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Quebecor profit rises 21% on gains at TV, cellphone units

Quebecor headquarters in Montreal

Robert J. Galbraith/The Globe and Mail

Quebecor Inc. said a strong performance from its cable and cellphone operations pushed it to a profit in its last quarter, despite continued weakness in its media division.

The Montreal-based company said profit was up 21 per cent to $67-million, or $1.05 a share. That beat analyst expectations of 97 cents a share. Revenue increased by $33-million to just over $1-billion.

"Quebecor's revenues rose … mainly because of sustained growth in Vidéotron's sales," chief executive officer Pierre Karl Peladeau said in a statement. "Vidéotron continued to grow despite the fiercely competitive environment."

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He said Vidéotron – which is the company's cable division – saw a boost in customers thanks to increased bundling options and a renewed focus on customer service. It saw gains across its product lines, including Internet access (12 per cent), cable television (15 per cent), mobile telephony service (56 per cent) and cable phone service (4.5 per cent).

The company had 1.8 million basic cable subscribers in the quarter (slightly fewer than last year), 1.4 million digital cable subscribers and 347,000 mobile subscribers.

It recently launched a renewed digital television service, which is now available to six million homes in Quebec.

Quebecor, Canada's largest newspaper publisher by number of titles, said revenue in its media division slipped 5 per cent. Operating profit was down 20 per cent, however, as the company added several community papers to its stable.

Advertising revenue decreased by 8 per cent at the company's papers in the quarter to $178-million, circulation revenue was off 2 per cent to $41-million. Digital revenue increased by 13 per cent to $11-million.

The company broke it down further, saying urban dailies saw revenues drop by 5 per cent in the quarter, while its community papers were down 7 per cent. Its earnings before interest, taxes, depreciation, and amortization margins – the amount of money left over after costs are taken into consideration – decreased slightly to 14 per cent.

"The news media segment was busy during the second quarter, acquiring Pub Extra magazine and the weekly L'Impact de Drummondville and launching L'Echo de Victoriaville," the company said in the statement, adding it now published 2.5-million copies of community newspapers each week.

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