1. Stock Recap

2. Andrew Foresi
2nd Year Analyst
Energy & Mining
Blerina Ago
2nd Year Analyst
Energy & Mining

3. Agenda
Rating
Company Overviews
Thesis I
Thesis II
Price Forecast
Our Portfolio

4. Both thesis’ remain true to the future growth potential of the company
Rating: Hold
Both thesis’ remain true to the future growth potential of the company
Quebecor is a medium to long-term investment
Quebecor continues to produce steady, non-volatile returns
In aggregate, we are going to hold Quebecor as an investment in our portfolio because of its medium to long term growth potential
We chose to invest in Quebecor because of these mid to long range time forecasts and we believe that Quebecor and its subsidiaries will continue to produce positive results while simultaneously meeting their future growth forecasts as I will explain in our thesis.
Lastly, when we first invested in Quebecor nearly a year ago, they were creating steady and non volatile returns as one of the largest holding companies in Canada, and they continue to do so

5. Additional Assets of Quebecor Media
Company Overview
Additional Assets of Quebecor Media
TVA Group
TVA Publishing Inc.
Canoe Inc.
Sun Media Corporation Inc.
Quebecor (QBR.B) is a Canadian leader in telecommunications that is firmly based in Quebec holding 81% of its largest asset, Quebecor Media.
Videotron is Quebec’s most respected telecommunications company with significant interests in wireless, Internet, cable and home phone services.
Quebecor Media is a Canadian media company with significant interest in wireless telecommunications through its subsidiary Videotron.

6. McMaster Investment Council
Videotron Timeline
Mar 6th 2015 Successfully won the bid for four 30 MHz licenses, obtaining licenses covering 100% of Quebec’s population and the Ottawa area for $31.8 million
Mar 11th 2015
Videotron acquires 4Degrees Colocation and its data centre for $31.5 million, enabling Videotron to meet its business customers’ needs and address the movement towards big data applications
Q1 2015
ARPU up 8.4% including a 15% increase for mobile telephone services, and increasing mobile telephone revenues by $27.7 million and internet revenues by $13.4 million
May 12th 2015 Successful bidder of Industry Canada’s 2500 MHz commercial mobile spectrum auction, gaining 18 licenses covering major urban centres in Canada for $187 million
Q2 2015
ARPU up 8.2% including a 13.8% increase for mobile telephone services, Q mobile telephone revenues up by $29.5 million and internet revenues by $14.1 million
Here we have a timeline showing some of the more significant events that have occurred at Videotron since our purchase back in late January of 2015.
January 7th 2016
- Videotron acquires Fibrenoire for $125 million. Fibrenoire is a fibre optic connectivity business that provides more than a thousand customers in Montreal , QC, Ottawa and Toronto with connectivity services. Fibrenoire is ranked as Quebec’s fastest-growing company on the PROFIT 500 list, which measures Canadian companies’ 5 year revenue growth.
The new connection will give Fibrenoire access to financial resources, technological depth and a fibre optic network of more than 30,000 km available across Quebec. This will enable them to serve customers better and generate growth.
Estimated $30 million generated revenues with % EBITDA
Source:
Nov 17th 2015
Videotron has to pay consumers $7m for an overcharging CRTC fee
Free was initially 1.5% of the bill but later reduced to 0.5%, however this should have only been applied to TV services not to pay-per-view
Videotron based the fee or cable customers on its regular monthly rate, even when they had a discount for bundling
Superior court found Videotron deliberately overcharged customers and was violating its contracts with consumers
Source:
Oct 15th 2015
Bell ExpressVu ordered to pay Videotron $139.1 million non-adjusted-operating-income which will be recognized Q3 2015
Payment due over Bell’s failure to successfully implement a security system to prevent privacy of its television signals broadcast by satellite between 1999 to 2005
May 12th 2015
-Urban centres include Toronto, Edmonton and Calgary
Sunday, November 11, 2018
McMaster Investment Council

7. McMaster Investment Council
Videotron Timeline
Q3 2015
ARPU up 8.7% including a 11.2% increase for mobile telephone services, Q mobile telephone revenues up by $30.7 million and internet revenues by $15.3 million
Oct 15th 2015
Bell ordered by Supreme Court of Canada to pay Videotron $139.1 million in compensation for neglecting to implement an appropriate security system
Nov 17th 2015
Videotron to pay $7 million back to consumers for overcharging on CRTC fee
Jan 7th 2016
Fibrenoire acquired for $125 million to meet growing demand in the Quebec markets
Here we have a timeline showing some of the more significant events that have occurred at Videotron since our purchase back in late January of 2015.
January 7th 2016
- Videotron acquires Fibrenoire for $125 million. Fibrenoire is a fibre optic connectivity business that provides more than a thousand customers in Montreal , QC, Ottawa and Toronto with connectivity services. Fibrenoire is ranked as Quebec’s fastest-growing company on the PROFIT 500 list, which measures Canadian companies’ 5 year revenue growth.
The new connection will give Fibrenoire access to financial resources, technological depth and a fibre optic network of more than 30,000 km available across Quebec. This will enable them to serve customers better and generate growth.
Estimated $30 million generated revenues with % EBITDA
Source:
Nov 17th 2015
Videotron has to pay consumers $7m for an overcharging CRTC fee
Free was initially 1.5% of the bill but later reduced to 0.5%, however this should have only been applied to TV services not to pay-per-view
Videotron based the fee or cable customers on its regular monthly rate, even when they had a discount for bundling
Superior court found Videotron deliberately overcharged customers and was violating its contracts with consumers
Source:
Oct 15th 2015
Bell ExpressVu ordered to pay Videotron $139.1 million non-adjusted-operating-income which will be recognized Q3 2015
Payment due over Bell’s failure to successfully implement a security system to prevent privacy of its television signals broadcast by satellite between 1999 to 2005
May 12th 2015
-Urban centres include Toronto, Edmonton and Calgary
Sunday, November 11, 2018
McMaster Investment Council

8. Thesis I - Videotron’s Growth Potential in Internal and External Markets
Quebecor Media’s Videotron has shown immense growth potential from the start of its facilities-based approach in Based off of two historical core competencies and a competitive advantage amongst smaller players, we believe that Videotron is positioned to become - in some capacity - Canada’s 4th national Telecom player. Management prudency coupled with favorable regulatory body support will mitigate uncertainty risk.
If a national expansion is not seen by management as a viable option, the Quebec wireless market is still a prime opportunity for growth.

9. 2015 Videotron Growth
Increased ARPU with respect to OTT Video, Wireless and Internet
Decrease in home phone usage and revenues is counteracted by growth in Wireless
Steady decrease in Cable subscribership and revenue growth partially counteracted by increase in Internet and OTT Video

10. Fibrenoire & 4Degrees Acquisition
Acquired 100% of 4Degrees Colocation on March 11th, 2015 for $31.5m
Largest data center in Quebec City
Acquired 100% of Fibrenoire on January 7th, 2016 for $125m
Caters towards Videotron’s Quebec business customers
In 3 yrs, doubled revenues and doubled profits
Both acquisitions aid in Videotron’s competency of offering bundles to customers, now in their business market where data management is of increased importance
Strongly accents Videotron’s internal market growth potential
STRONGLY ACCENTS THEIR INTERNAL GROWTH POTENTIAL
January 7th 2016
- Videotron acquires Fibrenoire for $125 million. Fibrenoire is a fibre optic connectivity business that provides more than a thousand customers in Montreal , QC, Ottawa and Toronto with connectivity services. Fibrenoire is ranked as Quebec’s fastest-growing company on the PROFIT 500 list, which measures Canadian companies’ 5 year revenue growth.
The new connection will give Fibrenoire access to financial resources, technological depth and a fibre optic network of more than 30,000 km available across Quebec. This will enable them to serve customers better and generate growth.
Estimated $30 million generated revenues with % EBITDA
Source:

11. Spectrum Auctions and Acquisitions
Date
Price
Description
2500 MHz
May, 2015
$187m
Supports LTE in all major urban areas (Toronto, Ottawa, Montreal, Calgary, Edmonton and Vancouver)
Reaches 21 million Canadians
Address the growing demand for faster and more reliable services
700 MHz
January, 2014
$ 233m
- Covers broader areas in Quebec, Ontario, Alberta and British Columbia
AWS-3
May, 2008
$ 554m
- Has the greatest coverage span in Quebec providing 3G+, HSPA and LTE
STRONGLY ACCENTS THEIR EXTERNAL GROWTH POTENTIAL
It is predicted that for Videotron to build an entire network in western Canada, it would cost $1 billion, nearly as much as they spent to develop their Quebec network
Successful auctions represent Videotron’s efforts to develop a wireless network that spans greater than the province of Quebec increasing potential to reach a large external market

12. Outlook – Thesis I True and Still Holds
Increased subscriber growth patterns in Quebec (internal market)
Increased ARPU on an aggregate and segmented basis
Still Holds
Success in building a national infrastructure that is capable of reaching more than 90% of the Canadian population
Continued focus on maintaining a leading telecommunications role within Quebec
CRTC still considering the option of allowing an additional wireless carrier into the market
Allows for increased competition and lower prices for the consumer
Example: Free Mobile in France
Small carrier rented existing infrastructure from an incumbent
Offered prices as much as 50% below competitors for similar services
Result was a 5.4% increase in market share within 6 months
Competitors were forced to lower prices as a result in order to compete

13. Thesis II - Short-time Oriented Discounts
Quebecor’s extrinsic value is being inhibited due to a short-term oriented market holdings discount. This holdings discount is only applicable in the near-term investment horizon, as relative leverage levels remain unsatisfactory and Quebecor Media is not wholly owned. In our investment horizon we are to see either the buyout of minority interests or an equity carve out (ECO)

14. Thesis II - True and Still Holds
Quebecor’s plans to acquire the remaining stake in Quebecor Media began in late 2014.
This is the tricky part. It is hard to confirm to the extent that this has contributed to a reduced holdings discount. However, in aggregate, the holdings discount will be erased over the course of Quebecor’s plans to purchase the remaining stake in Quebecor Media. This will of course be spread across 2-3 years, as forecasted
In 2015 they had acquired an additional 6% of the external stake in Quebecor Media.
We could see complete ownership in less that 3 years while continuously eroding the holdings discount thereby increasing the extrinsic value of Quebecor.

15. Valuation Recap
The following information was pulled from the January 2015 pitch.

16. 1 Yr. Price Forecast Reflected by the proven thesis’
Proven growth in internal and external markets
Certain acquisition of Quebecor Media stake
Uncertain government regulation in the external marketplace

17. McMaster Investment Council Portfolio
On February 2nd ,892 shares of Quebecor Inc. were purchased for a price of $ representing 6.5% of the portfolio.
We will continue to hold 1,892 shares of Quebecor that currently stand at a price of $33.73 with a total portfolio value of $63,817.16
This represents a return of +5.90% over a 1 year hold period