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.
Ladies and gentlemen, welcome to this Quebecor conference call. I am Hugues Simard. I'm the CFO. Joining me to discuss our financial and operating results for the second quarter is Pierre-Karl Péladeau, 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 11 November 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 Karl.
Merci, Hugues and 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, as I said, Minister Champagne and CRTC Commissioner Scott exercise and efforts to provide a reliable response plan should Canadians face another unfortunate telecommunications outage like the one Canada had to deal with recently. Today, more than ever, as we were clearly reminded, telecommunications represents 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 Canadians.
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 tepid, quasi-nonexistent competitive and promotional intensity, have created an opportunity in Ontario in the west 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 worrisome.
As clear evidence of our strong commitment to grow outside of 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 VMedia, an IPTV offering internet services, of course and also both regulated and unregulated video services through RiverTV. 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 CRTC 2021-130, elected to open the incumbents' wireless network for competition through an MVNO process.
Along with other telecom operators, we're still waiting for 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 Canadians. As we announced in June, we reached an agreement with Rogers to acquire Freedom Mobile, including several side 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 Shaw 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 fourth player that Canada so needs. 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 positions 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 have prevailed 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 go 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. Not having invested in crucial 5G, 3,500 MHz spectrum than 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 act, either by approving 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 stronghold of the big three, who in the meantime have been increasing their revenues and 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 Canadians. I will now review our operational results, starting with our telecom segment.
As the war in Ukraine continues, sadly, Videotron has been actively supporting the Ukrainian community by offering a six-month all-inclusive 20 GB 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 30 June . Once again, we captured the largest combined share of growth adds in Quebec with 32% for our two brands, Videotron and Fizz, according to a Léger survey.
Wireless EBITDA increased by 12% in the quarter compared to Q2 2021. Consolidated wireless ARPU for the quarter improved by CAD 0.53 or 1.4% over the same quarter last year due to higher plan 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, sorry, of our illico and Helix platforms. As a result, illico activations slowed to 33,600 for the quarter, still keeping our total video subscriber at 1.4 million as of June 30. Our TV ARPU increased from CAD 46.52 to CAD 47.74 sequentially compared to the first quarter.
All in all, we're 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 quote-unquote normal moving season in Quebec after two 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 in July are proving the case again this year.
While internet ARPU decreased by CAD 0.48 or 0.9% over the last year, essentially due to dilutive effect of fees and lower plan mix, we recorded a significant sequential ARPU increase by CAD 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 remains 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 CAD 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. I emphasize this on cash flow. It's not at 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 extension, 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 LTE equipment sales, resulting from a slower LTE growth as we optimize our two brands' pricing to improve margins. On the OpEx side, we're starting to see material reduction from the various initiatives implemented over the last year, translating into our increasing and industry-leading EBITDA margin. Telecom CapEx spending, excluding spectrum, was down CAD 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- Advanced and 5G roll-out, 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 platforms 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 variety shows such as Star Académie, 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 TVA 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 a slight 1.7%. Our digital platform increased our revenue by 19.9% during the quarter due in part to the growing popularity of TVA+. 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 was done with its radio services years ago.
CBC/Radio-Canada has been even more competitive lately, both on the air by carrying infomercials 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 family 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 societal 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 Videotron Centre. Prospects are continuing to improve with a full calendar lineup in sports and music for the fall and winter. I will now let you review our telecom and consolidated financial results. Hugues?
Merci, Pierre Karl. For the second quarter, Quebecor's revenues reached CAD 1.1 billion, down 1% from last year. Revenues from our telecom segment was down 2% to CAD 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 CAD 188 million in the second quarter, while our sports and entertainment segment grew 34% to CAD 45 million for the quarter. Our adjusted cash flows from operations increased by CAD 23 million for the quarter or 7% to CAD 361 million, once again demonstrating our continued operational and financial discipline. Adjusted cash flows from operations for our telecom segment grew CAD 39 million or 12% to CAD 369 million.
Quebecor's EBITDA was down 2% to CAD 491 million in the quarter, mainly due to the CAD 13 million decrease in EBITDA from our media segment, which is explained, as Pierre-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 CAD 6 million or 1% to CAD 488 million. Quebecor reported a net income attributable to shareholders of CAD 157 million in the quarter or CAD 0.66 per share, compared to a net income of CAD 124 million or CAD 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 CAD 162 million or CAD 0.68 per share, compared to an adjusted income of CAD 158 million or CAD 0.65 per share in the same quarter last year. For the first six months of the year, Quebecor's revenues were down 1% to CAD 2.2 billion and EBITDA was down 2% also to CAD 934 million. EBITDA from our telecom segment grew 2% to CAD 948 million for the same period, an improvement of CAD 50 million over last year. As of the end of the quarter, our net debt to EBITDA ratio was 3.27 times, up from 2.71 times reported at the end of the second quarter last year.
Mainly explained by the CAD 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 CAD 1.5 billion at the end of the second quarter and our growing free cash flows are more than sufficient to fulfill all commitments and maintain a very strong balance sheet. During the first six months of the year, we purchased and canceled 4.2 million Class B shares for a total investment of CAD 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 will now open the lines for your questions.
All right, first question comes from Maher Yaghi from Scotiabank. Please go ahead.
Bonjour monsieur, thank you for taking my question. I wanted to ask you first, quickly, the definitive agreement with Rogers, how are we doing on that? Do you have any idea or any view on when we should see it coming out? Following up on that, I wanted to ask you, Bell and Rogers indicated both that, they've been seeing a higher proportion of wireless net adds coming on the higher end side of the brand, i.e. Bell or Rogers, instead of Fido or Virgin. Are you seeing improvement in the type of customers you have coming in or are we still seeing a lot of the new adds coming on the Fizz brand? Thank you.
Thank you, Maher. I will ask, Hugues, you know, to answer the second question. I'll do the first one. It's unfortunate, you know. I try to emphasize the fact that, again, we believe that Quebecor is with a track record that we've been able, you know, to show. It's not wishful thinking. You know, we've been able to deliver significant performance for the last 10 years and in a very competitive environment. You know, we still believe that, you know, we should work with the bureau to make sure and Rogers will convince them about, you know, the strength of our proposal. Therefore, we'll keep this situation, you know, 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 or as I mentioned also earlier regarding the other aspect of the different other assets that we can line up.
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. I think one way to look at it is we're seeing the difference, you know, the average price difference between the main brands and the flanker brands as being reduced a little bit. But that being said, you know, we continue to have very good performance from our Fizz brand. We're actually, you know, seeing good performance and you saw the performance in wireless for the quarter. Very good performance from both of our brands. Yes, you know, a little bit of a better performance, I would say, by the Videotron brand this quarter as opposed to perhaps the last few quarters.
That's probably in line with what our competitors were saying to you.
Thank you. All right. Next question comes from Jérome Dubreuil from Desjardins. Please go ahead.
Thanks for taking my questions. First question for me would be that I would suppose that you have had conversations with your credit agencies following the announcement of your agreement to acquire Freedom. Probably not as big of 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?
Maybe we should talk about our credit facility renewal.
Yeah. For sure. Jérome, yes, we have obviously, you know, we have an ongoing dialogue as do, you know, all the players in the industry, of course, with our two credit agencies. You know, the acquisition of Freedom, the eventual acquisition of Freedom would certainly, you know, bring in very interesting growth potential and potential for growth of EBITDA as well and of cash flows. You know, the conversation with both agencies was very productive and they are very supportive of this transaction. We're certainly confident that we can achieve, you know, the plan without to your question, without having the need to issue equity for sure.
Okay. Great. Second question is on your VMedia acquisition. You know, we haven't got the MVNO rates yet and Rogers Shaw isn't fully settled. You know, there are many reasons that can explain that but it seems a bit early in or maybe it seems like you're absolutely convinced that either a big merger will definitely work or MVNO will be economically viable. Why didn't you think it was early to acquire VMedia here?
Yeah. It's a good question, Jérome. I think that, you know, what we should answer is that, you know, we are opportunistic. You know, this opportunity presents in front of us. I know, you know, obviously that, you know, the TPIA financial situation has not been the best more recently. The interesting thing that, you know, 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 non-regulated television. More than ever, I would say that we've been loud and clear with the CRTC. The regulation of television is unfortunately from our perspective being a factor, an additional factor, which is basically, you know, putting our hands in a kind of handcuff, not being able, you know, to propose original formula.
We need to distribute the base and unfortunately, out of the base, there is probably, you know, 99%. It's not, you know, it's not fun to say this but it is what the reality is all about. Ninety-nine percent of the different programs are not watched but we're forced, you know, to distribute it. In an unregulated environment, where we are facing, you know, the streaming services of the Americans. You know, this is a technology that could, you know, position ourselves in relatively interesting position if we were to increase the content in an unregulated environment. This is what we're 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.
Yes, it's true that it could be considered early in the process but we look forward, you know, to be able to catch on with the situation, given that, you know, it's not impossible that, you know, we can build in the future as we are expecting eventually to do in B2B, where we started as a TPIA. Since our customer base is high enough, we're considering building and moving from a TPIA to a facility-based operator. In a nutshell and, you know, I could spend more time on it but, you know, in a nutshell, this is what I can say at this moment.
Great. Perfect. Merci beaucoup.
Perfect. Next, we have a question from Drew McReynolds from RBC. Please go ahead.
Yeah, thanks. Thanks very much. Just a couple questions for me. With respect to, I guess, for you, Hugh, there's a one-time provision reversal just in telecommunications EBITDA this quarter. Just wondering if you could quantify that. And then secondly, you know, good to see obviously some cost efficiency come through the telecommunications margin again this quarter. Just wondering, you know, 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.
Thanks, Drew, for your question. Yeah, I'll take it. Firstly, there was a reversal and there was a new provision. Well, one settled and another ongoing lawsuit. There was, you know, a little bit of back and forth and provisions. All in all, when you know, net them all, it really is not material. In terms of cost efficiencies, yes. You know, as we said, you mentioned it yourself, Drew. I think we're starting to see both on the OpEx and on the CapEx side, you know, the results of our ongoing initiatives that we have been discussing with you guys for a few quarters now. But we're not quite there yet. I think you can expect, you know, the momentum to continue and see further improvement on that because we are, you know.
It's an ongoing process, as you know 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, yeah, we are still comfortable with stable CapEx for Videotron for the year 2022, for sure. Yeah.
That's great. Thank you very much.
All right. Next we have a question from Tim Casey from BMO. Please go ahead.
Yeah, a couple for me. Thanks. Good morning. Pierre-Karl, can we just go back to VMedia 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? Can you also. You know, 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? My second question, Pierre-Karl, relates to the process with respect to the Competition Bureau.
You know, I recognize you're not gonna 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, you know, your appetite for that, given that Freedom itself will lose out on, you know, the two major selling seasons in 2022 and, you know, presumably, you know, there'll be value implications there. Any thoughts you'd have on that would be interesting. Thank you.
Yeah. Good. Yeah, Tim. First of all, you know, I would say. Regarding regarding VMedia , I understand that, you know, you'd like to have more transparency. What I would say is, you know, it's non-material, so you should not expect, you know, any kind of surprise in the balance sheet or goodwill or whatever. Again, you know, what I would like to emphasize on is, you know, we were really interested in the technology that we found. This company is run by individuals in Toronto from Eastern origin connections. They've been, you know, able to get technology very, let's call it cheaply when we compare about, you know, IT costs in North America and proving at this stage, you know, pretty interesting.
This is certainly something that, you know, took our attention and for which coupled with the fact that, you know, they already have all the interconnection with the different telecom operators in many locations in Canada that give us, you know, the agility, you know, to launch a service depending on, you know, what will come from the MNO. If we were to sign a private agreement with the telecom operators, which we're still expecting to do. Unfortunately, at this stage, the telecom operators that have always been against competition are refusing to negotiate with us. They're saying that they're waiting for the framework to be established and published by the CRTC. We respect that. Unfortunately, we think that it's not in the best interest of them or of us but it's their decision.
You know, we will look forward to have an additional asset, if we need it and we will continue to be prudent. We're not gonna consider launching, you know, a full service, which will be a drag on our expenses or our financial results. We're gonna go slowly, prudently as we've been doing in the past. In terms of Competition Bureau, again, this is delicate. You know, we're not running the show. I'm not gonna say that we are in the bleachers but, you know, we are far from being on play and we're not playing directly with the Competition Bureau.
For sure, you know, we've been part of it because the Competition Bureau asked us, even before the announcement of Freedom Mobile, some statistics regarding, you know, the market, the wireless market, which obviously we answered with as much as, you know, good numbers and good statistics from the one that we've been experiencing for the last 10 years. We will continue to do so. We were in front of them, you know, making sure that they understand all the wherewithal of our plan. Are they still working on it? For sure. Are we still working on it? Yes, for sure. We will continue to work with Rogers to make sure this transaction will move forward. You know, we're not in control of the game.
It's true that depending on how long the process will take, that could have an effect on the subscriber and the commercial strategy that Freedom is now using. I guess that, you know, Shaw and Rogers should conduct their business as usual. Will they, you know, put more emphasis on Shaw Mobile than on Freedom? This we don't know. This is a matter of how they would like to be positioned in front of the bureau. These things could, you know, send a strong message to the bureau depending on the attitude that they will get or they will adopt moving forward for the transaction to close. I would guess that they. We expect them and we anticipate that they would like to see the transaction close as soon as possible.
Thank you.
All right. Next we have Matthew Griffiths from Bank of America. Please go ahead.
Hi. Good morning and thank you for taking the question. Just maybe focusing on wireless for a second. You know, maybe we've seen others in the industry have reported large benefits to ARPU in recent quarters, return to roaming being the largest contributor. You know, underlying kind of plan migrations also chipping in there. You know, maybe you're obviously benefiting less from the roaming. Maybe you could like kinda highlight a little bit about what you're seeing in terms of plan migrations, whether you're seeing consumers trying to like save on their monthly bill given the overall macro environment. You know, whether you see there being continued room to move, you know, higher as we go through the year into next.
Then also just, you know, as we look into Q3, just what, you know, what did you see in the early part of Q3, especially given, you know, the network issues that you know, alluded to with Rogers. You know, were you guys a net beneficiary of that? Do you see that continuing? Was it a blip? You know, just any kind of color on what you experienced in the market would be helpful.
Okay. Hugues , just would you answer the first part of the question? I will answer the second part. I think that, you know, what we can say is, as we've been seeing for the last few years and actually even more than a few years, I would say that's a general trend that, you know, the beginning of Q3 has been very strong. We look forward, you know, to continue in that trend. We will remain competitive. We'll make sure that, you know, we keep our fair share, as we described earlier, which has been, you know, the biggest market share of growth net adds. We will continue to do this. On the opposite side, if you have, you know, some comments on this.
Yeah, for sure. On the roaming is, as you point out yourself, Matthew, you know and we've said this in the past, we don't benefit from roaming in as much as our national competitors, for sure. As much as we didn't, you know, we weren't impacted as much at the beginning of the pandemic, well, just now, of course, we're not, you know, we don't benefit from as big a pickup as they are, as they're currently benefiting on the way back up, you know, which is normal. I think what we're seeing in the market, I mean, we continue to be aggressive. We continue to win, as you saw, you know, 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, you know, about 1/3 of the market of gross adds. We're seeing, you know, people, you know, in terms of price packages, people are, you know, there's some stability. Some people, you know, 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're seeing, you know. It continues to be a competitive market. I mean, we've said this, you know, it's been for quite some time.
We you know definitely have all the tools and all the ammunition to be able to successfully compete in this, you know, in this market that we see. You know, when we see our competitors' results, you know, we can only conclude that it's not the case in the rest of the country. For sure here, it continues to be quite competitive but we continue to win most of it. We're very pleased with the you know the continuation of the wireless market right now.
Okay, great. Thank you so much.
All right. Next, we have Stephanie Price from CIBC. Please go ahead.
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?
I'm sorry, Stephanie. Would you repeat your question? I'm not sure that I got it all.
Sure. I was asking about the wireline competitive environment and how you think about competing against fiber offerings that are in the market and whether there's a place for fiber and fixed wireless in your longer-term strategy for wireline.
Okay. I understand the first one, the first part of it. Well, you know, it's been competitive. Probably in Quebec, this is where, you know, we've been seeing the highest amount of TPIA and this is the reason why, you know, we launched an internet service out of our Fizz offering, which was, at the beginning, only dedicated to wireless. In fact, you know, what we're seeing in terms of achievement for internet has been good, especially when we couple, you know, our offer wireless and internet. We look forward to continue to do this. That would be also certainly one of our strategy that, you know, we look forward to propose, when we will be in a position to offer our services outside of our historical area, being in Quebec.
I'm not sure that I had, unfortunately, the second part of your question which was referring to a sixth competitor in wireline.
No fixed wireline.
Yeah. I was asking more about Quebec in terms of competing against fiber offerings and whether you're considering putting in place more fiber and fixed wireless in Quebec as part of your longer-term strategy.
Oh, fixed wireless. At this stage, you know, we are investing, as I mentioned and we've been doing it for the last few quarters on wireline. In fact, you know, we are through Opération Régions branchées, you know, in a position to close about 37,000 new doors, new potential, which we look forward to offer. With that, you know, we don't think that we would need fixed wireless, since, you know, we'll 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. You know, we look forward to start and in fact, you know, we already have, you know, new customers that already are connected with this new fiber.
I would say it's anecdotal for the moment. You know, we certainly gonna 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 by the telecom incumbent with the DSL technology or dishes for television. This is of great interest for us in the upcoming quarters. I don't know, Hugues, if you have anything to add.
Maybe just one comment. One thing, small thing to add, Stephanie, on the first part of your question as to the, you know, the wireline competitive market environment in light of the, you know, the fiber. Just one thing to remind you that, I mean, you know, fiber company or I mean, competition from fiber, I mean, is nothing new to us. I mean, you know, our main competitors started laying down fiber to the home in the Quebec City area more than eight years ago, you know. We also, in some cases, don't forget that in some network extensions we also go, you know, all the way to the home. Because of our technology, we can afford, in many cases, to go to the node. Economically, you know, it makes more sense for us to do that.
We, you know, depending on the competitive environment in that area, you know, we sometimes, you know, lay down more fiber. I mean, you know, I guess my point is that we've been dealing with this for, you know, for many years. I think we've demonstrated that we can successfully compete, you know, against our main competitors' very well-funded development and, you know and fiber layout. You know and the overlap is very high in Quebec compared to the rest of Canada, you know. Close to 90% overlap. You know, I think our numbers show that, you know, we're quite successful in competing with them on that front. I mean, for sure it continues to be competitive in wireline as well.
Again, as to our comment on wireless, you know, we believe we have all the right tools to win there.
I would add also, you're right to focus on the fact that, you know, the fiber expansion out of Bell had been there for many years. If you look in light of, you know, the quarterly results released this morning. I mean, you know, the IPTV increase was not significant. In fact, you know, what we've been seeing is certainly a kind of flat number. From the internet, you know, their increase, we don't know where it comes from. Is it coming from Quebec or Ontario? What we're seeing basically in Quebec regarding the competitive aspect is a matter of price. It's certainly not a matter of quality. I know Bell is making big noise regarding 5G or Fibe or whatever.
You know, we certainly have a very strong technology, whether it's coax and 5G, which we also offer to our customers. Basically, the main driver here is pricing. When we survey our customers, when we survey the market, the first reasons, you know, to change or to move from one supplier to the other, from one company to the other, will be the pricing equation.
Thank you for the color.
Great. Next question comes from David McFadgen from Cormark Securities. Please go ahead.
Oh, great. Thanks. Yeah, I have two questions. First of all, Hugues, I was wondering if you could comment on the debt that you've 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. Secondly, just on the internet net adds, you know, they're flat in the quarter but you indicated that in July you're seeing a pickup and I was just wondering, are you seeing a pickup similar to last year? Thanks.
On your first question, David, the debt that we've arranged that we had committed for the Freedom acquisition is actually to give ourselves flexibility. It is, you know, it's bank debt but it's bank debt over a certain number of different lengths in time to be assured to have some flexibility over the next few years to repay that debt and/or to you know replace it with a different instruments should the markets evolve and you know and get better in certain other areas. We've afforded ourselves, I think, some very interesting freedom on that front, no pun intended, to make sure that we've 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, you know, with that phenomenon that we used to talk about pre-pandemic of the, you know, Q2 having a little bit more disconnect and then reconnect in Q3. We are seeing this more this year, certainly as compared to last year. Our numbers in July so far look, you know, pretty good. You know, are clearly proving that this is the case again this year.
Okay. Just to follow up on the bank debt. There's no requirement that you would have to finance a large amount, say, within the first year or so. You've got time. More medium, long-term kind of debt financing.
Yes, that's correct. We have a bunch of yes. It's, you know, some we've 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.
Right. Okay. All right. Thank you.
Next, we have, Vince Valentini from TD Securities. Please go ahead.
Yeah, thanks. First, I just wanna clarify. 90% of your cable territory is passed by a fiber to the home solution from the telcos. I just reiterate that to you 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.
Yeah. Yeah, I know. It was brought to my attention by one of your colleagues and, because I didn't listen to the call, unfortunately. Yeah, so clearly, in Quebec and we've been saying this, you know, it just proves what we've been saying for many years, you know. The situation, the competitive situation and even the technology situation is different here because, our overlap is 87%, you know and I checked it again with our CTO this morning. So when they referred to 56%, I assumed that that was referring to the whole of Canada. So clearly, you know, we are. It makes sense, Vince, because as you know, they started here, you know. They started in Quebec City and Montreal before going to Ontario and elsewhere.
The overlap is much higher here than in the rest of Canada for sure.
Great. If you said this in your opening remarks, I apologize, I missed it. Did you give any clarification on retail internet adds in the second quarter relative to wholesale and retail or where you may have lost customers but the retail was positive?
No, we did not give that level of detail but it certainly is true. The situation that we mentioned a little bit last quarter certainly continued this quarter. Not as much but it's sort of that phenomenon. It still exists for sure.
Okay. 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'm not aware of them saying anything. They've rejected the deal prior to Quebecor getting involved and they said the remedy proposed then was not good enough. Since then, to my understanding, they're just investigating and deliberating and they haven't really said anything definitively. Are you aware that they've come out and actually said they've reviewed the terms of your deal and they don't think it's good enough for competition?
Well, this is our understanding. Do we have it from the horse's mouth? The answer is no. Again, you know, this is why, you know, we're still working on it and we wanna make sure that, you know, we will bring the arguments to convince them that, you know, you will remember at certain point, you know, they said, well, they were not gonna be in a position to bundle. We are emphasizing the fact and, you know, regarding the file with VMedia, we now are in a position to do so. We negotiated but we don't want to go too much in details but arrangement with Rogers, where we will also have access, you know, to wireline.
Unfortunately, as I mentioned earlier, I would not be able to give details in terms of negotiation but what we're looking for is to be able to map as many issues that were raised by the Competition Bureau and finding out, you know, how we can give them a positive answer that for them will be a key element to move forward and get their approval.
Yeah. Thanks for that clarification. That's it for me.
All right. The last question we have in the queue comes from Aravinda Galappatthige from Canaccord Genuity. Please go ahead.
Thanks for taking my question. I wanted to go back to the cable margin. You know, I think it was mentioned earlier. It was definitely a meaningful, you know, strengthening, I think of about 150 basis points. Can you maybe give us a little bit of a breakdown in terms of, you know, 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? When you look at the second half, you know, can we sort of anticipate similar magnitude improvement? I ask 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 lower base as well.
Any color on that would be helpful.
Yeah, yeah. Thanks for your question, Aravind. I just wanna make sure maybe on the first part of your question, I think you're talking about cable margin or wireless or both? I'm sorry. Maybe I misunderstood the specific of your question.
Yeah. I mean, obviously, what you reported is the total telecom margin improvement but I was trying to get a sense of s ome proportion of it was sort of the core cable business as opposed to wireless.
Okay. Well, I mean, you know, a good chunk of it is obviously on the wireless side. But the margin and, you know, I think we've clearly given the numbers. I mean, 12% more EBITDA in wireless. But we're also pointing out that on the wireline side, that you know, 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, you know, draws a little bit to the margin. If you look at service margin i n wireline, there's an improvement this quarter, finally. Knowing this is what we had talked about, that we had some struggles there as we were investing in a number of platforms.
Our initiatives of cost reductions had not fully gone into place. I think in this quarter, you're 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 on the wireline margin issues that we had talked about in the past, I mean, you're finally seeing an improvement in margin, 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 you know, bringing out or bearing fruits, perhaps I should say. We're certainly more optimistic on margin for the next couple of quarters.
Thank you. Just a quick follow-up on the buybacks. I mean, you stepped up buybacks in Q2 relative to Q1. You know, 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 kinda continue unabated? Thank you.
You know, on buybacks it is, it's not, you know. It is something as we said in the past, where we are, you know, opportunistic and we believe that our stock is and we continue to believe that our stock is undervalued. So, you know, it's hard to see, you know or to decide today and we have certainly haven't decided today what we're gonna do. We should, you know. I don't think it's unimaginable that we that we can think of continuing buybacks, you know, for a while as our stock continues to be undervalued.
Great. Thank you.
Good. We thank you very much all and we are expecting to talk to you again after Q3. Thank you and have a nice day.
Thank you.
This concludes the Quebecor Inc.'s financial results for the 2022 Q2 conference call. Thank you for your participation and have a nice day.