit that more adequately and equitably reflect the conditions facing broadcasters and producers in the television industry. The fact is that not only has nothing changed, but the situation is now worse than ever. A lack of consideration for our industry, coupled with the mounting challenges it confronts, has forced us to take unprecedented actions.

The deficit TVR Group is currently running is simply no longer sustainable. We have a responsibility to correct the situation. TVR has historically been an important vehicle for Quebec culture, language and news. We have a duty to preserve it and ensure its sustainability. The necessary measures we announced last week will change the way we do business to withstand the market pressures and face the competition.

We will refocus our activities, reduce our operating costs and concentrate on the strength that sets us apart and makes TVR Quebec a favorite television network. Our goal is to be able to continue offering viewers original Quebec content, to continue investing and to bring all Quebecor's reliable coverage of news and major sporting events.

Finally, our Sports and Entertainment Division maintains its momentum with revenues and EBITDA of $60 million and $40 million respectively in the quarter. Major shows, including Peter Gabriel, Morgan Wallen and Andre Rieu, were great successes and overarching champions. The Remparts of the Quebec have launched a new season drawing record audiences.

I will now let Hugues review our detailed financial results.

Hugues Simard

Merci, Pierre Karl. On a consolidated basis, in the third quarter of 2023, Quebecor recorded revenues of $1.4 billion, up 24%, EBITDA of $624 million, up 21% and cash flows from operations of $482 million, up 20% from the same period last year.

Our Telecom segment generated $454 million in cash flows from operations, a 19% increase compared to the same quarter last year. EBITDA also increased 20% at $590 million and EBITDA margin stood at 48%. Revenues reached $1.2 billion, up 31% compared to the same quarter last year. In addition to Freedom Mobile, which accounts for most of the revenue growth, the Videotron and Fizz brands continued to deliver growth in both wireless and Internet revenue -- service revenues rather.

On the OpEx side, the increase of 46% in the quarter compared to last year is due to the consolidation of Freedom Mobile, of course. As the cost containment initiatives in Videotron and Fizz continue to pay off, translating into our increasing and industry-leading EBITDA margins.

Telecom CapEx spending, excluding the acquisition of spectrum licenses, was up $28 million as compared to the same quarter last year. This variance is due to the addition of Freedom Mobile and to higher investments in key initiatives such as LTE Advanced and 5G, network extensions and geographic expansion on all markets.

Our Media segment recorded revenues of $166 million, a 2% decrease, and EBITDA of $21 million, a 17% increase compared to the same period last year, attributable to the excellent performance of our digital and out-of-home activities. Our Sports and Entertainment segment revenues grew 4% to $60 million and EBITDA grew 18% to $14 million in the quarter.

Quebecor reported a net income attributable to shareholders of $209 million in the quarter, or $0.91 per share, compared to the net income of $178 million, or $0.76 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 $202 million, or $0.88 per share, compared to an adjusted income of $175 million, or $0.75 per share, in the same quarter last year.

For the 9 months of the year -- for the first 9 months of the year rather, Quebecor's revenues were up 17% to $3.9 billion and EBITDA was up 15% to $1.7 billion. EBITDA from our Telecom segment grew 16% to $1.7 billion, an improvement of $234 million over last year. As of the end of the quarter, Quebecor Inc.'s net debt-to-EBITDA ratio was 3.39x, down from 3.52x reported at the end of the previous quarter, and still one of the lowest of all our telecom competitors and peers.

Available liquidity of more than $1.8 billion at the end of the quarter and our growing free cash flows will allow us to continue to improve our very strong balance sheet. During the first 9 months of the year, we purchased and canceled 236,000 Class B shares for a total investment of $7.1 million.

We thank you for your attention, and we can now open the lines for your questions.

Question-and-Answer Session

Operator

All right. First question comes from Maher Yaghi from Scotiabank.

Maher Yaghi

I wanted to ask you that obviously you had a much better performance on wireless subscriber loading in Q3. Can you maybe talk a little bit, and maybe if you can break your comments separately between what you saw in Videotron in Quebec in terms of improvement in the subscriber loading parameters and what you're seeing on the Freedom side since you -- any separate comments on both brands would be great.

And on the second question I wanted to ask you is, on the leverage side, we continue to see good paths for lower leverage. What is your expected level that you feel you want to achieve? And then, when you think that will be attained in terms of timing?

Hugues Simard

On your first question, so for the loading -- for the wireless loading, so starting in Quebec, my comments would be that continued growth in Quebec. I mean, our momentum basically very similar to what we've been experiencing over the past few quarters. Fizz performed very well, and so did Videotron. So, more of the same, I'd say, a very, very good quarter, a very favorable back-to-school season for us in Quebec on both of our brands. So, certainly continued momentum and continued increased loading in both of our brands in Quebec.

In the rest of the country for Freedom Mobile, a couple of comments. It was a little bit, what we call, sort of a 2 -- a quarter in 2 steps. The beginning of the quarter, before we launched some of our plans and some of our remedies was perhaps a little slow, sort of following the sequential last quarter. But then, the reaction and the reception from our various roaming plans, from our 5G, from our various initiatives to keep, from the seamless hand-off, from the various initiatives that we've put in place to improve the experience and the quality of our network has really resonated, I would say, with the customers in Ontario and the rest of the country.

And that really, really turned on the momentum, and we finished the quarter quite strongly as you can see. And that bodes very well for the rest. I mean, we always said, and I think I'd point out as well, Maher, that it's a tribute to our discipline. We always said, the last quarter, I think we said that we were -- we needed to put in place -- we had a plan and we were focused on executing this plan and putting in place the various building blocks that were needed to relaunch Freedom's growth, and market share fight in the rest of the country. And I think we've delivered on these building blocks, and the customer reception has been really good. So, that's sort of the conclusion of our very strong loading.

Pierre Karl Péladeau

On your second question, Maher, I guess that we should say that, for the last 25 years, I guess, since the -- almost 25, since the acquisition of Videotron. You will probably remember that the leverage was pretty high, 7x and even more. Our mission and objective was to reduce the leverage. And we've been able to do it despite the fact that we bought our partner's position, Caisse de depot, they're at 45% with the cash flow that was generated with the company. We started and participate in auctions to buy spectrum and build a wireless network and many other things. And despite all this, obviously for the most recent acquisition of Freedom, we were still focused on reducing our leverage. And this is what we're doing. And we are looking and trying to achieve an investment grade position. And we found that not really fair when our leverage is one of the best, it's not the best, maybe to the exception of Cogeco, but I'm not completely sure out of the industry.

So, Telus has 3.8x, Bell has 3.5x, just read on the Rogers report that the 4.9, looking to have 4.8. Yes, we are at 3.29 or something like this. We're looking to go -- to move forward and reduce it. And there is no reason why we're not going to be able to do so. You certainly know, but this is an industry trend that auctions are taking place right now. So, will we be able to continue as strongly as we were for the last two quarters? I should say that probably not. But we will keep our objective to do so, making sure that we're going to have the proper spectrum to continue to grow our business, improve all the time and offer the best product in terms of quality and prices.

Operator

The next question comes from Jerome Dubreuil from Desjardins.

Jerome Dubreuil

We've learned a lot about the environment where you're going to be evolving in the next year. We've had the MVNO rates decision recently. We have had the fiber access rates as well. Is it fair to say that now that the environment is pretty much set for at least probably next year, is it fair to say that you can probably accelerate some more initiatives on the Freedom side? Maybe I'm thinking of maybe bundling or other initiatives.

Hugues Simard

As you know, we already mentioned quarters before that this is what we're looking for. We said that obviously there's many markets. It's not -- and I remember, when the -- in front of the Competition Bureau, some people were saying that they are not going to be able to succeed because they do not have the capacity to bundle services.

First of all, we should say that it's not completely true. And as you just mentioned, the regulatory front provides our capacity to do so. I guess that we have tools. And if I refer to what the President of the Commission said, this is what in the FTTH decision, that's really what the Commission is looking for. And we find that this is certainly a very favorable environment for us to moving forward.

Yes, we're looking to get bundling services. As you know that we already bought VMedia, which is already offering Internet and cable distributions. Then with our wireless services, we have now the capacity to offer even larger bundled proposals. So this is what we're looking for. We're going to do it in proper phase. I mean, by this we would like to continue to offer quality products. As you know, maybe that it's not as simple as looking to do it, we have big systems behind. We want to make sure that we're not going to create any mistakes. We're not going to create customers in satisfaction. We've been always looking and considering this is the most important thing for us. But certainly, again, we have the tools to do so. And we're looking to move forward in the quarters to come.

Jerome Dubreuil

And maybe a follow-up to Maher's question, looking at the deleveraging, I think that was probably one of the highlights of your quarter. But is it too soon to start already talking about the eventual buybacks? Or are we maybe more focused on what's going to be happening in terms of network deployment? And we'll see after the spectrum auction, or we can already start thinking about this.

Pierre Karl Péladeau

Well, I think that we used to have kind of a policy, which is a balanced policy between buybacks and dividends. And again, reducing our debt, because what we're looking for is to make sure that we're going to be able to save on our interest costs while updating our investment grade pilot. So, again, it's a matter of balance. And we've been disciplined. We've been looking at all those avenues. And this is of importance for us that we're not going to focus or favor one to the detriment of the others.

Operator

Next question comes from Stephanie Price from CIBC.

Stephanie Price

I just want to touch on CapEx here. It's come in below I think Street expectations over the last two quarters. Can you give us a little bit of color around the ramp-up of the CapEx as you make network investments at Freedom?

Hugues Simard

Sure. Hi Stephanie. Yes, I mean as we said last quarter, this is -- sure, there will be a ramp-up, but there will be a gradual ramp up. We -- it was important for us to, as I said earlier, to execute our plan in a very disciplined way, meaning that it is important for us to focus right now on the -- on putting through the remedies that will ensure that we keep improving performance and service levels and that we can continue to build market share. So in -- at Freedom, I think it was important for us to start by re-questioning and making sure reprioritizing all of the various needs for capital. And I think that's what we've been doing.

And we are focusing on improving the networks on taking care of the black spots, for example, and ensuring that our quality continues to build up. But at the same time, as we had said, we make sure that through our roaming agreements and through our MVNO agreements that we were also in a position to continue to offer the best network to our customers as we are continuing to address the issues with the network. So all of that to say that this -- as we move along in this reprioritization, and I think it's a necessary thing to do, not to just spend right, left and center without much analysis.

And you will remember that, that's certainly what we've been doing in Quebec and Videotron for the past few years, re-questioning all capital investments and optimizing our investments and focusing on the revenue generating and on the strategic projects like LTE Advanced, which we are speeding up in 5G, which we've launched and network extensions. So all of that to say that we feel in a pretty good position in terms of CapEx. That's allowed us to -- while continuing to invest the network to continue to generate very strong cash flows. And to be in a good position for the next wave of investments, which obviously will come. We talked about stability for a 12-month period. And then we'll see over next year in the various next phases of investment at Freedom and at Videotron. But for now, we feel that our CapEx levels allow us to focus on the important stuff.

Pierre Karl Péladeau

You will probably remember Stephanie, that in the previous auction, the 3,500 where we participated and bought over $800 million of spectrum, 400 in three provinces, Ontario, Alberta and British Columbia and in fact -- in considering that we will enter the Canadian market. One of the most important thing was, WOW, you buy spectrum, you have 7 years to build. So contrary to some our competitors in front of the regulators saying that they don't want to build, they're not going to build.

They're going to use roaming agreements. What we said -- what we're saying is that, yes, we're going to obviously use roaming agreements, but we will continue to build, and we will deploy our network. The interesting thing is that you do not have two years to do so. We have 7 years. And as just mentioned, we will continue to be disciplined. Some people said 5G is at the end of the world. I remember two, three years ago we said, well, 5G is the thing that happened after LTE and after 4G. 4G was something that happened after 3G. We didn't have a revolution in the wireless industry. So we are considering that.

Obviously, we're going to enhance our network and provide quality and new technologies to our customers. But there's no such a rush that other companies have been doing. In fact, as you probably know, worldwide manufacturers of 5G equipment are just also saying that they don't -- they're not able to meet their own objectives because all telephone providers have been slowing down their deployment of 5G around the world. So I'm not saying that we're going to slow down. But we're not going to rush because there's no need to rush. We will continue to deploy our network in due time with proper discipline.

Stephanie Price

All right. And maybe just one follow-up on ARPU. Obviously, prepaid Freedom impacted it in the quarter. Just curious how we should kind of think about the puts and takes for the remainder of the year and into fiscal '24 as you think about some of the other initiatives that you're rolling out like 5G and bundling?

Hugues Simard

Sure, Stephanie. As we've said from the beginning, our focus is on profitability, not on ARPU. We said we're in this market to succeed -- to build market share in a disciplined way, as Pierre Karl just said but to build market share and continue to compete. And that's obviously going to put pressure on our view. I mean we need to maintain. We are the fourth player in English Canada. So clearly, we need to maintain as we are building and enhancing our network. We need to maintain a price advantage, and then that's what we're doing and that obviously puts pressure on ARPU. But I think this is nothing unexpected.

And it's certainly -- when we focus on profitability, I think you'll see that we're delivering the goods. The other put on ARPU is obviously Fizz in Quebec, which is performing very, very well. And we've had this course for many years, as you know that it dilutes our ARPU a little bit being a lower price, lower cost of operation, which maintains our margins. So I think all in all, as we're focusing on the bottom line, and I think we're showing that from our results that we're succeeding at it. And ARPU is -- and as we've said, we don't expect ARPU to go up. Some of our competitors have expected it and good for them. But in our case, I think we can be, and we're proving that we can be successful by focusing on profitability as opposed to ARPU.

Pierre Karl Péladeau

We will be taking EBITDA operational costs lower than our competitors. This is what we've been doing for years and years and years. In fact, probably what [indiscernible] is all about is since the inception of the acquisition [indiscernible], we will continue to do so. And at the end of the day, I would say the proof of the pudding is the eating. That mean by this you've been seeing the EBITDA on an increasing mode for almost since the time we acquired the company. We will continue to do so.

Operator

Next question comes from Matthew Griffiths from Bank of America.

Matthew Griffiths

I just wanted to follow up, I guess, first on some -- just the comments about, I guess, Freedom's net adds and the kind of exiting the quarter at a better kind of cadence than you entered the quarter in. And I was wondering if you could shed some light on to what extent that increase is being generated by kind of the elevated gross adds as you move to the latter part of the quarter or if you're seeing kind of churn benefits from the work you were describing on the network and from changing plans, keeping customers, maybe they migrate within them?

That would be helpful. And then just on the Internet side. Obviously, I think you mentioned the competition you're facing within Quebec and the promotions, it's obviously having an impact. I was just -- it seems as though this is going to be the strategy moving forward from your peer. So to what extent do you feel confident that you can kind of keep the net adds in broadband, especially positive and maybe even retrain some stronger growth going forward. That would be helpful color.

Hugues Simard

Yes. Thanks, Matt, for your question. So on your first -- on your Freedom question, it's actually a little bit of both, I'd say, gross adds, yes, picked up certainly as reception to our various plans and nationwide and in roaming -- the packages was improving. But also churn is something -- and we said that last time, and I think we should repeat it now. This is something we're keeping our eye on. Freedom's churn has historically been very high.

They were -- they've historically actually done a fairly good job as we said, picking up subscribers, especially focusing on people who wanted to -- you wanted a fair service and a fair performance at a good price. But we had a hard time keeping these customers due to network issues or other issues. So churn is clearly something that we identified very early on as a huge lever for us going forward. And we are in putting in place the various pieces that we talked about earlier, not only improving the network, but also these various plans that we talked about has really an opening up a seamless handoff and [indiscernible] et cetera, will keep decreasing churn.

And we're already seeing the first results from that. And as we said in our prepared script, we certainly expect the churn reduction to continue to accelerate because as we're focusing on the major irritants, and it's important for us to keep -- because as we said, we keep doing a good job on the gross. Now we need to do a better job on the net and reduce churn. But we're really focused on this, and we're confident that, that's in the right direction.

Pierre Karl Péladeau

Where we be -- will we stay in a competitive environment? Certainly, Matt, but we are prepared to face that. And what we've been seeing on the competitive front is they will probably may be gaining customers with what we called as our -- on the script or prepaid script at an unsustainable level. And probably when we look at the numbers, we have higher revenues, but we had lower EBITDA. So does that mean that they're buying or customers?

Well, asking the question is maybe answering it. But we certainly have the main logic and the main desire to maintain our operational costs as efficient as possible, and we will continue to do so. And again, regarding what I said regarding our own dividend policy, I mean, we can ask ourselves with the -- the reduced EBITDA by our main competitor, will they be able to continue to increase their dividends? Well, that's a good question. We'll find out.

Operator

Next question comes from David McFadgen from Cormark.

David McFadgen

A couple of questions. To me, I assume that greater than 50% in the net adds are coming from Freedom?

Hugues Simard

Well, we don't -- David, thanks for trying. Yes, I think if I remember well, you asked that very question last time. We won't tell you, David. But it's from both sides, okay? Very good performance on both sides. Both Freedom, Fizz did well and Videotron did well. So you know what, good momentum, as I said earlier, in Quebec, continued momentum in Quebec and good performance of Fizz, which had a bit of a put on ARPU as we talked about, but also very good towards the latter part of the trimester of the quarter from Freedom as well. So a very balanced loading.

David McFadgen

Okay. So if we just look at Freedom for a second, are there any plans in particular that are really driving the net adds of Freedom that you could call out or not really?

Hugues Simard

It's -- we know that our nationwide programs were very successful, just addressing some of the network issues from the start with the seamless handoffs in 5G and all of that, that's also brought a lot of people to us. Yes, U.S. and Can, yes, our Can-U.S. program, yes, that also fared very, very well. That also, by the way, has a bit of a put on the -- on ARPU in the sense that usage revenues are a little bit under pressure, but it's -- I think it brought to the market something that others were not offering and it's differentiated us and it was very well received, yes.

David McFadgen

Okay. So just on the MVNO front, where are you now expanding the MVNO? And where would you expect to be in the next year?

Pierre Karl Péladeau

Well, we mentioned an announcement that we're moving forward. We are at the end of the process regarding establishing the prices with the commission. We look forward to make sure that we're going to be able to connect with [indiscernible] in different locations. So we're moving ahead and establishing where we will focus in first plans because if I refer to my previous answer, we will start making sure that we will build in the years to come. So we will certainly prioritize those areas.

But that doesn't mean that we're not going to offer MVNO elsewhere. So it's a mix of making sure that we're focused on -- I mean, by advertising our products on the areas where we know that we will build in the years to come and another areas where the buildup will take probably a longer term. So if I was to refer to the Stephanie question in terms of capital expenditures, deploying the network, and we want to make sure that it will fix and it will be balanced with our MVNO marketing strategy.

David McFadgen

Okay. And just on the CapEx question. Can you give us an update on this year to be? And then if you could give us an indication for next year?

Hugues Simard

I think you got cut off a little bit. Can you repeat the first part of your question, Sorry, I know you're asking about next year, but what was the first part of your question?

David McFadgen

Just give us an update on CapEx this year.

Hugues Simard

Well, last time we talked about stability for the rest of the year as compared to -- and we're certainly still in that direction. Next year, as we said, we will gradually continue to invest, as Pierre Karl said. And so we'll be -- yes, there will be -- our network, and we've never hit that, Freedom's network needs investment, and we will continue to expand our network. But we're -- as we've said, as Pierre, we're in no rush to do that. So this will then -- will be done gradually and over time so no step function. As we've said all along, CapEx, there will be next waves of investments in the next 12 months, let's say. But certainly, no material step functions to be expected. So gradual investments and disciplined investment will continue.

Operator

Next question comes from Vince Valentini from TD.

Vince Valentini

I just need to clarify a couple of numbers. Hugues, I'm not sure I caught you on wireless EBITDA in your prepared remarks.

Hugues Simard

Well, $232.5 million in EBITDA in wireless EBITDA.

Vince Valentini

Do you have -- are you willing to give us CapEx for the wireless segment in total?

Hugues Simard

No. Sorry.

Vince Valentini

No problem. The churn number up 0.1% year-over-year. Just to be clear, that's only because you didn't include Freedom in Q3 last year and now you're including it or are you saying that?

Hugues Simard

That's correct. That's right. That's exactly it.

Vince Valentini

If you go from what they had been doing under Jazz ownership to what it is now, do you have those figures? Like, do you think you improved churn because of all the initiatives you put in place?

Hugues Simard

Absolutely. As we said, yes, absolutely. By far, when we looked at -- and God knows that we had time to look at this, while we were waiting for the various approvals from everyone, we were looking at what the issue, the highest levels of complaints and why people were leaving the network and the reasons for churn. And digging down below just the first line of yes, network issues, people getting cut off leaving the service, the coverage area was by far the number one. So seamless handoff really addressed this.

Our roaming package and then roaming was a big issue, which was hugely expensive. And there were no -- as you know, Freedom wasn't competitive on that front. And so that's the second thing. Third, as we keep addressing these, what we call black spots as when we introduce -- all of these various introductions that we've made all of these various packages that have resonated with the client. I mean this has really allowed us to start right away over the summer and certainly -- and now it should pick up in the fall, as we said earlier, to reduce churn. So yes, I mean, we are delivering on churn reduction, yes.

Vince Valentini

Okay. Just two more clarifications. So the 89,000 wireless sub adds this quarter was clearly quite strong versus I think what most of us expected. Was there any huge skew in there of prepaid or is most of the 89,000 postpaid?

Hugues Simard

No, it's mostly postpaid yes, for sure. Yes. I mean, prepaid -- I mean not that prepaid isn't doing well. I think we're faring quite well on prepaid. We don't focus on that all that much, but it's a good business. And it's done well as well, but most of it is on postpaid.

Pierre Karl Péladeau

And we certainly reversed the trend. The previous, as you know, when prepaid was the big stuff on the Shaw ownership. And since we acquired, we reversed that trend.

Hugues Simard

Yes. And as a matter of fact, for Q4, that's something you will remember that Q4 last year, Freedom did -- I was about to say did very well. I'm not sure that's the right term but anyway, generated a lot of prepaids at low prices in Q4. So that's something we're going to have to cycle over, but we've definitely reversed that trend as Pierre Karl just said.

Vince Valentini

Last one is on the TVA restructuring, it seems quite large. Have I missed in any of your disclosures, any mention of what the severance and restructuring costs will be and then what the recurring savings are on the other end of that or do we just need to take that number of jobs and multiply by whatever estimate we have?

Pierre Karl Péladeau

Well, Vince, the people involved in the restructuring are not -- are not all full-time employees. So the indemnity will be different. And we keep this numbers, those numbers for our negotiations that is going to take place with the union. Again, it's unfortunate that we were forced to do this. And we need to do it. It's our responsibility to do it. But there is proper environment or proper locations to discuss this and respect with what we can call our social partner being the union.

We look forward to come shortly at the table and to establish what we will consider being a generous offer because we've been respectful, and we need to recognize that they've been doing for so many years, a good job. We're, by far, the number one network, where we have over 40% market share. For sure, it's a declining market. But everyone here has been working very hard. If we were able to establish this level of market share, it's because of teamwork, and we need to recognize this. But we will certainly have more details for you at the next conference call.

Vince Valentini

No, no. Totally fine Pierre Karl. I just want to make sure I haven't missed the numbers so much.

Operator

Next question comes from Tim Casey from BMO.

Tim Casey

Just can we just go back to the spending question, Hugues. I mean prior to the closing of Freedom, you had mostly suggested that $200 million was kind of a run rate CapEx. Can you just help us out? Is that in the numbers now or have you sort of adjusted your thinking there and you're going to wait and see, get a better feel for the business, get behind spectrum and then reassess that number. Just wondering if that's still a valid thing for us to consider.

Hugues Simard

Tim, yes, it's actually -- that's the number we -- that's the guidance we gave out at the very beginning. Now as I said, I think answering Stephanie's question, we really started by really reassessing everything. And like as people do when you make an acquisition -- and so we focused on the important stuff first. And yes, we're certainly not on the $200 million run rate at this point, as you can see. Will we get back to it in the future, perhaps, but in steps. So yes, to answer your question, the $200 million has been revised probably on the -- a little bit lower side than that because we're certainly not on a $200 million run rate right now, no.

Operator

Last question comes from Drew McReynolds from RBC.

Drew McReynolds

One for me. And I guess it just probably floats above all wireless questions here. And maybe, Hugues, you can just help us how to think about this. We're all trying to triangulate, I think, you're loading with ARPU and margin. How should we think about how, I guess, margin evolves as over the course of time, presumably you will have more loading either on kind of Rogers roaming agreement or the MVNO framework? And is it important for you to essentially target a certain kind of EBITDA or margin in the wireless business and therefore, kind of manage your loading mix? Like how are you approaching that? That would be helpful.

Hugues Simard

Hi Drew. So well, as we said earlier, our focus is clearly on profitability. So loading, we are -- we're doing a little bit of what you're describing. We are triangulating actually. That's what we're doing in trying to maximize, of course, loading and market share gains by -- but at profitable levels and having negotiated some agreements that allow us to keep our costs down and also with MVNO rates that are coming in at a much more reasonable levels than what was in the past. So I think this will allow us to continue to push on loading but while margin -- while we preserve and while we preserve margin. ARPU, as we said earlier, that's sort of the -- probably the third piece of the triangle that is less. For us, it's more of an arbitrage between loading and margin, to be honest, as opposed to ARPU.

Pierre Karl Péladeau

Well, I think the last question was by Drew. So thank you very much attending this conference call. Since we're not going to talk to each other before next in February, I know I've been a little bit in advance, but wish you a Merry Christmas. Thank you all.

Operator

Ladies and gentlemen, this concludes the Quebecor Inc.'s Financial Results for the 2023 Third Quarter Conference Call. Thank you for your participation, and have a nice day.

For further details see:

Quebecor Inc. (QBCRF) Q3 2023 Earnings Call Transcript