20-F

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                        to
Commission file number 033-51000

VIDÉOTRON LTÉE
(Exact name of Registrant as specified in its charter)

PROVINCE OF QUÉBEC
(Jurisdiction of incorporation or organization)

300 Viger Avenue East
Montréal, Québec, Canada H2X 3W4
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
None	None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

6⁷/8% Senior Notes due January 15, 2014
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

11,174,813 Common Shares
0 Preferred Shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý Yes o No

Indicate by check mark which financial statement item the registrant has elected to follow.

ý Item 17 o Item 18

TABLE OF CONTENTS

	Page
Explanatory Notes	ii
Forward-Looking Statements	ii
Exchange Rates	iii
PART I
Item 1 — Identity of Directors, Senior Management and Advisers	1
Item 2 — Offer Statistics and Expected Timetable	1
Item 3 — Key Information	1
Item 4 — Information on the Company	16
Item 5 — Operating and Financial Review and Prospects	39
Item 6 — Directors, Senior Management and Employees	55
Item 7 — Major Shareholders and Related Party Transactions	63
Item 8 — Financial Information	67
Item 9 — The Offer and Listing	68
Item 10 — Additional Information	68
Item 11 — Quantitative and Qualitative Disclosures About Market Risk	90
Item 12 — Description of Securities Other than Equity Securities	93
PART II
Item 13 — Defaults, Dividend Arrearages and Delinquencies	93
Item 14 — Material Modifications to the Rights of Security Holders and Use of Proceeds	93
Item 15 — Controls and Procedures	93
Item 16 — [Reserved]	93
Item 16A — Audit Committee Financial Expert	93
Item 16B — Code of Ethics	93
Item 16C — Principal Accountant Fees and Services	93
Item 16D — Exemptions from the Listing Standards for Audit Committees	94
Item 16E — Purchases of Equity Securities by the Issuer and Affiliated Purchasers	94
PART III
Item 17 — Financial Statements	94
Item 18 — Financial Statements	94
Item 19 — Exhibits	95

i

EXPLANATORY NOTES

All references in this annual report to "Vidéotron" or "our company," as well as use of the terms "we," "us," "our" or similar terms, are references to Vidéotron Ltée and, unless the context otherwise requires, its consolidated subsidiaries.

        Market data and certain industry statistics used throughout this annual report were obtained from internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys and industry and market data, while believed to be reliable, have not been independently verified, and we make no representation as to the accuracy or completeness of such information.

        Our consolidated financial statements and the financial statements of Videotron Telecom Ltd. included in this annual report have been prepared in accordance with accounting principles generally accepted in Canada, or Canadian GAAP. For a discussion of the principal differences between Canadian GAAP and accounting principles generally accepted in the United States, or U.S. GAAP, see note 22 to our audited consolidated financial statements and note 19 to the audited financial statements of Videotron Telecom Ltd., all of which are included elsewhere in this annual report. Both we and Videotron Telecom Ltd. state our financial statements in Canadian dollars. In this annual report, references to Canadian dollars, Cdn$ or $ are to the currency of Canada and references to U.S. dollars or US$ are to the currency of the United States.

        We use certain financial measures that are not calculated in accordance with Canadian GAAP or U.S. GAAP to assess our financial performance. We use such non-GAAP financial measures because we believe that they are meaningful measures of our performance. Our method of calculating these non-GAAP financial measures may differ from the methods used by other companies and, as a result, the non-GAAP financial measures presented in this annual report may not be comparable to other similarly titled measures disclosed by other companies. We provide a definition of the non-GAAP financial measures as well as other measures used in this annual report and a reconciliation to the most directly comparable Canadian GAAP and U.S. GAAP financial measures in notes 7 and 8 to the tables under "Item 3 — Key Information — Selected Financial Data" and the discussion under "Item 5 — Operating and Financial Review and Prospects — Operating Results — General."

        Unless otherwise indicated, information provided in this annual report, including all operating data presented in this annual report, is as of December 31, 2004.

FORWARD-LOOKING STATEMENTS

        This annual report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts included in this annual report, including, without limitation, statements under the captions "Item 3 — Key Information — Risk Factors," "Item 5 — Operating and Financial Review and Prospects" and "Item 4 — Information on the Company — Business Overview" and located elsewhere in this annual report regarding the prospects of our industry and our prospects, plans, financial position and business strategy, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. While the below list of cautionary statements is not exhaustive, some important factors that could affect future operating results, financial position and cash flows and could cause actual results to differ materially from those expressed in these forward-looking statements are:

•

the intensity of competitive activity in the industries in which we operate;

ii

•

unanticipated higher capital spending required to address continued development of competitive alternative technologies;



•

changes in our ability to obtain services and other items critical to our operations; and



•

changes in laws and regulations, or in their interpretations, which could result in, among other things, the loss (or reduction in value) of our licenses or markets or in an increase in competition, compliance costs or capital expenditures.

These and other factors could cause actual results to differ materially from our expectations expressed in the forward-looking statements included in this annual report, and further details and descriptions of these and other factors are disclosed in this annual report, including under the section "Item 3 — Key Information — Risk Factors." These forward-looking statements speak only as of the date of this annual report. We will not update these statements unless the securities laws require us to do so.

EXCHANGE RATES

        The following table sets forth, for the periods indicated, the average, high, low and end of period noon buying rates in the City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York, or the noon buying rate. Such rates are set forth as U.S. dollars per Cdn$1.00 and are the inverse of rates quoted by the Federal Reserve Bank of New York for Canadian dollars per US$1.00. On March 21, 2005, the inverse of the noon buying rate was Cdn$1.00 equals US$0.8258.

Year Ended:	Average(1)	High	Low	Period End
December 31, 2004	0.7719	0.8493	0.7158	0.8310
December 31, 2003	0.7136	0.7738	0.6349	0.7738
December 31, 2002	0.6370	0.6619	0.6200	0.6329
December 31, 2001	0.6446	0.6697	0.6241	0.6279
December 31, 2000	0.6727	0.6969	0.6410	0.6669

Month Ended:	Average(2)	High	Low	Period End
February 28, 2005	0.8064	0.8134	0.7961	0.8133
January 31, 2005	0.8165	0.8346	0.8050	0.8067
December 31, 2004	0.8204	0.8435	0.8064	0.8310
November 30, 2004	0.8357	0.8493	0.8155	0.8402
October 31, 2004	0.8020	0.8201	0.7850	0.8191
September 30, 2004	0.7763	0.7906	0.7651	0.7906

(1)

The average of the exchange rates on the last day of each month during the applicable year.

(2)

The average of the exchange rates for all days during the applicable month.

iii

PART I

ITEM 1 — IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

        Not applicable.

ITEM 2 — OFFER STATISTICS AND EXPECTED TIMETABLE

        Not applicable.

ITEM 3 — KEY INFORMATION

1

SELECTED FINANCIAL DATA

        The following tables present financial information derived from our consolidated financial statements included in this annual report, which are comprised of balance sheets as at December 31, 2003 and 2004 and the statements of operations, shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 2004. The consolidated financial statements have been audited by KPMG LLP, independent registered public accounting firm. KPMG LLP's report on the audited consolidated financial statements is included in this annual report. The financial information for the year ended December 31, 2000 have been derived from our unaudited consolidated financial statements not included in this annual report. The information presented below the caption "Balance Sheet Data" as at December 31, 2001 is unaudited except for shareholder's equity. The information presented below the caption "Operating Data" is not derived from our consolidated financial statements. The information presented below the caption "Other Financial Data" is unaudited except for cash flows and capital expenditures for the years ended December 31, 2001, 2002, 2003 and 2004. All information contained in the following tables should be read in conjunction with our consolidated financial statements, the notes related to those financial statements and the section entitled "Item 5 — Operating and Financial Review and Prospects."

        Our consolidated financial statements have been prepared in accordance with Canadian GAAP. For a discussion of the principal differences between Canadian GAAP and U.S. GAAP, see note 22 to our audited consolidated financial statements for the years ended December 31, 2002, 2003 and 2004 included elsewhere in this annual report.

			Year Ended December 31,
			2000			2001			2002			2003			2004
			(restated) (1) (unaudited)			(restated) (1)			(restated) (1)
			(dollars in thousands)
Statement of Operations Data:
Operating revenues:
	Cable television		$	596,223		$	607,942		$	579,200		$	558,887		$	576,825
	Internet access			60,112			99,629			135,514			183,268			222,458
	Video stores			32,053			35,155			35,344			38,450			48,058
	Other(1)			10,118			22,728			30,982			24,396			24,277
		Total operating revenues		698,506			765,454			781,040			805,001			871,618
Direct cost(1)				201,938			227,322			259,686			245,967			250,442
Operating, general and administrative expenses(1)				271,504			274,202			285,816			283,784			279,999
Depreciation and amortization(1)				122,187			116,692			120,016			122,958			130,215
Financial expenses(2)				54,842			101,307			76,188			64,602			177,985
Dividend income from parent company(2)				—			—			—			—			(111,055	)
Other items(3)				99,205			95,570			25,000			(2,500	)		—
Income taxes(1)				(27,407	)		(10,076	)		2,663			26,830			(3,440	)
Non-controlling interest in a subsidiary				253			145			188			49			100
Amortization of goodwill(4)				13,397			13,331			—			—			—
Net income (loss)(1)(4)			$	(37,413	)	$	(53,039	)	$	11,483		$	63,311		$	147,372
Balance Sheet Data (at period end):
Cash and cash equivalents			$	195		$	80,935		$	16,041		$	28,329		$	36,230
Total assets(1)(6)				1,690,234			1,728,715			1,570,463			1,525,605			1,630,861
Long-term debt, excluding QMI subordinated loans(5)(6)(7)				950,843			1,310,179			1,119,625			886,677			888,908
QMI subordinated loans(6)				—			—			—			150,000			150,000
Common shares(5)				1			1			1			173,326			173,236
Shareholder's equity(5)				297,537			(328,673	)		(345,189	)		70,817			38,030

2

	Year Ended December 31,
	2000			2001			2002			2003			2004
	(restated) (1) (unaudited)			(restated) (1)			(restated) (1)
	(dollars in thousands, except for ARPU)
Other Financial Data
Operating income(1)(8)	$	225,064		$	263,930		$	235,538		$	275,250		$	341,177
Operating income margin(1)(8)		32.2	%		34.5	%		30.2	%		34.2	%		39.1	%
Cash flows from operating activities	$	89,272		$	208,005		$	195,934		$	194,078		$	310,675
Cash flows used in investing activities		(103,137	)		(135,305	)		(91,878	)		(110,802	)		(128,867	)
Cash flows from (used in) financing activities		9,800			5,327			(159,372	)		(72,094	)		(174,759	)
Capital expenditures(9)		304,527			133,319			93,041			90,284			123,030
Operating Data (unaudited):
Homes passed(10)		2,324,940			2,330,648			2,329,023			2,351,344			2,383,443
Basic customers(11)(12)		1,552,131			1,510,408			1,431,060			1,424,144			1,452,554
Basic penetration(12)(13)		66.8	%		64.8	%		61.4	%		60.6	%		60.9	%
Digital customers		80,898			114,634			171,625			240,863			333,664
Digital penetration(14)		5.2	%		7.6	%		12.0	%		16.9	%		23.0	%
High-speed Internet customers		140,302			228,759			305,054			406,277			502,630
High-speed Internet penetration(13)		6.0	%		9.8	%		13.1	%		17.3	%		21.1	%
ARPU(12)(15)	$	35.29		$	38.53		$	40.70		$	43.68		$	46.50

			Year Ended December 31,
			2002			2003		2004
			(restated) (1)
			(dollars in thousands)
AMOUNTS UNDER U.S. GAAP
Statement of Operations Data:
Operating revenues:
	Cable television		$	579,200		$	558,887	$	586,179
	Internet access			135,514			183,268		222,458
	Video stores			35,344			38,450		48,058
	Other(1)			30,982			24,396		24,277
		Total operating revenues		781,040			805,001		880,972
Direct cost(1)				259,044			245,967		250,442
Operating, general and administrative expenses(1)				285,952			280,804		290,932
Depreciation and amortization(1)				137,687			133,003		142,585
Financial expenses(2)				72,850			62,424		165,452
Dividend income from parent company(2)				—			—		(111,055	)
Other items(3)				606			—		—
Income taxes(1)				5,166			24,079		1,821
Non-controlling interest in a subsidiary				188			49		100
Impairment of goodwill(4)				2,004,000			—		—
Net income (loss)(1)(4)			$	(1,984,453	)	$	58,675	$	140,695
Balance Sheet Data (at period end):
Cash and cash equivalents			$	16,041		$	28,329	$	36,230
Total assets(1)(6)				3,956,549			3,899,915		3,897,848
Long-term debt, excluding QMI subordinated loans(5)(6)(7)				1,119,625			888,017		884,182
QMI subordinated loans(6)				—			150,000		150,000
Common shares(5)				1			173,236		173,236
Shareholder's equity(5)				1,963,438			2,373,352		2,252,863

3

	Year Ended December 31,
	2002			2003			2004
	(restated) (1)
	(dollars in thousands)
Other Financial Data:
Operating income(1)(8)	$	236,044		$	278,230		$	339,598
Operating income margin(1)(8)		30.2	%		34.6	%		38.5	%
Cash flows from operating activities	$	189,617		$	193,878			309,096
Cash flows used in investing activities		(85,561	)		(110,602	)		(127,288	)
Cash flows used in financing activities		(159,372	)		(72,094	)		(174,759	)
Capital expenditures(9)		92,414			90,284			123,030

(1)

During the fourth quarter ended December 31, 2003, we revised our accounting policies in accordance with Canadian Institute of Chartered Accountants Handbook Section 1100, Generally Accepted Accounting Principles. This new accounting policy requires, among other things, that we expense, as they are incurred, the costs related to equipment subsidies granted to our customers, as well as customer reconnection costs. This change in our accounting policies has been applied retroactively, and the amounts presented for the prior periods have been restated for this change. Because this new accounting policy with respect to equipment subsidies and customer reconnection costs is consistent with the applicable existing accounting policy under U.S. GAAP, the retroactive application of this change will not affect the amounts presented for prior periods under U.S. GAAP.

(2)

In the first quarter of 2004, our wholly owned subsidiary, Vidéotron (1998) ltée, entered into a back-to-back transaction with Quebecor Media. With respect to this back-to-back transaction, we made cash interest payments of $108.5 million to Quebecor Media in the year ended December 31, 2004, but we received $111.1 million in dividends from Quebecor Media in that same year. See "Item 5 — Operating and Financial Review and Prospects — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan" and "Item 10 — Additional Information — Material Contracts — Subordinated Loan Agreement, dated as of January 16, 2004, between Quebecor Media Inc. and Vidéotron (1998) ltée."

(3)

Following the acquisition of us by Quebecor Media in 2000, our former employees exercised in-the-money options and we introduced a restructuring program in 2001. Other items for the year ended December 31, 2000 consisted primarily of payments made to our employees under our employee stock option plan and a restructuring provision. In 2001, our residential Internet protocol telephony project was suspended, and other items for the year ended December 31, 2001 consisted primarily of the write-off of fixed assets and deferred charges related to that project. In 2002, in connection with the renegotiation of two of our collective bargaining agreements, we put in place a second restructuring initiative resulting in a reduction of 300 employees, and other items consisted primarily of severance costs relating to this restructuring. Because the final severance costs relating to this restructuring were lower than estimated, the difference between the final severance costs and the estimated severance costs was reversed in 2003 and increased our net income in 2003 by approximately $2.5 million.

(4)

Effective January 1, 2002, we implemented Canadian Institute of Chartered Accountants Handbook Section 3062, Goodwill and Other Intangible Assets and its US equivalent, FAS 142. The new standards require that goodwill and intangible assets with indefinite lives no longer be amortized, but instead be tested for impairment at least annually. At January 1, 2002, we had unamortized goodwill in the amount of $432.3 million under Canadian GAAP and $4,666.9 million under U.S. GAAP, which is no longer being amortized. This change in accounting policy is not applied retroactively and the amounts presented for the prior periods have not been restated for this change. If this change in accounting policy were applied to the reported combined statements of operations for the prior periods, the impact of the change, in respect of goodwill and intangible assets with indefinite useful lives not being amortized, would be as follows:

	Year Ended December 31,
	2000			2001
	(restated) (unaudited)			(restated)
	(dollars in thousands)
Net loss	$	(29,651	)	$	(53,039	)
Goodwill amortization		13,397			13,331
Net loss before goodwill amortization	$	(16,254	)	$	(39,708	)

(5)

Long-term debt, excluding QMI subordinated loans, means long-term debt and a promissory note payable to a company under common control less the QMI subordinated loans, and it does not include the retractable preferred shares held by Quebecor Media. The retraction price of the retractable preferred shares was $300.0 million as of December 31, 2001 and $332.5 million as of December 31, 2002. During the year ended December 31, 2003, $332.5 million of the retractable preferred shares were converted into our common shares. The excess of the retraction price of the preferred shares over the stated capital converted into common

4

shares was credited to our contributed surplus account in an amount of $301.2 million. The outstanding $2.0 million of retractable preferred shares as of December 31, 2003 was redeemed for an amount of $3.7 million. The excess of the consideration paid over the preferred shares was charged to deficit in an amount of $1.7 million. No retractable preferred share was outstanding as at December 31, 2004.

(6)

The term "QMI subordinated loans" refers to the $150.0 million subordinated loan due 2015 we entered into in favor of Quebecor Media and the $1.1 billion subordinated loan due 2019 our subsidiary Vidéotron (1998) ltée, which is a guarantor of the notes, entered into on January 16, 2004 in favor of Quebecor Media. Interest on the $150.0 million subordinated loan throughout its term is payable in cash at our option. The QMI subordinated loans have been excluded from long-term debt because under the terms of the notes, all payments on the $150.0 million subordinated loan are restricted payments treated in the same manner as dividends on our common shares, and the proceeds of our $1.1 billion subordinated loan has been invested in retractable preferred shares of Quebecor Media as part of a back-to-back transaction to reduce our income tax obligations. On December 16, 2004, Quebecor Media redeemed its $1.1 billion of retractable preferred shares, and we used the proceeds to repay our $1.1 billion subordinated loan. The QMI subordinated loans are reflected as long-term debt on our consolidated balance sheet. As at December 31, 2004, our total long-term debt was $1,038.9 million. See Item 5 — Operating and Financial Review and Prospects — Operating Results — Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan."

(7)

We believe that long-term debt, excluding QMI subordinated loans, is a meaningful measure of the amount of our indebtedness we have from the perspective of a holder of the notes because the QMI subordinated loans are subordinated in right of payment to the prior payment in full of senior indebtedness, including the notes; all payments on the $150.0 million subordinated loan are restricted payments, under the terms of the notes, treated in the same manner as dividends on our common shares; and the proceeds of our $1.1 billion subordinated loan were invested in retractable preferred shares of Quebecor Media as part of a back-to-back transaction to reduce our income tax obligations. This back-to-back transaction was unwound on December 16, 2004. Consequently, we use long-term debt, excluding QMI subordinated loans, in this annual report. Long-term debt, excluding QMI subordinated loans, is not intended to be a measure that should be regarded as an alternative to other financial reporting measures, and it should not be considered in isolation as a substitute for measures of liabilities prepared in accordance with U.S. GAAP or Canadian GAAP. Long-term debt, excluding QMI subordinated loans, is calculated from and reconciled to long-term debt as follows:

	Year Ended December 31,
	2000		2001		2002		2003			2004
	(restated)		(restated)		(restated)
	(unaudited)
	(dollars in millions)
Long-term debt	$	950.8	$	1,287.7	$	1,119.6	$	1,036.7		$	1,038.9
Promissory note to a company under common control		—		22.5		—		—			—
QMI subordinated loans		—		—		—		(150.0	)		(150.0	)
Long-term debt, excluding QMI subordinated loans, as defined	$	950.8	$	1,310.2	$	1,119.6	$	886.7		$	888.9
AMOUNTS UNDER U.S. GAAP
Long-term debt					$	1,119.6	$	1,038.0		$	1,034.2
Promissory note to a company under common control						—		—			—
QMI subordinated loans						—		(150.0	)		(150.0	)
Long-term debt, excluding QMI subordinated loans, as defined					$	1,119.6	$	888.0		$	884.2

(8)

Operating income for us means net income (loss) before depreciation and amortization, financial expenses, dividend income from parent company, other items (consisting primarily of restructuring charges), income taxes, non-controlling interest in a subsidiary and goodwill amortization. Operating income is not a measure of results that is consistent with Canadian or U.S. GAAP. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It is not intended to represent funds available for debt service, dividends, reinvestment or other discretionary uses, and should not be considered in isolation as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. We use operating income because management believes that it is a meaningful measure of performance commonly used in the cable industry and by the investment community to analyze and compare companies. It also facilitates year-over-year comparison of results since operating income excludes, among other things, unusual items that are not readily comparable from year to year. Our definition of operating income may not be identical to similarly titled measures reported

5

by other companies. Operating income margin is operating income as a percentage of operating income. Our operating income is calculated from and reconciled to net income (loss) as follows:

	Year Ended December 31,
	2000			2001			2002		2003			2004
	(restated)			(restated)			(restated)
	(unaudited)
	(dollars in millions)
Net income (loss)(1)(4)	$	(37.4	)	$	(53.0	)	$	11.5	$	63.3		$	147.4
Depreciation and amortization(1)		122.2			116.7			120.0		123.0			130.2
Financial expenses(2)		54.8			101.3			76.2		64.6			178.0
Dividend income from parent company(2)		—			—			—		—			(111.1	)
Other items(3)		99.2			95.6			25.0		(2.5	)		—
Income taxes(1)		(27.4	)		(10.1	)		2.6		26.9			(3.4	)
Non-controlling interest in a subsidiary		0.3			0.1			0.2		—			0.1
Goodwill amortization(4)		13.4			13.3			—		—			—
Operating income as defined	$	225.1		$	263.9		$	235.5	$	275.3		$	341.2

AMOUNTS UNDER U.S. GAAP
Net income (loss)(1)(4)	$	(1,984.5	)	$	58.7	$	140.7
Depreciation and amortization(1)		137.6			133.0		142.6
Financial expenses(2)		72.9			62.4		165.5
Dividend income from parent company(2)		—			—		(111.1	)
Other items(3)		0.6			—		—
Income taxes(1)		5.2			24.1		1.8
Non-controlling interest in a subsidiary		0.2			—		0.1
Goodwill amortization(4)		2,004.0			—		—
Operating income as defined	$	236.0		$	278.2	$	339.6

(9)

Capital expenditures is comprised of acquisition of fixed assets.

(10)

"Homes passed" means the number of residential premises, such as single dwelling units or multiple dwelling units, and commercial premises passed by the cable television distribution network in a given cable system service area in which the programming services are offered.

(11)

Basic customers are customers who receive basic cable television service in either the analog or digital mode.

(12)

The numbers of basic customers for the years 2000-2003, inclusive, were restated in order to permit such numbers to be compared to the 2004 number of basic customers.

(13)

Represents customers as a percentage of total homes passed.

(14)

Represents customers as a percentage of basic customers.

(15)

Average monthly revenue per user, or ARPU, is an industry term that we use to measure our average cable and Internet revenue per month per basic cable customer. ARPU is not a measurement under Canadian GAAP or U.S. GAAP, and our definition and calculation of ARPU may not be the same as identically titled measures reported by other companies. We calculate ARPU by dividing our combined cable television and Internet-access revenues for the applicable year by the average number of our basic cable customers during such year, and then dividing the resulting amount by the number of months in the year.

6

CAPITALIZATION AND INDEBTEDNESS

        Not applicable.

REASONS FOR THE OFFER AND USE OF PROCEEDS

        Not applicable.

RISK FACTORS

Our substantial indebtedness and significant interest payment requirements could adversely affect our financial condition.

        We have a substantial amount of indebtedness, which could have significant consequences, including the following:

•

increase our vulnerability to general adverse economic and industry conditions;



•

require us to dedicate a substantial portion of our cash flow from operations to making interest and principal payments on our indebtedness, reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes;



•

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;



•

place us at a competitive disadvantage compared to our competitors that have less debt; and



•

limit our ability to borrow additional funds on commercially reasonable terms, if at all.

We will need a significant amount of cash to service our debt. Our ability to generate cash depends on many factors beyond our control.

        Our ability to meet our debt service requirements, including those with respect to our 6⁷/8% Senior Notes due January 15, 2014, which are referred to in this annual report as the notes, will depend on our ability to generate cash in the future. Our ability to generate cash depends on many factors beyond our control, such as competition and general economic conditions. In addition, our ability to borrow funds in the future to make payments on our debt will depend on our satisfaction of the covenants in our credit facilities and our other debt agreements, including the indenture governing the notes, and other agreements that we may enter into in the future. We cannot assure you that we will generate sufficient cash flow from operations or that future distributions will be available to us in amounts sufficient to pay our indebtedness, including the notes, or to fund our other liquidity needs. If we are unable to generate sufficient cash flow to meet our debt service requirements, we may have to renegotiate the terms of our debt or obtain additional financing. We cannot assure you that we will be able to refinance any of our debt, including our credit facilities or the notes, or obtain additional financing on commercially reasonable terms, if at all.

Restrictive covenants in our debt instruments may reduce our operating and financial flexibility, which may prevent us from capitalizing on business opportunities.

        The terms of our credit facilities and the indenture governing our notes contain a number of operating and financial covenants restricting our ability to, among other things:

•

incur additional debt, including guarantees by our restricted subsidiaries;



•

pay dividends and make restricted payments;



•

create liens;



•

use the proceeds from sales of assets and subsidiary stock;

7

•

create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us;



•

enter into transactions with affiliates;



•

enter into sale and leaseback transactions; and



•

consolidate or merge or sell all or substantially all of our assets.

        In addition, our ability to comply with covenants contained in the indenture, our credit facilities and the agreements governing other debt to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in an acceleration of our debt and cross-defaults under our other debt. This could require us to repay or repurchase debt prior to the date it would otherwise be due, which could adversely affect our financial condition. Acceleration of any debt outstanding under our credit facilities or any of our other debt could prevent us from making interest and principal payments on the notes. Even if we are able to comply with all applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

We may still be able to incur substantially more debt, which could increase the risks described above.

        The terms of our credit facilities and the indenture do not fully prohibit us or our subsidiaries from incurring additional debt. As of December 31, 2004, we had $450.0 million available for additional borrowings under our credit facilities. We may be able to incur substantial additional debt in the future. If we do so, the risks described above could be greater.

We depend, to a certain extent, on our subsidiaries for cash needed to service our obligations under our indebtedness, including the notes.

        For the year ended December 31, 2004, our subsidiaries generated approximately 50.7% of our revenues (before inter-company eliminations) and held approximately 36.6% of our consolidated total assets. We need the cash generated by our subsidiaries from their operations and their borrowings to service our obligations, including the notes. Our subsidiaries are not obligated to make funds available to us.

        Our subsidiaries' ability to make payments to us will depend upon their operating results and will also be subject to applicable laws and contractual restrictions. For example, the terms of the indenture governing the 9.125% Senior Secured First Priority Notes due 2007 of our subsidiary CF Cable TV Inc., which are referred to in this annual report as the CF Cable notes, contain a number of operating and financial covenants that restrict CF Cable's ability to, among other things, pay dividends and make restricted payments to us. In addition, some of our subsidiaries may, in the future, become subject to loan agreements and indentures that restrict sales of assets and prohibit or significantly restrict the payment of dividends or the making of distributions, loans or advances to shareholders and partners. The indenture governing the notes permits our subsidiaries to incur debt with similar prohibitions and restrictions.

We may not be able to finance a change of control offer as required by the indenture governing the notes because we may not have sufficient funds at the time of the change of control or our credit facilities may not allow the repurchases.

        If we were to experience a change of control (as defined under the indenture governing our notes), we would be required to make an offer to purchase all of the notes then outstanding at 101.0% of the principal amount plus accrued and unpaid interest, if any, to the date of purchase. However, we may not have sufficient funds at the time of the change of control to make the required repurchase of the notes.

8

        In addition, under our credit facilities, a change of control would be an event of default. Any future credit agreement or other agreements relating to our senior indebtedness to which we become a party may contain similar provisions. Our failure to purchase the notes upon a change of control under the indenture would constitute an event of default under the indenture. This default would, in turn, constitute an event of default under our credit facilities and may constitute an event of default under future senior indebtedness, any of which may cause the related debt to be accelerated after the expiry of any applicable notice or grace periods. If debt were to be accelerated, we may not have sufficient funds to repurchase the notes and repay the debt.

Canadian bankruptcy and insolvency laws may impair the trustee's ability to enforce remedies under the notes.

        The rights of the trustee who represents the holders of the notes to enforce remedies could be delayed by the restructuring provisions of applicable Canadian federal bankruptcy, insolvency and other restructuring legislation if the benefit of such legislation is sought with respect to us. For example, both the Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement Act (Canada) contain provisions enabling an insolvent person to obtain a stay of proceedings against its creditors and to file a proposal to be voted on by the various classes of its affected creditors. A restructuring proposal, if accepted by the requisite majorities of each affected class of creditors, and if approved by the relevant Canadian court, would be binding on all creditors within each affected class, including those creditors that did not vote to accept the proposal. Moreover, this legislation, in certain instances, permits the insolvent debtor to retain possession and administration of its property, subject to court oversight, even though it may be in default under the applicable debt instrument, during the period that the stay against proceedings remains in place.

        The powers of the court under the Bankruptcy and Insolvency Act (Canada), and particularly under the Companies' Creditors Arrangement Act (Canada), have been interpreted and exercised broadly so as to protect a restructuring entity from actions taken by creditors and other parties. Accordingly, we cannot predict whether payments under the notes would be made during any proceedings in bankruptcy, insolvency or other restructuring, whether or when the trustee could exercise its rights under the indenture governing the notes or whether and to what extent holders of the notes would be compensated for any delays in payment, if any, of principal, interest and costs, including the fees and disbursements of the trustee.

An active trading market for the notes may not develop.

        The notes are not listed on a national securities exchange. Although we were informed by the initial purchasers of the notes that they intended to make a market in the notes, they are under no obligation to do so, and, if they do make a market in the notes, they may cease their market-making activities at any time without notice. Accordingly, we cannot assure you of the liquidity of the market for the notes or the prices at which you may be able to sell the notes.

        In addition, the market for non-investment grade debt has historically been subject to disruptions that have caused volatility in prices. It is possible that the market for the notes will be subject to disruptions. Any such disruptions may have a negative effect on your ability to sell the notes regardless of our prospects and financial performance.

Non-U.S. holders of the notes are subject to restrictions on the resale of the notes.

        Although we registered the notes under the Securities Act, we did not, and we do not intend to, qualify the notes by prospectus in Canada, and, accordingly, the notes remain subject to restrictions on resale in Canada. In addition, non-U.S. holders remain subject to restrictions imposed by the jurisdiction in which the holder is resident.

9

Applicable statutes allow courts, under specific circumstances, to void the guarantees of the notes provided by certain of our subsidiaries.

        Our creditors or the creditors of one or more guarantors of the notes could challenge the guarantees as fraudulent transfers, conveyances or preferences or on other grounds under applicable U.S. federal or state law or applicable Canadian federal or provincial law. While the relevant laws vary from one jurisdiction to another, the entering into of the guarantees by certain of our subsidiaries could be found to be a fraudulent transfer, conveyance or preference or otherwise void if a court were to determine that:

•

a guarantor delivered its guarantee with the intent to defeat, hinder, delay or defraud its existing or future creditors;



•

the guarantor did not receive fair consideration for the delivery of the guarantee; or



•

the guarantor was insolvent at the time it delivered the guarantee.

        To the extent a court voids a guarantee as a fraudulent transfer, preference or conveyance or holds it unenforceable for any other reason, holders of notes would cease to have any direct claim against the guarantor that delivered a guarantee. If a court were to take this action, the guarantor's assets would be applied first to satisfy the guarantor's liabilities, including trade payables and preferred stock claims, if any, before any portion of its assets could be distributed to us to be applied to the payment of the notes. We cannot assure you that a guarantor's remaining assets would be sufficient to satisfy the claims of the holders of notes relating to any voided portions of the guarantees.

        In addition, the corporate statutes governing the guarantors of the notes may also have provisions that serve to protect each guarantor's creditors from impairment of its capital from financial assistance given to its corporate insiders where there are reasonable grounds to believe that, as a consequence of this financial assistance, the guarantor would be insolvent or the book value, or in some cases the realizable value, of its assets would be less than the sum of its liabilities and its issued and paid-up share capital. While the applicable corporate laws may not prohibit financial assistance transactions and a corporation is generally permitted flexibility in its financial dealings, the applicable corporate laws may place restrictions on each guarantor's ability to give financial assistance in certain circumstances.

U.S. investors in the notes may have difficulties enforcing certain civil liabilities.

        We are governed by the laws of the Province of Québec. Moreover, substantially all of our directors, controlling persons and officers are residents of Canada or other jurisdictions outside of the United States and a substantial portion of our assets and their assets are located outside of the United States. As a result, it may be difficult for holders of notes to effect service of process upon us or such persons within the United States or to enforce against us or them in the United States, judgments of courts of the United States predicated upon the civil liability provisions of the U.S. federal or state securities laws or other laws of the United States. In addition, there is doubt as to the enforceability in Canada of liabilities predicated solely upon U.S. federal or state securities law against us and our directors, controlling persons and officers who are not residents of the United States, in original actions or in actions for enforcements of judgments of U.S. courts.

We may not successfully implement our business and operating strategies.

        Our business and operating strategies include maximizing customer satisfaction, launching and deploying additional value-added products and services, maintaining our advanced broadband network, reducing costs and improving operating efficiency, and further integrating our operations within the Quebecor Media group of companies. We may not be able to fully implement these strategies or realize their anticipated results. Implementation of these strategies could also be affected by a number of factors, some of which are beyond our control, such as operating difficulties, increased operating costs or capital expenditures, regulatory developments, general or local economic conditions or increased competition. Any material failure to

10

implement our strategies could have a material adverse effect on our business, financial condition and operating results and on our ability to meet our obligations, including our ability to service our indebtedness.

We operate in highly competitive industries.

        In our cable operations, we compete against direct broadcast satellite, or DBS, providers, multi-channel multipoint distribution systems, or MDS, satellite master antenna television systems and over-air television broadcasters. In addition, we will soon compete against incumbent local exchange carriers, which have been licensed to provide video distribution services using video digital subscriber line, or VDSL, technology. We also face competition from illegal providers of cable television services and illegal access to DBS and pirate systems that enable customers to access programming services from U.S. and Canadian DBS without paying any fee. In our Internet access business, we compete against other Internet service providers offering residential and commercial Internet access services. Recent decisions of the CRTC also require us to offer access to our high speed Internet system to competitive Internet service providers. Competitors in the video rental industry include other video stores, video-on-demand services, television and other alternative entertainment media. In addition, depending on the final regulatory framework set by the CRTC, our telephony service will have numerous competitors, including incumbent local exchange carriers, competitive local exchange carriers, wireless telephone service operators and other providers of Voice over IP telephony services, and possibly including competitors that are not facilities-based and therefore have a much lower infrastructure cost. We cannot assure you that our existing and future competitors will not pursue or be capable of achieving business strategies similar to or competitive with ours. Some of our competitors have greater financial and other resources than we do. We may not be able to compete successfully in the future against existing or potential competitors, and increased competition could have a material adverse effect on our business, financial condition or results of operations.

We compete and will continue to compete with alternative technologies, and we may be required to invest a significant amount of capital to address continued technological development.

        The cable and Internet access industries are experiencing rapid and significant technological changes, which may result in alternative means of transmission and which could have a material adverse effect on our business, financial condition or results of operations. Further, industry regulators have authorized direct-to-home satellite (DTH), microwave services and video digital subscriber line (VDSL) services, and may authorize other alternative methods of transmitting television and other content with improved speed and quality. We may not be able to successfully compete with existing or newly developed alternative technologies or may be required to acquire, develop or integrate new technologies ourselves. The cost of the acquisition, development or implementation of new technologies could be significant and our ability to fund such implementation may be limited and could have a material adverse effect on our ability to successfully compete in the future.

We may not be able to obtain additional capital to continue the development of our business.

        Our business has required substantial capital for the upgrade, expansion and maintenance of our network and the launch and expansion of new or additional services. If the demand for capacity increases, or if we decide to introduce new services, such as high definition television, or HDTV, or our new telephony service, and depending on the evolution of our product and service offerings, we may need to make unplanned additional capital expenditures. We may not be able to obtain the funds necessary to finance our capital improvement program or any additional capital requirements through internally generated funds, additional borrowings or other sources. If we are unable to obtain these funds, we would not be able to implement our business strategy and our results of operations would be adversely affected.

11

Our financial performance will be materially adversely affected if we cannot continue to distribute a wide range of television programming on reasonable terms.

        The financial performance of our cable service business depends in large part on our ability to distribute a wide range of appealing, conveniently-scheduled television programming at reasonable rates. We obtain television programming from suppliers pursuant to programming contracts. We cannot assure you that we will be able to maintain key programming contracts or continue to pay reasonable rates for television programming. Loss of programming contracts may have a material adverse effect on our results of operations because the quality and amount of television programming offered by us affect the attractiveness of our services to customers and, accordingly, the prices we can charge. Programming costs represent our single largest expense item, and the cost of television programming may increase in the future. If we cannot pass on such increases, if any, to our customers, then these increased costs may have a material adverse effect on our results of operations.

We depend on third-party suppliers and providers for services and other items critical to our operations.

        We depend on third-party suppliers and providers for services and other items that are critical to our operations, including set-top converter boxes, servers and routers, fiber-optic cable, telephone circuits, inter-city links, support structures, software, the "backbone" telecommunications network for our Internet access service and construction services for expansion and upgrades of our network. These services and items are available from a limited number of suppliers. If no supplier can provide us with set-top converter boxes that comply with evolving Internet and telecommunications standards or that are compatible with our other equipment and software, our business, financial condition and results of operations could be materially adversely affected. In addition, if we are unable to obtain critical equipment, software, services or other items on a timely basis and at an acceptable cost, our ability to offer our products and services and roll out our advanced services may be delayed, and our business, financial condition and results of operations could be materially adversely affected.

We are subject to extensive government regulation. Changes in government regulation could adversely affect our business, financial condition or results of operations.

        Broadcasting operations are generally subject to extensive government regulation. Regulations govern the issuance, amendment, renewal, transfer, suspension, revocation and ownership of broadcasting programming and distribution licenses. With respect to distribution undertakings, regulations govern, among other matters, the distribution of Canadian and non-Canadian programming services and the maximum fees to be charged to the public in certain circumstances. In Canada, there are significant restrictions on the ability of foreign entities to own or control broadcasting undertakings. See "Item 4 — Information on the Company — Business Overview — Regulation — Ownership and Control of Canadian Broadcasting Undertakings."

        Our broadcasting distribution and telecommunications (including Internet access service) operations are regulated respectively by the Broadcasting Act (Canada) and the Telecommunications Act (Canada) and regulations thereunder. The Canadian Radio-television and Telecommunications Commission, or the CRTC, which administers the Broadcasting Act (Canada) and the Telecommunications Act (Canada), has the power to grant, amend, suspend, revoke and renew broadcasting distribution licenses, approve certain changes in corporate ownership and control, and make regulations and policies in accordance with the Broadcasting Act (Canada), subject to certain directions from the Federal Cabinet. We are also subject to technical requirements and performance standards for cable television systems under the Radiocommunication Act (Canada) administered by Industry Canada.

        Changes to the regulations and policies governing broadcast television, specialty or pay-television services and broadcasting distribution through cable or alternate means, the introduction of new regulations or policies or terms of license, could have a material adverse effect on our business, financial condition or operating results. For example, the Supreme Court of Canada decided in April 2002 that the

12

Radiocommunication Act (Canada) covers and prohibits both the "black market" reception of satellite television signals (i.e., the unauthorized decoding of Canadian and foreign encrypted satellite signals) and the "grey market" reception of satellite television signals (i.e., the reception of foreign signals through subscriptions in Canada to foreign satellite television providers), but expressly did not rule on the question of the constitutionality of the legislative prohibition against grey market reception. On October 28, 2004, a Québec court of first instance held that the provisions of the Radiocommunication Act (Canada), which prohibited grey market reception of satellite signals, violated the principle of freedom of expression guaranteed by the Canadian Charter of Rights and Freedoms and were therefore invalid. The Québec court suspended its declaration of invalidity for a one-year period starting on the date of the judgment. On November 24, 2004, the Government of Canada filed an inscription of appeal with respect to this decision, which appeal will be argued before and decided by the Superior Court of Québec. For a more complete description of the regulatory environment affecting our business, see "Item 4 — Information on the Company — Business Overview — Regulation."

        At the present time, through an exemption order, the CRTC does not regulate the content of the Internet or interactive television and does not regulate broadcast distribution via the Internet. However, the CRTC has a policy of reviewing its exemption orders every five to seven years.

        While the CRTC has an established framework for regulating facilities-based local telephony competition, a recently concluded proceeding on regulatory issues related to the provision of Voice over IP telephony may bring significant changes to that framework. Depending on the decisions rendered by the CRTC, which we expect in the summer of 2005, our recently launched local telephony service could be substantially altered or even withdrawn.

The CRTC may not renew our existing broadcasting distribution licenses or grant us new licenses, either on acceptable terms or at all.

        Our CRTC broadcasting distribution licenses must be renewed from time to time, typically every seven years, and cannot be transferred without regulatory approval. Our inability to renew any of our licenses or acquire new interests or licenses on acceptable terms, or at all, could have a material adverse effect on our business, financial condition or operating results.

We are required to provide third-party Internet service providers with access to our cable systems, which may result in increased competition.

        The four largest cable operators in Canada, including Vidéotron, have been required by the CRTC to provide third-party Internet service providers with access to their cable systems at mandated wholesale rates. The CRTC has approved cost-based rates for our third-party Internet access service and has resolved most, if not all, of the technical issues that had been delaying third party interconnection. The CRTC has also required us to file new costs study in order to review the rates that will be charged to third-party Internet service providers and to establish the level of mark-up on costs that is appropriate for third party access services and facilities provided by us. As a result, we expect that interconnection by third party Internet service providers to our cable network will commence in 2005.

        Until access through interconnection is provided to third-party Internet service providers to the underlying telecommunications facilities used to provide Internet service, the CRTC requires us and other incumbent cable carriers to allow third-party retail Internet service providers to purchase for the purpose of resale our retail high-speed Internet services at a discount of 25% off the lowest retail Internet service rate charged by such cable carriers to their cable customers during a one-month period.

        As a result of these requirements, we may experience increased competition for retail high-speed Internet customers. In addition, because our resale rates are regulated by the CRTC, we could be limited in our ability to recover our costs associated with providing this access.

13

We may have to support increasing costs in securing access to support structures needed for our network.

        We require access to the support structures of hydro-electric and telephone utilities and to municipal rights of way to deploy our cable network. Where access cannot be secured, we may apply to the CRTC to obtain a right of access under the Telecommunications Act (Canada). However, the CRTC's jurisdiction to establish the terms and conditions of access to the support structure of hydro-electric utilities has been challenged in the courts. In a recent decision of the Supreme Court of Canada, it was held that the CRTC does not have the jurisdiction to establish the terms and conditions of access to the support structure of hydro-electric utilities. As a result, our costs of obtaining access to support structures of hydro-electric companies could be substantially increased. Although we are a party to an agreement for access to the support structures of hydro-electricity utilities in Québec, this agreement expires in December 2005.

We serve our customers through a single clustered network, which may be more vulnerable to widespread disruption.

        We provide our cable products and services through a primary headend and eight regional headends in our single clustered network. This characteristic means that a failure in our primary headend could prevent us from delivering some of our products and services throughout our network until we have resolved the failure, which may result in significant customer dissatisfaction.

We may not be able to protect our services from piracy, which may have a negative effect on our customer base and lead to a possible decline in revenues.

        We may not be able to protect our services from piracy in the future. There can be no assurance that we will be able to prevent unauthorized access to our analog and digital programming, as well as our Internet access services. We use encryption technology to protect our cable signals from unauthorized access and to control programming access based on subscription packages. Each cable modem has a unique MAC address, and we use these MAC addresses to identify our customers and to protect our systems from unauthorized access to our Internet access services. We may not be able to develop or acquire adequate technology to prevent unauthorized access to our services, which may have a negative effect on our customer base and lead to a possible decline of revenues.

We depend on information technology systems.

        In our cable, Internet access and telephony operations, we are highly dependent on information technology systems. An inability to maintain and enhance our information technology systems to accommodate additional customer growth and support new products and services could have a negative effect on our ability to acquire new customers, retain existing customers, produce accurate and timely billing, generate operating revenue growth, and manage operating expenses, all of which may adversely affect our financial results and position. In addition, we use industry standard network and information technology security, survivability and disaster recovery practices. Network failures could materially hurt our business, including our customer relationships and operating results. If an unexpected event, such as a natural disaster, power outage, terrorist action, computer virus, security breach, hacking or corruption of data, occurs, our operations may be significantly adversely affected and may result in a condition that is beyond the scope of our ability to recover without significant service interruption and commensurate revenue and customer loss.

We are controlled by Quebecor Media.

        All of our issued and outstanding common shares are held by Quebecor Media. As a result, Quebecor Media controls our policies and operations. The interests of Quebecor Media, as our sole equity holder, may conflict with the interests of the holders of the notes.

        In addition, Quebecor Media has entered into certain transactions, and in the future may enter into other transactions, with us to consolidate tax losses within the Quebecor Media group. As a result of these

14

transactions, we have recognized significant income tax benefits. Quebecor Media may unwind these transactions at any time in its discretion, which unwinding may impact our ability to reduce our income tax obligations. See "Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan."

        Also, Quebecor Media is a holding company with no significant assets other than its equity interests in its subsidiaries. Its principal source of cash needed to pay its own obligations is the cash that its subsidiaries generate from their operations and borrowings. We expect to pay dividends to Quebecor Media in the future subject to the terms of our indebtedness and applicable law. In addition, actions taken by Quebecor Media and its financial condition, matters over which we have no control, may affect us and the market for the notes. See "Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Payment of Dividends" and "Item 8 — Financial Information — Dividend Policy."

We depend on key personnel.

        Our success depends to a large extent upon the continued services of our senior management and our ability to retain skilled employees. There is intense competition for qualified management and skilled employees, and our failure to recruit, retain and train such employees could have a material adverse effect on our business, financial condition or operating results.

We may be adversely affected by strikes and other labor protests.

        Approximately 80% of our employees are unionized. We are currently a party to four collective bargaining agreements. As of the date of this annual report, none of our collective bargaining agreements has expired or is the subject of renewal negotiations. Our collective bargaining agreements (representing approximately 2,000 employees) will expire between December 31, 2006 and August 31, 2008.

        We have had significant labor disputes in the past, which have disrupted our operations, resulted in damages to our network and impaired our operating results. In April 2003, we settled an eleven-month labor dispute with 1,700 of our unionized employees. We cannot predict the outcome of any future negotiations relating to the renewal of our collective bargaining agreements, nor can we assure you that we will not experience work stoppages, strikes or other forms of labor protests pending the outcome of any future negotiations. Any strikes or other forms of labor protests in the future could disrupt our operations and have a material impact on our business, financial condition or operating results.

We may be adversely affected by fluctuations of the exchange rate.

        Virtually all of our revenue and the majority of our expenses, other than interest payments on U.S. dollar-denominated debt and purchases of set-top converter boxes and cable modems, is received or denominated in Canadian dollars. As of December 31, 2004, the notes and the CF Cable notes, and interest, principal and premium, if any, thereon, was denominated in U.S. dollars. As a result, we are exposed to foreign currency exchange risk. We entered into transactions to hedge the exchange rate risk with respect to the notes and a portion of the CF Cable notes. However, such hedging transactions may not be successful, such that exchange rate fluctuations may impair our ability to make payments in respect of the notes and the CF Cable notes. See "Item 11 — Quantitative and Qualitative Disclosure about Market Risk."

        For the purposes of financial reporting, any change in the value of the Canadian dollar against the U.S. dollar during a given financial reporting period would result in a foreign exchange gain or loss on the translation of the CF Cable notes into Canadian dollars. Consequently, our reported earnings and debt could fluctuate materially as a result of foreign exchange gains or losses.

We are subject to environmental regulations.

        We are subject to federal, provincial and municipal laws relating to protection of the environment. Our properties, and the areas surrounding our properties, may have had historic uses, or may have current uses, affecting our properties, which require further study or remedial measures. We cannot assure you that all our environmental liabilities have been determined. See "Item 4 — Information on the Company — Business Overview — Environment."

15

ITEM 4 — INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

        Our name is Vidéotron Ltée. We were founded on September 1, 1989 as part of the amalgamation of our two predecessor companies, namely Vidéotron Ltée and Télé-Câble St-Damien inc., under Part IA of the Companies Act (Québec). In October 2000, our parent company, Le Groupe Vidéotron ltée, was acquired by Quebecor Media for $5.3 billion. At the time of this acquisition, the assets of Le Groupe Vidéotron ltée included all of our shares. In December 2002, Le Groupe Vidéotron ltée was liquidated into its sole shareholder Quebecor Media.

        Our registered office is located at 612 St. Jacques Street, Montréal, Québec, Canada H3C 4M8, and our telephone number is (514) 281-1232. Our corporate website can be accessed through www.videotron.com. The information found on our corporate website is, however, not part of this annual report. Our agent for service of process in the United States with respect to our notes is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

        On July 5, 2001, we acquired from our sole shareholder Quebecor Media all the outstanding shares of Vidéotron (1998) ltée for an agreed value of $600 million. As consideration, we issued to Quebecor Media one Series E preferred share with a stated capital of $300 million and a promissory note of $300 million. As this transaction was between entities under common control, the net assets acquired were recorded at the carrying amount in the books of Vidéotron (1998) ltée of $26.8 million and as the value of the preferred share issued. The excess consideration paid out at the redemption of the promissory note of $300 million and the excess of the preferred share retraction value of $273.2 million were charged to retained earnings. This business combination was accounted for using the continuity-of-interest method, and the results of operations of Vidéotron (1998) ltée have been included in our consolidated financial statements as if the two companies had always been pooled together.

        On February 8, 2002, we sold our cable inside wire in multi-dwelling units to Câblage QMI Inc., a wholly-owned subsidiary of Quebecor Media, for proceeds of approximately $19.5 million paid in preferred shares of Câblage QMI Inc., $6.8 million of which have been redeemed. On December 23, 2003, we purchased back the cable inside wiring assets initially transferred to Câblage QMI for an amount of $16.1 million. As consideration, we issued to Quebecor Media one Series F preferred share, which is retractable at the option of the holder, with a stated capital of $2.0 million and a promissory note of $8.8 million, and we paid $5.3 million in cash to Quebecor Media.

        On December 5, 2002, we acquired from our sole shareholder Quebecor Media some trademarks and the related future tax asset of $4.5 million. In consideration for this asset acquisition, we issued to Quebecor Media one Series E preferred share retractable at the option of the holder at $32.5 million. Because this transaction was between entities under common control, the stated capital of this Series E preferred share, which amounted to the carrying value of the net assets acquired of $4.5 million, has been recorded in the share capital and the $28.0 million excess has been charged to retained earnings.

        On March 28, 2003, our sole shareholder Quebecor Media converted one of its Series E preferred shares into 750,000 common shares at a stated capital of $26.8 million. Furthermore, on May 4, 2003, Quebecor Media converted its sole remaining Series E preferred share into 70,000 common shares at a stated capital of $4.5 million. The excess of the preferred share retraction value over the state capital converted into common shares, amounting to $301.2 million, has been credited to our contributed surplus.

        On October 7, 2003, our sole shareholder Quebecor Media transferred its wholly owned subsidiaries SuperClub Vidétron and Vidéotron TVN to us for an agreed value of $141.9 million. As consideration, we issued to Quebecor Media an additional 354,813 of our common shares. This transaction was between entities under common control and was accounted for by the continuity-of-interests method. The transfer was recorded at the carrying value of the subsidiaries' net assets at the moment of the transfer, and the

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corresponding figures in our consolidated financial statements for periods before the transfer include those of SuperClub Vidéotron and Vidétron TVN.

        Vidéotron TVN inc. was liquidated into Vidéotron on January 1, 2005, and Vidéotron (1998) ltée was liquidated into Vidéotron on December 31, 2004. We expect that Vidéotron TVN inc. and Vidéotron (1998) ltée will be dissolved in 2005. We also currently expect that the operations of Videotron Telecom Ltd., which is a wholly owned subsidiary of Quebecor Media, will be integrated within our own operations in 2005, subject to the approval of the CRTC, as well as the satisfactory completion of discussions with our labor unions.

        For a description, including the amount invested, of our principal capital expenditures since January 1, 2002, see "Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Capital Expenditures."

BUSINESS OVERVIEW

Overview

        We are the largest distributor of pay-television services in the Province of Québec and the third largest cable operator in Canada based on the number of cable customers. Our cable network covers approximately 80% of Québec's 3.0 million homes passed by cable, which includes residential and commercial premises. Our cable licenses include licenses for the greater Montréal area, the second largest urban area in Canada. The greater Montréal area represents one of the largest contiguous clusters in Canada and is among the largest in North America as measured by the number of cable customers. This concentration provides us with improved operating efficiencies and is a key element in the development and launch of our bundled service offerings. In 2001, we substantially completed our network modernization program, which has provided us with one of the largest bi-directional hybrid fiber coaxial (HFC) networks in North America, with approximately 97% of our systems upgraded to two-way capability and 74% of our customers served by systems upgraded to 750 MHz.

        As of December 31, 2004, we had approximately 1.5 million basic cable customers, representing a basic penetration rate of 60.9%. Through our extensive broadband coverage, we also offer digital television and high-speed Internet access services to approximately 97% of our total homes passed. We have rapidly grown our digital customer base in recent years, and at December 31, 2004, we had 333,664 digital customers, representing 23.0% of our basic customers and 14.0% of our total homes passed. We have also rapidly grown our high-speed Internet access customer base, and at December 31, 2004, we had 502,630 high-speed Internet access customers, representing 34.6% of our basic customers and 21.1% of our total homes passed. We believe that the continued increase in the penetration of our digital television and high-speed Internet access services will result in increased average revenue per customer and higher operating income margins.

        We offer our advanced products and services, which include video-on-demand and selected interactive television services, as a bundled package that is unique among the competitors in our market. We differentiate our services by offering a higher speed Internet access product and the widest range of French-language programming in Canada. We believe that our bundled packages of products and services, together with our focus on customer service and the breadth of our French-language offerings, have resulted in improved customer satisfaction, increased use of our services and higher customer retention.

        In July 2004, we announced our intention to launch a telephony service using Voice over IP technology in Québec. This project is being conducted with another wholly owned subsidiary of Quebecor Media, Videotron Telecom Ltd., which holds a license as a competitive local exchange carrier and will initially provide the circuit switches and local network interconnection services. In January 2005, technical field tests for this telephony service were completed successfully, and we launched this telephony service in selected areas. We expect to continue to launch this service progressively among our other residential and commercial customers in 2005. Our new telephony service includes local and long-distance calling and permits our

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customers to access a host of other telephony services, such as enhanced 911 Emergency service, name and number caller ID and automatic call forwarding. Capital investments for this project, excluding customer acquisition costs, are expected to total $80.0 million over the next four years. Acquisition costs are expected to total approximately $250 per customer.

        On July 9, 2004, SuperClub Vidéotron acquired substantially all of the assets of Jumbo Entertainment Inc., a franchisor and operator of 105 video and video game rental stores across Canada. Through SuperClub Vidéotron, we also own the largest chain of video and game rental stores in Québec and among the largest of such chains in Canada, with a total of 285 retail locations (of which 238 are franchised) and more than 1.65 million video club rental members. With approximately 154 retail locations located in our markets, SuperClub Vidéotron is both a showcase and a valuable and cost-effective distribution network for our growing array of advanced products and services, such as high-speed Internet access and digital television.

        For the year ended December 31, 2004, we generated revenues of $871.6 million and operating income of $341.2 million.

Competitive Strengths

        Leading Market Positions.    We are the largest distributor of pay-television services in Québec and the third largest cable operator in Canada. We believe that our strong market position has enabled us to more effectively launch and deploy new products and services. For example, since the introduction of our high-speed Internet access service, we estimate that we have become the largest provider of such service in the areas we serve. In addition, we operate the largest chain of video stores in Québec through our SuperClub Vidéotron subsidiary. We believe that our retail distribution network of over 570 stores, including the SuperClub Vidéotron video stores, assist us in marketing and distributing our advanced services, such as high-speed Internet access and digital television, on a large scale basis.

        Advanced Broadband Network.    We have one of the most advanced bi-directional networks in North America. Currently, 97% of our cable network is two-way enabled with 74% of our customers served by bandwidth of 750 MHz. We substantially completed our network modernization program in 2001 and expect the majority of our future capital spending to be driven by the launch and deployment of new services. Following the substantial completion of this program, we have generated positive cash flow before financing activities from 2001 to 2004. We are committed to maintaining and upgrading our network capacity and, to that end, we currently anticipate that future capital expenditures over the next five years will be required for us to maintain and upgrade our network in order to accommodate the evolution of our products and services, to meet the demand for increased capacity and to complete the launch of our new telephony service.

        Single, Highly Contiguous Cluster.    We serve our customer base through a single clustered network that covers approximately 85% of Québec's total addressable market (as per 2003 CRTC data) and five of the province's top six urban areas. This network represents one of the largest contiguous clusters in Canada and among the largest in North America as measured by the number of cable customers. We serve all of our cable customers through one primary headend and eight regional headends. We believe that our single cluster and network architecture provide us with the following benefits:

•

a higher quality and more reliable network;



•

reduced capital required to launch and deploy new products and services;



•

a lower cost structure through reduced maintenance and technical support costs; and



•

more rapid and effective introduction of new products and services, enhancing our ability to increase both customers and revenues.

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        Differentiated, Bundled Service Offerings.    Through our technologically advanced network, we offer a variety of products and services to our customers, including digital television, high-speed Internet access, video-on-demand and other interactive television services. In addition, we began our launch of our telephony service progressively among our residential and commercial customers using Voice over IP in Québec in January 2005, which, if successful, will enable us to become an integrated provider of video, data and voice services. We believe the competitors in our market are currently unable to offer a comparable suite of products and services in an integrated bundle. Specifically, our direct broadcast satellite competitors cannot currently offer full interactivity or video-on-demand. We believe many of our product and service offerings are superior to those of our competitors. For example, our standard high-speed Internet access service enables our customers to download data at a higher speed than that currently offered by standard digital subscriber line, or DSL, technology. In addition, we offer the widest range of French-language programming in Canada. As approximately 80% of the Province of Québec is French speaking, we believe our ability to deliver unique French-language content provides us with a competitive advantage in our communities. We believe that offering bundled products and services has contributed to improved customer satisfaction, increased use of our services, higher average revenue per customer and higher customer retention.

        Strong, Market-Focused Management Team.    Our focused and results-oriented senior management team has extensive experience and expertise in a range of areas, including marketing, finance, telecommunications and technology. Under the leadership of our senior management team, we have successfully increased sales of our digital television products and improved penetration of our high-speed Internet access product.

Broadcast Distribution Industry Overview

Cable Television Industry Overview

        Cable television has been available in Canada for more than 50 years and is a well developed market. Competition in the cable industry was first introduced in Canada in 1997. As of August 31, 2003, there were approximately 6.9 million cable television customers in Canada, representing a basic cable penetration rate of 65.2% of homes passed. The Canadian cable television market is fairly concentrated with the four largest cable service providers serving 6.6 million customers, or approximately 96% of total basic cable customers. For the twelve months ended August 31, 2003, total industry revenue was estimated to be over $4.2 billion and is expected to grow significantly in the future because Canadian cable operators have aggressively upgraded their networks and have begun launching and deploying new products and services, such as high-speed Internet access and digital television services. The following table summarizes recent annual key statistics for the Canadian and U.S. cable television industries.

	Twelve Months Ended August 31,
	1999		2000		2001		2002		2003		CAGR(1)
	(Homes passed and basic cable customers in millions, dollars in billions)
Canada
Industry Revenue	$3.0		$3.3		$3.6		$3.9		$4.2		6.6	%
Homes Passed	9.7		9.9		10.0		10.2		10.5		1.6	%
Basic Cable Customers	7.3		7.3		7.2		7.0		6.9		(1.2	%)
Basic Penetration	74.8	%	73.6	%	71.6	%	68.7	%	65.2	%

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	Twelve Months Ended November 30,
	2000		2001		2002		2003		2004		CAGR(2)
	(Homes passed and basic cable customers in millions, dollars in billions)
U.S.
Industry Revenue	US$40.9		US$43.5		US$49.4		US$51.3		US$57.6		7.1	%
Homes Passed	99.1		100.6		102.7		102.9		108.2		1.8	%
Basic Cable Customers	69.3		73.0		73.5		73.4		73.6		1.2	%
Basic Penetration	70.0	%	72.6	%	71.6	%	71.3	%	68.0	%

Source of Canadian data: CRTC. Source of U.S. data: NCTA, Nielsen Media Research, Kagan Research and Broadband Cable Financial Databook 2004.

(1)

Compounded annual growth rate from 1999 until 2003.

(2)

Compounded annual growth rate from 2000 until 2004.

        The traditional cable business, which is the delivery of video via hybrid fiber coaxial network, is fundamentally similar in the U.S. and Canada. Different economic and regulatory conditions, however, have given rise to important differences between the two markets. Canadian operators have more limited revenue sources than U.S. operators due to Canadian regulations which prevent cable operators from generating revenue from local advertising. However, the lack of local advertising revenues allows Canadian cable operators to benefit from lower programming costs as compared to U.S. cable operators.

        A significant portion of Canada's cable television customers are based in Québec. As of August 31, 2003, Québec was home to approximately 24% of Canada's population and approximately 21.8% of its basic cable customers. Basic cable penetration in Québec, which was approximately 55.2% as of August 31, 2003, has traditionally been lower than in other populated provinces in Canada, principally due to the higher concentration of French-speaking Canadians in Québec. It is estimated that over 80% of Québec's population is French-speaking. Contrary to the English-speaking provinces of Canada, where programming in English comes from all over North America, programming in French is available "off-air" in most of Québec's French-speaking communities. The arrival of a variety of French-language specialty programming not available "off air" contributed to a slight cable penetration increase in the 1990s.

        See "— Regulation" for more information on the regulatory framework governing Canada's cable industry.

Expansion of Digital Distribution and Programming

        In order to compete with the direct broadcast satellite offerings, the cable industry began deploying digital technology, which allows for a large number of programming channels and advanced services to be offered.

        In addition, in the last four years, the choice and range of television programming has expanded substantially in Canada. In November 2000, the CRTC released its decisions on the applications for new digital pay and specialty television channels. In total, the CRTC approved 21 Category One licenses (16 English-language and five French-language) and 262 Category Two licenses, as well as two pay-per-view and four video-on-demand licenses. Cable service providers using digital technology are required to carry all of the approved Category One services appropriate to their markets while Category Two licensees who do not have guaranteed distribution rights must negotiate with cable service providers for access. Since then, the CRTC has licensed dozens of Category Two additional programming licenses. The increase in programming content as a result of the launch of approximately 50 of these programming services is believed to be a key factor in driving increases in digital cable penetration in Canada.

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        In September 2001, Canadian cable service providers, including Vidéotron, significantly expanded their digital programming offering through the launch of many of the new digital channels licensed by the CRTC. From September 2001 to December 2003, we have launched over 30 new English-language and four new French-language digital channels, significantly increasing the programming offered to our digital customers. In 2004, we have launched 39 new channels, including four new French-language digital channels, six high definition channels, one ethnic channel and ten time shifting channels. We also launched 15 new audio channels in 2004. We have launched a French-language subscription video-on-demand service and intend to launch a similar English-language service in the first half of 2005. We believe the launch of these digital channels will help to improve the penetration of our digital television service among our customers.

Products and Services

        We currently offer our customers analog cable television services and programming as well as new and advanced high-bandwidth products and services such as high-speed Internet access, digital television, premium programming and selected interactive television services. We continue to focus on our high-speed Internet access and digital television services, both of which are increasingly desired by customers. With our advanced broadband network, we will be able to successfully increase penetration of value-added services such as video-on-demand, high-definition television, personal video recorders, as well as interactive programming and advertising.

        In January 2005, we launched a new telephony service in Québec together with our affiliate Videotron Telecom by joining our customer base with Videotron Telecom's telecommunication network and expertise. We expect that we will integrate Videotron Telecom's operations within our own operations in 2005, subject to the approval of the CRTC, as well as the satisfactory completion of discussions with our labor unions.

Traditional Cable Television Services

        Customers subscribing to our traditional analog "basic" and analog "extended basic" services generally receive a line-up of between 49 and 59 channels of television programming, depending on the bandwidth capacity of their local cable system. Customers who pay additional amounts can also subscribe to additional channels, either individually or in packages. For any additional programming, customers must rent or buy a set-top box. We tailor our channels to satisfy the specific needs of the different customer segments we serve.

        Our cable television service offerings include the following:

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Basic Service.  All of our customers receive a package of basic programming, consisting of local broadcast television stations, the four U.S. commercial networks and PBS, selected Canadian specialty programming services, and local and regional community programming. Our basic service customers generally receive 32 channels on basic cable.



•

Extended Basic Service.  This expanded programming level of services includes a package of French- and English-language specialty television programming and U.S. cable channels in addition to the basic service channel line-up described above. Branded as "Telemax," this service was introduced in almost all of our markets largely to satisfy customer demand for greater flexibility and choice.



•

Premium Cable and Pay-Television Services.  We offer commercial-free movies, U.S. superstations and other special entertainment programming.



•

Pay-Per-View Service.  These channels allow customers to pay on a per-event basis to view a single showing of a recently released movie, a special sporting event or a music concert on a commercial-free basis. We offer both French-language and English-language pay-per-view services.

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Advanced Products and Services

        Cable's high bandwidth is a key factor in the successful delivery of advanced products and services. Several emerging technologies and increasing Internet usage by our customer base have presented us with significant opportunities to expand our sources of revenue. In most of our systems, we currently offer a variety of advanced products and services including high-speed Internet access, digital television and selected interactive services. We intend to continue to develop and deploy additional services to further broaden our service offering.

•

High-Speed Internet Access.  Leveraging our advanced cable infrastructure, we offer high-speed Internet access to our residential customers primarily via cable modems attached to personal computers. We provide this service at speeds more than 90 times the speed of a conventional telephone modem. As of December 31, 2004, we had 502,630 high-speed Internet access customers, representing 34.6% of our basic customers and 21.1% of our total homes passed. In addition, as of December 31, 2004, we had 23,973 dial-up Internet access customers. Based on internal estimates, we are the largest provider of high-speed Internet access services in the areas we serve with an estimated market share of 48% as of December 31, 2004.



•

Digital Television.  As part of our network modernization program, we have installed headend equipment capable of delivering digitally encoded transmissions to a two-way digital-capable set-top box in the customer's home. This digital connection provides significant advantages. In particular, it increases channel capacity, which allows us to increase both programming and service offerings while providing increased flexibility in packaging our services. We launched our digital television service in March 1999 with the introduction of digital video compression terminals in the greater Montréal area. Since introducing our digital television service in the greater Montréal area, we have also introduced the service in other major markets. In September 2001, we launched a new digital service offering under the illico™ brand. In addition to providing high quality sound and image quality, illico™ offers our customers significant programming flexibility. Our basic digital package includes 24 television channels, 45 audio services providing CD quality music, 14 AM/FM radio channels, an interactive programming guide as well as television-based e-mail capability. Our extended digital basic television service, branded as Self-Service, offers customers the ability to select more than 100 additional channels of their choice, allowing them to customize their choices among many specialty channels. This service also offers customers significant programming flexibility including the option of French-language only, English-language only or a combination of French- and English-language programming. We also offer pre-packaged themed service tiers in the areas of news, sports and discovery. Customers who purchase basic service and one customized package can also purchase channels on an à la carte basis at a specified cost per channel per month. As part of our digital service offering, customers can also purchase near-video-on-demand services on a per-event basis. Our customers currently have the option to purchase or lease the digital set-top boxes required for digital service. As of December 31, 2004, we had 333,664 customers for our digital television service. Notwithstanding our digital television service, we intend to continue to offer analog cable service to our customers.



•

Interactive Services.  In September 2001, we also launched digital interactive services under the illico™ Interactive brand. These services, which combine our digital television and Internet access services, will enable customers equipped with wireless keyboards to access the Internet and send and receive e-mail. In the near future, we intend to provide additional functionality including e-commerce. We believe interactive services will be increasingly desired by customers, and we intend to continue to develop and deploy advanced products and services to add greater functionality to our interactive services offering.



•

Video-On-Demand.  Video-on-demand service enables digital cable customers to rent from a library of movies, documentaries and other programming through their digital set-top box. Our digital cable customers are able to rent their video-on-demand selections for a period of 24 hours, which they are

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then able to watch at their convenience with full stop, rewind, fast forward, pause and replay functionality during that period. Our video-on-demand service is available to 97% of the homes passed by us. We also offer pay television channels on a subscription basis that permit our customers to access and watch any of their video-on-demand selections at any time at their convenience.

•

Voice over IP.  In July 2004, we announced our intention to launch a telephony service using Voice over IP technology in Québec. In January 2005, technical field tests for our telephony service were completed successfully, and we launched this service in selected areas. We expect to continue to launch this service progressively among our other residential and commercial customers in 2005. Our new telephony service includes local and long-distance calling and permits our customers to access a host of other telephony services, such as enhanced 911 Emergency service, name and number caller ID and automatic call forwarding.



•

Other New Business Initiatives.  To maintain and enhance our market position, we are focused on increasing penetration of high-definition television and personal video recorders, as well as other high-value products and services.

        The following table summarizes our customer statistics for our analog and digital cable and advanced products and services:

	As of December 31,
	2000		2001		2002		2003		2004
Video services
Basic analog cable
Homes passed(1)	2,324,940		2,330,648		2,329,023		2,351,344		2,383,443
Basic customers(2)	1,552,131		1,510,408		1,431,060		1,424,144		1,452,554
Penetration(3)	66.8	%	64.8	%	61.4	%	60.6	%	60.9	%
Digital cable
Digital customers	80,898		114,634		171,625		240,863		333,664
Penetration(4)	5.2	%	7.6	%	12.0	%	16.9	%	23.0	%
Number of digital terminals	85,756		121,210		182,010		257,350		362,053
Data services
Dial-up Internet access
Dial-up customers	62,673		55,427		43,627		28,821		23,973
High-speed Internet access
Cable modem customers	140,302		228,759		305,054		406,277		502,630
Penetration(3)	6.0	%	9.8	%	13.1	%	17.3	%	21.1	%

(1)

"Homes passed" means the number of residential premises, such as single dwelling units or multiple dwelling units, passed by the cable television distribution network in a given cable system service area in which the programming services are offered.

(2)

Basic customers are customers who receive basic cable service in either the analog or digital mode. The numbers of basic customers for the years 2000-2003, inclusive, were restated in order to permit such numbers to be compared to the 2004 number of basic customers.

(3)

Represents customers as a percentage of total homes passed.

(4)

Represents customers for the digital service as a percentage of basic customers.

        In the year ended December 31, 2004, we recorded a net increase of 28,410 basic cable customers. During the same period, we also recorded net growth of 96,353 customers of our high-speed Internet access service and 92,801 customers of our digital television service, the latter of which includes customers who have upgraded from our analog cable service.

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Our New Telephony Service

        In January 2005, we launched our new telephony service using Voice over IP technology in selected areas, and we expect to continue to launch this service progressively among our other residential and commercial customers in Québec during 2005. Our new telephony service includes both local and long-distance calling, and permits all of our telephony customers, both residential and commercial, to access all service features mandated by CRTC Decision 97-8 and other regulatory decisions and orders, including: enhanced 911 Emergency service; number portability from and to any local exchange carrier; a message relay service allowing subscribers to communicate with the hearing impaired; and a variety of personal privacy features including universal call tracing.

        We also offer free basic listings in local telephone directories, as well as full operator assistance, including: operator-assisted calls; collect and third-party calls; local, national and international directory assistance; person-to-person calls; and busy-line verification.

        Finally, we offer as part of our new telephony service a host of convenient, optional features, including: name and number caller ID; call waiting with long-distance distinctive ring and audible indicator tone; name and number caller ID on call waiting; visual indicator of a full voice mail box and audible message waiting indicators; automatic call forwarding; three-way conference calling; automatic recalling; and last incoming call identification and recall.

        In keeping with our competitive strength of providing differentiated, bundled service offerings, we offer free installation of our new telephony service to existing cable television and/or Internet customers and to new bundled customers. We also offer discounts to our bundled customers, when compared to the sum of the prices of the individual services provided to these customers. In addition, we offer discounts for a second telephone line subscription.

Video Stores

        Through SuperClub Vidéotron, we also own the largest chain of video and game rental stores in Québec and among the largest of such chains in Canada, with a total of 285 retail locations (of which 238 are franchised) and more than 1.65 million video club rental members. With approximately 154 retail locations located in our markets, SuperClub Vidéotron is both a showcase and a valuable and cost-effective distribution network for our growing array of advanced products and services, such as high-speed Internet access and digital television.

Pricing of Our Products and Services

        Our revenues are derived principally from the monthly fees our customers pay for cable services. The rates we charge vary based on the market served and the level of service selected. Rates are usually adjusted annually. We also offer discounts to our bundled customers, when compared to the sum of the prices of the individual services provided to these customers. As of December 31, 2004, the average monthly fees for basic and extended basic service were $21.89 and $35.45, respectively, and the average monthly fees for basic and extended basic digital service were $11.08 and $38.84, respectively. A one-time installation fee, which may be waived in part during certain promotional periods, is charged to new customers. Monthly fees for rented equipment such as set-top boxes and cable modems, and administrative fees for delinquent payments for service, are also charged. Except in respect of our Internet access services, customers are typically free to discontinue service at any time without additional charge, but they may be charged a reconnection fee to resume service.

        The CRTC only regulates rates for basic cable service. The fees for services offered in discretionary packages, including Canadian and U.S. specialty television services, are based upon rates negotiated between us and the providers of programming services. In addition, fees for extended cable service (over and above basic cable service rates), pay-television and pay-per-view services, and rentals for set-top boxes are priced by us on a discretionary basis and are not regulated by the CRTC.

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        Although our service offerings vary by market, because of differences in the bandwidth capacity of the cable systems in each of our markets and competitive and other factors, our services are typically offered at monthly price ranges, which reflect discounts for bundled service offerings, as follows:

Service	Price Range
Basic analog cable	$15.07 – $26.85
Extended basic analog cable	$25.57 – $39.19
Basic digital cable	$10.98 – $12.98
Extended basic digital cable	$24.98 – $67.98
Pay-television	$  6.00 – $23.96
Pay-per-view (per movie or event)	$  3.99 – $79.95
Video-on-demand (per movie or event)	$  0.99 – $24.95
Dial-up Internet access	$  9.95 – $22.95
High-speed Internet access	$24.95 – $69.95

Our Network Technology

        As of December 31, 2004, our cable systems consisted of approximately 8,500 km of fiber optic cable and 28,500 km of coaxial cable, passing approximately 2.4 million homes and serving approximately 1.55 million customers. Our network is the largest broadband network in Québec covering over 80% of cable homes passed, and one of the most advanced broadband networks in North America, with over 97% two-way capability at present.

        The following table summarizes the current technological state of our systems, based on the percentage of our customers who have access to the bandwidths listed below and two-way capability:

	450 MHz and Under	480 to 625 MHz	750 to 860 MHz	Two-Way Capability
December 31, 2000	7%	21%	72%	92%
December 31, 2001	3%	25%	72%	97%
December 31, 2002	3%	23%	74%	97%
December 31, 2003	3%	23%	74%	97%
December 31, 2004	3%	23%	74%	97%

        Our cable television networks are comprised of four distinct parts including signal acquisition networks, main headends, distribution networks and subscriber drops. The signal acquisition network picks up a wide variety of television, radio and multimedia signals. These signals and services originate from either a local source or content provider or are picked up from distant sites chosen for satellite or "off-air" reception quality and transmitted to the main headends by way of "off-air" links, coaxial links or fiber optic relay systems. Each main headend processes, modulates, scrambles and combines the signals in order to distribute them throughout the network. Each main headend is connected to the primary headend in order to receive the digital MPEG2 signals and the IP Backbone for the Internet services. This connection is provided by Videotron Telecom through its inter-city fiber network. The first stage of this distribution consists of either a fiber optic link or a very high capacity microwave link which distributes the signals to distribution or secondary headends. After that, the signal uses the hybrid fiber coaxial cable network made of wide-band amplifiers and coaxial cables capable of serving up to 30 km in radius from the distribution or secondary headends to the subscriber drops. The subscriber drop brings the signal into the customer's television set directly or, depending on the area or the services selected, through various types of customer equipment including set top boxes.

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        Since 1995, we have invested over $304.7 million in a modernization program to upgrade our network to enable us to develop and deploy new advanced products and services. This modernization program was substantially completed as of December 31, 2001. As a result, we are now able to deliver simultaneously over 70 analog channels and up to 250 digital channels in the greater Montréal area and in western Québec, and up to 42 analog channels and over 200 digital channels in other urban areas in Québec, and provide two-way capability throughout most of our network. In December 2003, we decided to upgrade our two-way capability network in Quebec City to increase the bandwidth from 480 MHz to 750 MHz or greater, and we estimate that $26.8 million of capital expenditures over the next two years will be required. We are also currently contemplating similarly upgrading our two-way capability network in central Québec. If we were to proceed with such upgrade, we estimate that approximately $15 million of capital expenditures over two years would be required. After completion of these upgrades, we expect that approximately 95% of our network will have a bandwidth of 750 MHz or greater. Further increase in bandwidth, up to 860 Mhz, in the Montréal region may be required as demand for higher speed in Internet access services grows and new high definition television channels are introduced.

        We have adopted the hybrid fiber coaxial network architecture as the standard for our ongoing system upgrades. Hybrid fiber coaxial network architecture combines the use of fiber optic cable with coaxial cable. Fiber optic cable has excellent broadband frequency characteristics, noise immunity and physical durability and can carry hundreds of video and data channels over extended distances. Coaxial cable is less expensive and requires greater signal amplification in order to obtain the desired transmission levels for delivering channels. In most systems, we deliver our signals via fiber optic cable from the headend to a group of nodes to the homes passed served by that node. Our system design provides for cells of approximately 1,000 homes each to be served by fiber optic cable. To allow for this configuration, secondary headends were put into operation in the greater Montréal area and in the greater Quebec City area. Remote secondary headends must also be connected with fiber optic links. The loop structure of the two-way networks brings reliability through redundancy, the cell size improves flexibility and capacity, while the reduced number of amplifiers separating the home from the headend improves signal quality and reliability. Our network design provides us with significant flexibility to offer customized programming to individual cells of 1,000 homes, which is critical to our ability to deploy certain advanced services in the future, including video-on-demand and the continued expansion of our interactive services. Our network design also allows for further segmentation to 500 or 250 homes where cable and Internet service penetration requires higher network capacity.

        We also believe that our network design provides high capacity and superior signal quality that will enable us to provide to our current and future customers new advanced products and services in addition to those currently offered by us.

Marketing and Customer Care

        Our long term marketing objective is to increase our cash flow through deeper market penetration of our services and continued growth in revenue per customer. We believe that customers will come to view their cable connection as the best distribution channel to the home for a multitude of services. To achieve this objective, we are pursuing the following strategies:

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continue to rapidly deploy advanced products and services such as high-speed Internet access and digital television;



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introduce new advanced products and services desired by customers;



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design product offerings that provide greater opportunity for customer entertainment and information choices;



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leverage the retail presence and other products offered within the Quebecor Media group, including the retail presence of Archambault Group Inc., and within non-exclusive commercial retailers to cross-promote and distribute our cable and data services to our existing and future customers;

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target marketing opportunities based on demographic data and past purchasing behavior;



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develop targeted marketing programs to attract former customers, households that have never subscribed to our services and customers of alternative or competitive services; and



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leverage the relationship between customer service representatives and our customers by training and motivating customer service representatives to promote advanced products and services.

        We plan to invest increasing amounts of time, effort and financial resources in marketing new and existing services. To increase both customer penetration and the number of services used by our customers, we will use coordinated marketing techniques, including door-to-door solicitation, telemarketing, media advertising, e-marketing and direct mail solicitation.

        Maximizing customer satisfaction is a key element of our business strategy. In support of our commitment to customer satisfaction, we operate a 24-hour customer service hotline seven days a week for nearly all of our systems. We currently have five operational call centers and we are implementing various initiatives to improve customer service and satisfaction. For example, all of our customer service representatives and technical support staff are now trained to assist our customers with respect to all products and services offered by us, which in turn allows our customers to be served more efficiently and seamlessly. Our customer care representatives continue to receive extensive training to develop customer contact skills and product knowledge, which are key contributors to high rates of customer retention as well as to selling additional products and services and higher levels of service to our customers. We have also implemented Web-based customer service capabilities. To assist us in our marketing efforts, we utilize surveys, focus groups and other research tools as part of our efforts to determine and proactively respond to customer needs.

Programming

        We believe that offering a wide variety of conveniently scheduled programming is an important factor in influencing a customer's decision to subscribe to and retain our cable services. We devote significant resources to obtaining access to a wide range of programming that we believe will appeal to both existing and potential customers. We rely on extensive market research, customer demographics and local programming preferences to determine our channel and package offerings. The CRTC currently regulates the distribution of foreign content in Canada and, as a result, we are limited in our ability to provide such programming to our customers. We obtain basic and premium programming from a number of suppliers, including TVA Group.

        Since September 2001, we have significantly expanded the programming available to our customers through the launch of over 55 English-language and eight French-language digital channels in digital format and 12 high definition digital channels. Furthermore, we believe the launch of these digital channels will help to increase the penetration of our digital television service among our customers.

        Our programming contracts generally provide for a fixed term of up to seven years, and are subject to negotiated renewal. Programming tends to be made available to us for a flat fee per customer. Our overall programming costs have increased in recent years and may continue to increase due to factors including, but not limited to, additional programming being provided to customers as a result of system rebuilds that increase channel capacity, increased costs to produce or purchase specialty programming and inflationary or negotiated annual increases.

Competition

        We face competition in the areas of price, service offerings and service reliability. We compete with other providers of television signals and other sources of home entertainment. In addition, as we expand into additional services such as interactive services, we may face additional competition. We operate in a competitive business environment which can adversely affect our business and operations. Our principal competitors include off-air television and providers of other entertainment, direct broadcast satellite, digital

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subscriber line, private cable, other cable distribution and wireless distribution. We also face competition from illegal providers of cable television services and illegal access to foreign DBS and pirate systems that enable customers to access programming services from U.S. and Canadian direct broadcast satellite services without paying any fee.

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Off-Air Television and Providers of Other Entertainment.  Cable television has long competed with broadcast television, which consists of television signals that the viewer is able to receive without charge using an "off-air" antenna. The extent of such competition is dependent upon the quality and quantity of broadcast signals available through "off-air" reception compared to the services provided by the local cable system. Cable systems also face competition from alternative methods of distributing and receiving television signals and from other sources of entertainment such as live sporting events, movie theaters and home video products, including videotape recorders and DVD players. The extent to which a cable television service is competitive depends in significant part upon the cable system's ability to provide a greater variety of programming, superior technical performance and superior customer service than are available over the air or through competitive alternative delivery sources.



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Direct Broadcast Satellite.  Direct broadcast satellite, or DBS, is a significant competitor to cable systems. DBS delivers programming via signals sent directly to receiving dishes from medium- and high-powered satellites, as opposed to broadcast, cable delivery or lower-powered transmissions. This form of distribution generally provides more channels than some of our television systems and is fully digital. DBS service can be received virtually anywhere in Canada through the installation of a small rooftop or side-mounted antenna. DBS systems use video compression technology to increase channel capacity and digital technology to improve the quality of the signals transmitted to their customers.



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DSL.  The deployment of digital subscriber line technology, known as DSL, provides customers with Internet access at data transmission speeds greater than that which is available over conventional telephone lines. DSL service is comparable to high-speed Internet access over cable systems. We also face competition from other providers of DSL service.



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VDSL.  The CRTC and Industry Canada have authorized video digital subscriber line, or VDSL, services. VDSL technology increases the capacity of DSL lines available, which permits the distribution of digital video. We expect that we will soon face competition from incumbent local exchange carriers, which are in the process of securing licenses to launch video distribution services using this technology.



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Private Cable.  Additional competition is posed by satellite master antenna television systems known as "SMATV systems" serving multi-dwelling units, such as condominiums, apartment complexes, and private residential communities.



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Other Cable Distribution.  Currently, a second cable operator offering analog television distribution and providing high-speed Internet access service is serving multi-unit dwellings in the greater Montréal area.



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Wireless Distribution.  Cable television systems also compete with wireless program distribution services such as multi-channel multipoint distribution systems. This technology uses microwave links to transmit signals from multiple transmission sites to line-of-sight antennas located within the customer's premises.



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Grey and Black Market DBS Providers.  Cable and other distributors of television signals continue to face competition from the use of access codes and equipment that enable the unauthorized decoding of Canadian and foreign encrypted satellite signals, from unauthorized access to our analog and digital cable signals (black market) and from the reception of foreign signals through subscriptions to foreign satellite television providers that are not lawful distributors in Canada (grey market). See "Item 3 — Key Information — Risk Factors — We are subject to extensive government regulation. Changes in

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government regulation could adversely affect our business, financial condition or results of operations."

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Telephony Service.  Our new telephony service competes against other telephone companies, including both the incumbent telephone service provider in Québec, which controls a significant portion of the telephony market in Québec, as well as other Voice over IP telephony service providers and cellular telephone service providers.

Regulation

Ownership and Control of Canadian Broadcast Undertakings

        Subject to any directions issued by the Governor in Council (effectively the Federal Cabinet), the Canadian Radio-television and Telecommunications Commission, referred to as the CRTC, regulates and supervises all aspects of the Canadian broadcasting system.

        The Governor in Council, through an Order-in-Council referred to as the Direction to the CRTC (Ineligibility of Non-Canadians), has directed the CRTC not to issue, amend or renew a broadcasting license to an applicant that is a non-Canadian. Canadian, a defined term in the Direction, means, among other things, a citizen or a permanent resident of Canada, a qualified corporation, a Canadian government, a non-share capital corporation of which a majority of the directors are appointed or designated by statute, regulation or specified governmental authorities, or a qualified mutual insurance company, qualified pension fund society or qualified cooperative of which not less than 80% of the directors or members are Canadian. A qualified corporation is one incorporated or continued in Canada, of which the chief executive officer (or if there is no chief executive officer, the person performing functions similar to those performed by a chief executive officer) and not less than 80% of the directors are Canadian, and not less than 80% of the issued and outstanding voting shares and not less than 80% of the votes are beneficially owned and controlled, directly or indirectly, by Canadians. In addition to the above requirements, Canadians must beneficially own and control, directly or indirectly, not less than 66.6% of the issued and outstanding voting shares and not less than 66.6% of the votes of the parent company that controls the subsidiary, and neither the parent company nor its directors may exercise control or influence over any programming decisions of the subsidiary if Canadians beneficially own and control less than 80% of the issued and outstanding shares and votes of the parent corporation, if the chief executive officer of the parent corporation is a non-Canadian or if less than 80% of the parent corporation's directors are Canadian. There are no specific restrictions on the number of non-voting shares which may be owned by non-Canadians. Finally, an applicant seeking to acquire, amend or renew a broadcasting license must not otherwise be controlled in fact by non-Canadians, a question of fact which may be determined by the CRTC in its discretion. Control is defined broadly in the Direction to mean control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of a corporation or otherwise. Vidéotron is a qualified Canadian corporation.

        Regulations made under the Broadcasting Act (Canada) require the prior approval of the CRTC of any transaction that directly or indirectly results in (i) a change in effective control of the broadcasting distribution undertaking of a licensee, (ii) a person or a person and its associates acquiring control of 30% or more of the voting interests of a licensee or of a person who has, directly or indirectly, effective control of a licensee, or (iii) a person or a person and its associates acquiring 50% or more of the issued common shares of the licensee or of a person who has direct or indirect effective control of a licensee. In addition, if any act, agreement or transaction results in a person or a person and its associates acquiring control of at least 20% but less than 30% of the voting interests of a licensee, or of a person who has, directly or indirectly, effective control of the licensee, the CRTC must be notified of the transaction. Similarly, if any act, agreement or transaction results in a person or a person and its associates acquiring control of 40% or more but less than 50% of the voting interests of a licensee, or a person who has directly or indirectly effective control of the licensee, the CRTC must be notified.

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        In November 2002, the federal Minister of Industry initiated a review of the existing foreign ownership restrictions applicable to telecommunications carriers. In April 2003, the House of Commons Standing Committee on Industry, Science and Technology released a report of its study of the issue of foreign direct investment restrictions applicable to telecommunications common carriers. The House of Commons Standing Committee on Industry, Science and Technology, recommended, among other things, that the Government of Canada remove the existing foreign ownership restrictions in the telecommunications industry and ensure that any changes made to the Canadian ownership and control requirements applicable to telecommunications common carriers be applied equally to broadcasting distribution undertakings. In June 2003, the House of Commons Standing Committee on Canadian Heritage released a report of its review of the Broadcasting Act (Canada) and, among other things, recommended that the current restrictions on foreign ownership relating to broadcasting, cable and telecommunications remain. In September 2003, the Canadian government announced it intended to launch an expedited analysis of these reports and this issue, but to date the results of that analysis have not been publicly announced and no changes have been made or proposed. We cannot predict, what, if any, changes will result from these reports.

Jurisdiction Over Canadian Broadcasting Undertakings

        Our cable distribution undertakings are subject to the Broadcasting Act (Canada) and regulations made under the Broadcasting Act (Canada) that empower the CRTC, subject to directions from the Governor in Council, to regulate and supervise all aspects of the Canadian broadcasting system in order to implement the policy set out in that Act. Certain of our undertakings are also subject to the Radiocommunication Act (Canada), which empowers Industry Canada to establish and administer the technical standards that networks and transmission must respect, namely, maintaining the technical quality of signals.

        The CRTC has, among other things, the power under the Broadcasting Act (Canada) and regulations to issue, subject to appropriate conditions, amend, renew, suspend and revoke broadcasting licenses, approve certain changes in corporate ownership and control, and establish and oversee compliance with regulations and policies concerning broadcasting, including various programming and distribution requirements, subject to certain directions from the Federal Cabinet.

Licensing of Canadian Broadcasting Distribution Undertakings

        The CRTC has responsibility for the issuance, amendment, renewal, suspension and revocation of Canadian broadcasting licenses, including licenses to operate a cable distribution undertaking. A cable distribution undertaking distributes broadcasting services to customers predominantly over closed transmission paths. A license to operate a cable distribution undertaking gives the cable television operator the right to distribute television programming services in its licensed service area. Broadcasting licenses may be issued for periods not exceeding seven years and are usually renewed, except in cases of a serious breach of the conditions attached to the license or the regulations of the CRTC. The CRTC is required to hold a public hearing in connection with the issuance, suspension or revocation of a license.

        Cable systems with 2,000 customers or less and operating their own local headend are exempted from the obligation to hold a license pursuant to an exemption order issued by the CRTC in 2001 and amended in 2002. These cable systems will continue to have to comply with a number of programming carriage requirements set out in the exemption order and comply with the Canadian ownership and control requirements in the Direction. We operate 16 of these small cable systems.

        Similarly, cable systems with between 2,000 and 6,000 customers (generally Class 2 cable systems or Class 3 cable systems not exempt under the CRTC's exemption for small cable undertakings) are also exempted from holding a license pursuant to a CRTC public notice issued in 2003. Cable distribution undertakings that are fully interconnected with other broadcasting distribution undertakings will be ineligible for this exemption unless the aggregate number of customers served by the interconnected broadcast distribution undertakings is less than 6,000. The CRTC has issued a proposed exemption order in June of

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2004, and we have filed for revocation of license for three networks that will benefit from the exemption by having reduced administrative costs and regulatory burdens.

        In September 2003, the CRTC adopted amendments to the Broadcasting Distribution Regulations that permit the CRTC to implement its regional licensing model for cable distribution undertakings (Broadcasting Public Notice CRTC 2003-48). The CRTC believes that the regional licensing approach will result in greater efficiencies for the licensees of cable distribution undertakings as well as for itself and reflects the current trend toward consolidation in the cable industry and growing interconnection between systems.

        In November 2003, the CRTC finalized the regulatory framework that will govern the distribution of digital signals by over-the-air television stations (Broadcasting Public Notice CRTC 2003-61). The CRTC requires broadcasting distribution undertakings to distribute the primary digital signal of a licensed over-the-air television service in accordance with the priorities that currently apply to the distribution of the analog version of the services. The CRTC expects all broadcasting distribution undertakings to implement the necessary upgrades. Analog carriage should be phased out once 85% of a particular broadcasting distribution undertaking's customers have digital receivers or set-top boxes that can convert digital signals to analog. Exempt undertakings will not be required to duplicate mandatory services in digital format. A further proceeding to establish a licensing framework governing the transition of pay and specialty services to high definition, or HD, signals was initiated in August 2004. It will also establish a framework to govern the distribution of such services by broadcasting distribution undertakings. It is expected that this policy will be made public after the first quarter of 2005. According to the CRTC, the time period during which broadcasters and distributors will have to provide services in both analog and digital formats will depend on the speed with which customers convert from analog to digital. A shorter transition period will reduce the overall costs of the transition for both broadcasters and distributors.

        In order to conduct our business, we must maintain our broadcasting distribution undertaking licenses in good standing. Failure to meet the terms of our licenses may result in their short-term renewal, suspension, revocation or non-renewal. We still hold a separate license for each of our 34 cable systems with greater than 2,000 customers and have never failed to obtain a license renewal for those cable systems.

Application of Canadian Telecommunications Regulation

        In a series of decisions, the CRTC has determined that the carriage of "non-programming" services by cable companies results in the company being regulated as a carrier under the Telecommunications Act (Canada). This applies to a company serving its own customers, or allowing a third party to use its distribution network to provide non-programming services to customers, such as providing access to high-speed Internet services.

        In addition, the CRTC regulates the provision of telephony services in Canada. On May 1, 1997, the CRTC established the regulatory framework for the provision of competitive local telephony services in Canada. Among the key elements of this framework are: a technical form of interconnection based on a co-carrier (i.e., peer-to-peer) relationship between the incumbent local exchange carrier and competitive local exchange carriers, or CLECs; mutual compensation for traffic termination (including Bill & Keep compensation at low levels of traffic imbalance); effective deregulation of CLEC retail service offerings with the exception of certain social obligations such as the provision of enhanced 911 service; and the imposition of a series of regulatory safeguards on the incumbent local exchange carriers to protect against anti-competitive conduct on their part, including retail tariffing requirements, service bundling restrictions and winback restrictions.

        Videotron Telecom, which has been operating as a competitive local exchange carrier under the framework described above for several years, is providing the underlying local network interconnection services for our residential local telephony offering. In this capacity, we are acting as a reseller of Videotron Telecom's competitive local exchange carrier services. In a series of rulings dating back to 1997, the CRTC has established that virtually all of the significant regulatory obligations imposed upon competitive local

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exchange carriers flow through to their resellers, and our residential local telephony offering has been designed on this basis.

        In early 2004, the CRTC launched a regulatory proceeding to consider the advent of local telephony services using Voice over IP technology, and more specifically whether the existing framework for local telephony competition needed to be modified to accommodate these services. A public hearing was conducted in September 2004, and a decision is pending. Because our recently launched telephony service satisfies the current requirements that are applied to the provision of conventional switched local telephone service, we do not believe that any new regulation imposed by the CRTC will prevent us from offering our Voice over IP telephony service. If, however, the CRTC forebears from the regulation of Voice over IP telephony service entirely, or substantially lessens the competitive safeguards applicable to the incumbent local exchange carriers, or creates unduly favorable conditions for non-facilities-based Voice over IP service providers, then our Voice over IP offering may have to be substantially altered.

Right to Access to Telecommunications and Hydro-Electric Support Structures

        The CRTC has concluded that some provisions of the Telecommunications Act (Canada) may be characterized as encouraging joint use of existing support structures of telephone utilities to facilitate efficient deployment of cable distribution undertakings by Canadian carriers. We access these support structures in exchange for a tariff that is regulated by the CRTC. If it were not possible to agree on the use or conditions of access with a support structure owner, we could apply to the CRTC for a right of access to a supporting structure of a telephone utility. The Supreme Court of Canada, however, has held on May 16, 2003 that the CRTC does not have jurisdiction under the Telecommunications Act (Canada) to establish the terms and conditions of access to the support structure of hydro-electricity utilities. Terms of access to the support structures of hydro-electricity utilities must therefore be negotiated with those utilities.

        We have entered into an agreement for access to the support structures of hydro-electricity utilities in Québec running through December 2005. The Canadian Cable Telecommunications Association, or the CCTA, has filed an application before the Ontario Energy Board, or the OEB, to establish uniform terms and conditions of access to electricity distribution power pools in Ontario for the purpose of transmitting cable services, including a specific pole rental charge, retroactive to January 1, 1997. Hearings are presently ongoing before the OEB with respect to CCTA's application and no date has been fixed for a decision. While we have limited facilities located in Ontario that will be directly affected by the OEB's decision, the setting of rates and terms and conditions for support structure access in Ontario will very likely influence future negotiations with Québec electricity utilities for the period commencing in 2006.

Canadian Broadcast Distribution (Cable Television)

Distribution of Canadian Content

        The Broadcasting Distribution Regulations made by the CRTC pursuant to the Broadcasting Act (Canada) mandate the types of Canadian and non-Canadian programming services respectively that can be distributed by broadcasting distribution undertakings, including cable television systems. In summary, each cable television system is required to distribute all of the Canadian programming services that the CRTC has determined are appropriate for the market it serves, which includes local and regional television stations, certain specialty channels and pay television channels, and a pay-per-view service, but does not include Category 2 digital services and video-on-demand services.

        As revised from time to time, the CRTC has issued a list of non-Canadian programming services eligible for distribution in Canada on a discretionary user-pay basis to be linked along with Canadian pay-television services or with Canadian specialty services. The CRTC currently permits the linkage of up to one non-Canadian service for one Canadian specialty service and up to five non-Canadian services for every one Canadian pay-television service. In addition, the number of Canadian services received by a cable television customer must exceed the total number of non-Canadian services received. The CRTC decided that it would

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not be in the interest of the Canadian broadcasting system to permit the distribution of certain non-Canadian pay-television movie channels and specialty programming services that could be considered competitive with licensed Canadian pay-television and specialty services. Therefore, pay-television movie channels and certain specialty programming services available in the United States and other countries are not approved for distribution in Canada.

        Also important to broadcasting operations in Canada are the specialty (or thematic) programming service access rules, which require cable systems with more than 6,000 customers (Class 1 cable systems) operating in a French-language market to offer each analog French-language Canadian specialty service licensed, other than certain religious programming services, to the extent of availability of channels. Moreover, all Canadian specialty channels, other than Category 2 digital specialty channels, must be carried by broadcast distributors with more than 2,000 customers (Class 1 and Class 2 cable systems) when digital distribution is offered. These rules seek to ensure wider carriage for certain Canadian specialty channels than might otherwise be secured through negotiation. However, Category 2 digital specialty channels do not benefit from any regulatory assistance to guarantee distribution on cable or DTH satellite distribution undertakings apart from the requirement that a distributor offer at least five non-related Category 2 digital specialty channels for every Category 2 digital specialty channel it distributes in which it owns, directly or indirectly, more than 10% of the equity.

1998 Broadcasting Distribution Regulations

        The Broadcasting Distribution Regulations enacted in 1998, also called the 1998 Regulations, apply to distributors of broadcasting services or broadcasting distribution undertakings in Canada. The 1998 Regulations promote competition between broadcasting distribution undertakings and the development of new technologies for the distribution of such services while ensuring that quality Canadian programs are exhibited. The 1998 Regulations introduced important new rules, including the following:

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Competition, Carriage Rules and Signal Substitution.  The 1998 Regulations provide equitable opportunities for all distributors of broadcasting services. Similar to the signal carriage and substitution requirements that are imposed on existing cable television systems, under the 1998 Regulations, new broadcasting distribution undertakings are also subject to carriage and substitution requirements. The 1998 Regulations prohibit a distributor from giving an undue preference to any person, including itself, or subjecting any person to an undue disadvantage. This gives the CRTC the ability to address complaints of anti-competitive behavior on the part of certain distributors.

A significant aspect of television broadcasting in Canada is simultaneous program substitution, or simulcasting, a regulatory requirement under which Canadian distribution undertakings, such as cable television systems with over 6,000 customers, are required to substitute the foreign programming service with local Canadian signal, including Canadian commercials, for broadcasts of identical programs by a U.S. station when both programs are exhibited at the same time. These requirements are designed to protect the program rights that Canadian broadcasters acquire for their respective local markets. The CRTC, however, has suspended the application of these requirements to DTH satellite operators for a period of time, so long as they undertake certain alternative measures, including monetary compensation to a fund designed to help finance regional television productions.

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Canadian Programming and Community Expression Financing Rules.  All distributors, except systems with less than 2,000 customers, are required to contribute at least 5% of their gross annual broadcast revenues to the creation and presentation of Canadian programming including community programming. However, the allocation of these contributions between broadcast and community programming can vary depending on the type and size of the distribution system involved.



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Inside Wiring Rules.  The CRTC determined that the inside wiring portion of cable networks creates a bottleneck facility that could affect competition if open access is not provided to other distributors. Incumbent cable companies may retain the ownership of the inside wiring but must allow usage by

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competitive undertakings to which the cable company may charge a just and reasonable fee for the use of the inside wire. Because the CRTC did not establish a fee for the use of the inside wire until September 2002, we negotiated a fee for the use of inside wire owned by Câblage QMI in February 2002. On September 3, 2002, the CRTC established a fee of $0.52 per customer per month for the use of cable inside wire in MDUs. As a result, the CRTC, on October 9, 2002, ordered Câblage QMI and us to comply with the inside wiring access rules.

Broadcasting License Fees

        Broadcasting licensees are subject to annual license fees payable to the CRTC. The license fees consist of two fees. One fee allocates the CRTC's regulatory costs for the year to licensees based on a licensee's proportion of the gross revenue derived during the year from the licensed activities of all licensees whose gross revenues exceed specific exemption levels. The other fee, also called the Part II license fee, for a broadcasting distribution undertaking, is 1.365% of the amount by which its gross revenue derived during the year from its licensed activity exceeds $175,000. Our broadcasting distribution activities are subject to both fees. In January 2004, we filed a claim before the Federal Court on the basis that the Part II license fee is similar to a tax levy and that the CRTC has no jurisdiction to impose a tax. This claim has been merged with a similar claim from the Canadian Association of Broadcasters.

Rates

        Our revenue related to cable television is derived mainly from (a) monthly subscription fees for basic cable service; (b) fees for premium services such as specialty services, pay-television and pay-per-view television and video-on-demand; and (c) installation and additional outlets charges.

        The CRTC does not regulate the fees charged by non-cable broadcast distribution undertakings and does not regulate the fees charged by cable providers for non-basic services. The basic service fees charged by Class 1 (6,000 customers or more) cable providers are regulated by the CRTC until true competition exists in a particular service area, which occurs when:

(1)

30% or more of the households in the licensed service area have access to the services of another broadcasting distribution undertaking. The CRTC has advised that as of August 31, 1997, the 30% availability criterion was satisfied for all licensed cable areas; and



(2)

the number of customers for basic cable service has decreased by at least 5% since the date on which a competitor started offering its basic cable service in the particular area.

        For all but two of our service areas, the basic service fees for our customers have been deregulated.

        The CRTC further restricts installation fees to an amount that does not exceed the average actual cost incurred to install and connect the outlet to a household situated in a residential area.

        Subject to certain notice and other procedural requirements, for Class 1 cable systems still regulated, we may increase our basic service rates so as to pass through to customers increases in CRTC authorized fees to be paid to specialty programming services distributed on our basic service. However, the CRTC has the authority to suspend or disallow such an increase.

        In the event that distribution services may be compromised as a result of economic difficulties encountered by a Class 1 cable distributor, a request for a rate increase may be submitted to the CRTC. The CRTC may approve an increase if the distributor satisfies the criteria then in effect for establishing economic need.

Winback Restrictions

        In a letter decision dated April 1, 1999, the CRTC established rules, referred to as the winback rules, that prohibit the targeted marketing by incumbent cable companies of customers who have cancelled basic

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cable service. These rules require us and other incumbent cable companies to refrain for a period of 90 days from: (a) directly contacting customers who, through an agent, have notified their cable company of their intention to cancel basic cable service; and (b) offering discounts or other inducements not generally offered to the public, in instances when customers personally initiate contact with the cable company for the purpose of canceling basic cable service. The CRTC considers it appropriate at this time to eliminate the winback rules as they pertain to customers in single unit dwellings. In August of 2004 (Public Notice CRTC 2004-62), the CRTC has decided that it will no longer require incumbent cable companies to adhere to winback rules with respect to customers who reside in single unit dwellings. However, the CRTC has also determined that the winback rules should continue to apply to incumbent cable companies with respect to their dealings with individual customers who reside in multiple unit dwellings. The CRTC has further determined that incumbent cable companies are prohibited from initiating communication with residents of a multiple unit dwelling for a period of 90 days from the date on which a new entrant enters into an access agreement to provide service in the multiple unit dwelling. Moreover, the CRTC now requires incumbent cable companies to refrain from the targeted marketing of all residents of a multiple unit dwelling, or from offering them discounts or other inducements not generally available to the public, for a period of 90 days following the date on which a new entrant enters into an access agreement to offer services in the multiple unit dwelling.

        In February 2001, the CRTC also announced similar "winback" restrictions on certain cable television operators, including us, in the Internet service market. These restrictions limit cable operators' ability to "win back" Internet service customers who have chosen to switch to another Internet service provider within 90 days of the customer's switch.

Copyright Board Proceedings

        Certain copyrights in radio, television and pay audio programming are administered collectively and tariff rates are established by the Copyright Board of Canada. Tariffs set by the Copyright Board are generally applicable until a public process is held and a decision of the Copyright Board is rendered for a renewed tariff. Renewed tariffs are often applicable retroactively.

Royalties for the Retransmission of Distant Signals

        Following the implementation in 1989 of the Canada-U.S. Free Trade Agreement, the Copyright Act (Canada) was amended to require retransmitters, including Canadian cable television operators, to pay royalties in respect of the retransmission of distant television and radio signals.

        Since this legislative amendment, the Copyright Act (Canada) empowers the Copyright Board of Canada to quantify the amount of royalties payable to retransmit these signals and to allocate them among collective societies representing the holders of copyright in the works thus retransmitted. Regulated cable television operators cannot automatically recover such paid retransmission royalties from their customers, although such charges might be a component of an application for a basic cable service rate increase based on economic need.

        Distant television signal retransmission royalties vary from $100 per year for Class 3 cable systems and from $0.30 to $0.65 per customer per month for Class 2 cable systems serving areas with fewer than 1,500 customers and to $0.70 per customer per month for more than 6,000 customers (Class 1 cable systems), except in French-language markets. In French-language markets, there is a 50% rebate for Class 1 and Class 2 cable systems, where the maximum rate is $0.35 per customer per month. The same pricing structure, with lower rates, applies for distant radio signal transmission. All of our undertakings operate in French-language markets. Recently, the collective societies representing copyright holders filed with the Copyright Board of Canada a tariff request to increase to $1.00 per customer per month the distant signal retransmission royalty applicable to systems of more than 6,000 customers for the years 2000 to 2008. In December 2003, the 2003 tariff was extended indefinitely on an interim basis until the Copyright Board rules on the proposed tariff, and a hearing in respect of the proposed tariff has been scheduled for October 2005.

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Royalties for the Transmission of Pay and Specialty Services

        In 1989, the Copyright Act (Canada) was amended, in particular, to define copyright as including the exclusive right to "communicate protected works to the public by telecommunication." Prior to the amendment, it was generally believed that copyright holders did not have an exclusive right to authorize the transmission of works carried on radio and television station signals when these signals were not broadcast but rather transmitted originally by cable television operators to their customers. In 1996, at the request of the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the Copyright Board approved Tariff 17A, which required the payment of royalties by broadcasting distribution undertakings, including cable television operators, that transmit musical works to their customers in the course of transmitting television services on a subscription basis. Through a series of industry agreements, this liability was shared with the pay and specialty programming services.

        In February 2001, the Copyright Board rendered a decision that set the royalty rates payable pursuant to Tariff 17A for 1996 to 2000. The royalty payable by small transmission systems was $10 per year. The monthly royalty payable by transmission systems (other than small transmission systems) for the signals of Canadian and American pay services was 2.1% of the transmitter's affiliation payments to these services in 1996 and 1.8% for the remainder of the tariff period. For all other signals transmitted, the monthly royalty payable by a transmitter is based on the total number of premises served in the system's licensed area and varies from $0.028 to $0.095 for 1996 to $0.044 to $0.155 for 2000. Royalties payable by a system located in a French-language market are calculated at a rate equal to 85% of the rate otherwise payable. Starting in 2001, SOCAN requested substantial increases to the Tariff 17A royalty rates, while several objectors requested changes to the tariff structure and royalty calculations. Starting in 2001, the royalty rates that had been approved for 2000 were continued on an interim basis pending a decision of the Copyright Board on SOCAN's proposed Tariff 17A.

        In March 2004, the Copyright Board changed the name of this tariff from Tariff 17A to Tariff 17 and rendered its decision setting Tariff 17 royalty rates for 2001 through 2004. The Copyright Board changed the structure of Tariff 17 to calculate the royalties based on the revenues of the pay and specialty programming services (affiliation payments only in the case of foreign and pay services, and all revenues in the case of Canadian specialty services) and set a basic royalty rate of 1.78% for 2001 and 1.9% for 2002 through 2004. The basic royalty rate is subject to reductions in certain cases, although there is no French-language discount. SOCAN has agreed that the 2005 tariff will continue on the same basis as in 2004, except for a proposed royalty rate of 2.1%.

Royalties for Pay Audio Services

        The Copyright Board of Canada rendered a decision on March 16, 2002 regarding two new tariffs for the years 1997-1998 to 2002, which provide for the payment of royalties from programming and distribution undertakings broadcasting pay audio services. The tariffs fix the royalties payable to SOCAN and to the Neighbouring Rights Collective of Canada, or NRCC, respectively, during this period at 11.115% and 5.265% of the affiliation payments payable during a month by a distribution undertaking for the transmission for private or domestic use of a pay audio signal. The royalties payable to SOCAN and NRCC by a small cable transmission system, an unscrambled low or very low power television station or by equivalent small transmission systems during this period were fixed by the Board at 5.56% and 2.63%, respectively, of the affiliation payments payable during a year by the distribution undertaking for the transmission for private or domestic use of a pay audio signal. Royalties payable by a system located in a French-language market during this period are calculated at a rate equal to 85% of the rate otherwise payable.

        In February 2005, the Copyright Board rendered its decision setting pay audio services royalties for 2003 through 2006. The Copyright Board fixed the rate of royalties payable to SOCAN and NRCC during this period to 12.35% and 5.85%, respectively, of the affiliation payments payable during a month by a distribution undertaking for the transmission for private or domestic use of a pay audio signal. In addition, the Copyright Board established the rate of royalties payable to SOCAN and NRCC during this period at 6.175%

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and 2.95%, respectively, for a small cable transmission system, an unscrambled low or very low power television station or an equivalent small transmission system. The Copyright Board also eliminated the previously effective 15% discount to royalties payable by a system located in a French-language market. We have made interim royalty payments for 2003 and 2004 based on the lower royalty rate of the 2002 tariffs. Consequently, there are retroactive royalty obligations owed by us since 2003. Along with all of the other broadcasting distribution undertaking and programming services, we are in the process of settling and paying these retroactive obligations to SOCAN and NRCC.

Tariff in Respect of Internet Service Provider Activities

        In 1996, SOCAN proposed a tariff (Tariff 22) to be applied against Internet service providers, in respect of composers'/publishers' rights in musical works communicated over the Internet to Internet service providers' customers. SOCAN's proposed tariff was challenged by a number of industry groups and companies. In 1999, the Copyright Board decided that Internet service providers should not be liable for the communication of musical works by their customers, although they might be liable if they themselves operated a musical website. In June 2004, the Supreme Court of Canada upheld this portion of the decision of the Copyright Board and determined that Internet service providers do not incur liability for copyright content when they engage in normal intermediary activities, including web hosting and caching. SOCAN's tariff proposal will, therefore, be subject to further consideration by the Copyright Board to determine what royalties should be paid by content providers in respect of music communicated over the Internet.

Access by Third Parties to Cable Networks

        In Canada, access to the Internet is a telecommunications service. While Internet access services are not regulated on a retail (price and terms of service) bases, Internet access for third-party Internet service providers is mandated and tariffed according to conditions approved by the CRTC for cable operators.

        On July 6, 1999, the CRTC required certain of the largest cable television operators, including Vidéotron, to submit tariffs for high-speed Internet access services, known as open access or third-party access, in order to allow competing retail Internet service providers to offer such services over a cable infrastructure. Some of our tariff elements, most notably the per end-user rate we may charge to third-party Internet service providers, were approved by the CRTC on an interim basis in August 2002. A revised cost study for our per end-user rate was filed with the CRTC in August 2004 and is under consideration. Other tariff elements, most notably those related to our interconnection architecture and service charges, were approved by the CRTC on an interim basis in November 2004. Other technical, operational and business policies to implement access services have been addressed by the CRTC Interconnection Steering Committee, or CISC, and technical tests have been concluded.

        Final tariff rates for our per end-user charge to Internet service providers and our other third-party interconnection service charges will be established pursuant to CRTC follow-up proceedings currently under way. We expect that interconnection by third-party Internet service providers to our cable network will commence in 2005.

        Until third-party access to our cable network is provided, the CRTC requires certain of the largest cable television operators, including Vidéotron, to allow third-party retail Internet service providers to purchase for the purpose of resale our retail high-speed Internet services at a discount of 25% off the lowest retail Internet service rate charged by us to our cable customers during a one-month period. This resale obligation will cease to be mandated once facilities-based access is available to Internet service providers.

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Organizational Structure

        Our current corporate structure is (certain immaterial subsidiaries have been omitted):

*

Vidéotron TVN inc. was liquidated into Vidéotron on January 1, 2005, and Vidéotron (1998) ltée was liquidated into Vidéotron on December 31, 2004. We expect that Vidéotron TVN inc. and Vidéotron (1998) ltée will be dissolved in 2005.

        All of the subsidiaries included in the above corporate chart are wholly owned and reside in Canada. CF Cable TV Inc. and Videotron (Regional) Ltd. do not guarantee our notes. They have undertaken to become guarantors of the notes at such time when the CF Cable notes are no longer outstanding.

Property, Plants and Equipment

        Our corporate offices are located in leased space at 300 Viger Avenue East, Montréal, Québec, Canada H2X 3W4. We own several buildings in Montréal, the largest of which is located at 150 Beaubien Street (approximately 27,850 square feet) and houses our primary headend. We also own a building of approximately 40,000 square feet in Quebec City where our regional headend for the Quebec City region is located. We also own or lease a significant number of smaller locations for signal reception sites and customer service and business offices. We generally lease space for the business offices and retail locations for the operation of our video stores.

        Our credit facilities are generally secured by charges over all of our assets and those of our subsidiaries. The CF Cable notes are generally secured by charges over all of its assets and those of its subsidiaries.

Intellectual Property

        We use a number of trademarks for our products and services. Many of these trademarks are registered by us in the appropriate jurisdictions. In addition, we have legal rights in the unregistered marks arising from their use. We have taken affirmative legal steps to protect our trademarks, and we believe our trademarks are adequately protected.

Environment

        Our operations are subject to federal, provincial and municipal laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air and water, the management and disposal of hazardous materials, the recycling of wastes and the cleanup of contaminated

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sites. Laws and regulations relating to workplace safety and worker health, which among other things, regulate employee exposure to hazardous substances in the workplace, also govern our operations.

        Compliance with these laws has not had, and management does not expect it to have, a material effect upon our capital expenditures, net income or competitive position. Environmental laws and regulations and the interpretation of such laws and regulations, however, have changed rapidly in recent years and may continue to do so in the future. The property on which our primary headend is located has contamination problems to various degrees related to historical use by previous owners as a landfill site and is listed by the authorities on their contaminated sites registry. We believe that such contamination poses no risk to public health, and we are currently updating our environmental studies to determine whether further intervention is required. In November 2004, our environmental studies reported improvements in the groundwater resources of this property, and we are presently in discussions with the authorities to remove this property from their contaminated sites registry. Our properties, and the areas surrounding all our properties, may have had historic uses or may have current uses which could have had or have an adverse environmental impact, and which may require further study or remedial measures. No material studies or remedial measures are currently anticipated or planned by us or required by regulatory authorities with respect to our properties. However, we cannot provide assurance that all environmental liabilities have been determined, that any prior owner of our properties did not create a material environmental condition not known to us, that a material environmental condition does not otherwise exist as to any such property, or that expenditure will not be required to deal with known or unknown contamination.

ITEM 5 — OPERATING AND FINANCIAL REVIEW AND PROSPECTS

OPERATING RESULTS

The following discussion and analysis provides information concerning our operating results and financial condition. This discussion should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this annual report. It also contains forward-looking statements, which are subject to a variety of factors that could cause actual results to differ materially from those contemplated by these statements. See "Forward-Looking Statements."

General

        Our consolidated financial statements have been prepared in accordance with Canadian GAAP, which differ from U.S. GAAP in certain respects. Note 22 to our audited consolidated financial statements contains discussions of the principal differences between Canadian GAAP and U.S. GAAP and the extent to which these differences affect our consolidated financial statements.

        On July 5, 2001, we acquired from our sole shareholder Quebecor Media its wholly-owned subsidiary Vidéotron (1998) ltée in exchange for one Series E preferred share and a promissory note. On October 7, 2003, our sole shareholder Quebecor Media transferred its wholly-owned subsidiaries SuperClub Vidéotron and Vidéotron TVN to us in exchange for additional shares of our capital stock. These transactions were between entities under common control and were accounted for by the continuity-of-interests method. The transfers were recorded at the carrying value of the subsidiaries' net assets at the moment of the applicable transfer, and the corresponding figures in our consolidated financial statements for periods before the transfers include those of Vidéotron (1998) ltée, SuperClub Vidéotron and Vidéotron TVN. Our subsidiary Vidéotron (1998) ltée was liquidated into Vidéotron on December 31, 2004. This transaction did not affect our consolidated financial statements.

        Our primary sources of revenue are subscriptions from our customers for cable television and Internet access services and the rental and sale of video cassettes and digital video discs, or DVDs. Our business is mostly subscription-based, which has historically provided stable revenues and low sensitivity to general economic conditions. We provide a wide variety of packages at a range of prices. Internet revenues include

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amounts from both our high-speed Internet access and dial-up customers. As of December 31, 2004, we had 502,630 high-speed Internet access customers and 23,973 dial-up customers.

        Because our cable television and Internet access services use the same network, we have only one significant business segment. Our other revenues consist primarily of revenues from sales of equipment and revenues from our subsidiary Société d'édition et de transcodage ltée, which provides certain broadcasting services, including television standards conversion and duplication, background music on cable channels, signal delivery, recording and distribution and caption subtitling for the hearing impaired.

        Our direct cost consists of television programming costs, Internet bandwidth and transportation costs, set-top box and modem costs and purchasing costs for video cassettes and DVDs. These costs vary with the number of customers and prices negotiated with our suppliers.

        Major components of operating expenses include salaries and benefits, subcontracting costs, advertising and regulatory contributions.

        We experienced a decline in the number of our basic cable customers in the years ended December 31, 2000, 2001 and 2002 and in the first half of 2003 due to increased competition from direct broadcast satellite and the impact of an eleven-month labor conflict. In April 2003, this labor conflict was resolved and we entered into collective bargaining agreements with 1,700 unionized employees. These agreements terminate in December 2006 and we believe these new agreements have resulted in operating expenses that are approximately $20 million lower, on an annualized basis, than what we would have incurred under our previous labor agreements. Despite this labor conflict, we experienced growth in the numbers of our digital and high-speed Internet access customers. Since July 2003, we recorded an increase in the number of our basic cable customers. We believe that this increase is due to our effort to improve customer service, the deployment of our products in retail stores and the return of our employees after the eleven-month labor conflict. See "Item 6 — Directors, Senior Management and Employees — Employees."

        During the year ended December 31, 2004, we recorded a net increase of 28,577 basic cable customers. During the same period, we also recorded net growth of 96,353 customers of our high-speed Internet access service and 92,801 customers of our digital television service, the latter of which includes customers who have upgraded from our analog cable service.

        As calculated in our consolidated financial statements included in this annual report, operating income for us means net income (loss) before depreciation and amortization, financial expenses, dividend income from parent company, other items (consisting primarily of restructuring charges), income taxes, non-controlling interest in a subsidiary and goodwill amortization. Operating income is not a measure of results that is consistent with Canadian or U.S. GAAP. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It is not intended to represent funds available for debt service, dividends, reinvestment or other discretionary uses, and should not be considered in isolation as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. We use operating income because management believes that it is a meaningful measure of performance commonly used in the cable industry and by the investment community to analyze and compare companies. It also facilitates year-over-year comparison of results since operating income excludes, among other things, unusual items that are not readily comparable from year to year. Our definition of operating income may not be identical to similarly titled measures reported by other companies. Operating income margin is operating income as a percentage of operating revenues.

        Average monthly revenue per user, or ARPU, is an industry term that we use to measure our average cable and Internet revenue per month per basic cable customer. ARPU is not a measurement under Canadian GAAP or U.S. GAAP, and our definition and calculation of ARPU may not be the same as identically titled measures reported by other companies. We calculate ARPU by dividing our combined cable television and

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Internet-access revenues for the applicable period by the average number of our basic cable customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Revenues

        Consolidated operating revenues for the year ended December 31, 2004 were $871.6 million, compared to $805.0 million for 2003, an increase of $66.6 million, or 8.3%. This increase would have been $76.2 million, or 9.5%, if we exclude the impact of the change in accounting policy for the timing of revenue and expense recognition regarding connection fees. See note 1(b) to our consolidated financial statements for the years ended December 31, 2002, 2003 and 2004 and "— Recent Canadian GAAP Accounting Pronouncements."

        Cable television revenues for the year ended December 31, 2004 increased by $17.9 million, or 3.2%, as compared to 2003. The increase would have been $25.5 million or 4.6% if we exclude the impact of the change in accounting policy. This growth was primarily a result of the increase in the number of basic cable customers, the sale of more lucrative packages and the price increases we gradually implemented beginning March 1st, 2004. In 2004, we increased the number of our basic cable customers by 28,410, or 2.0%, to 1,452,554 at December 31, 2004, which is the largest increase in the number of our basic cable customers since 1999. This compares to a decrease of 6,916 customers, or 0.5%, during 2003 for a total of 1,424,144 customers at December 31, 2003. We increased the number of digital customers by 92,801, or 38.5%, to 333,664 at December 31, 2004 compared to 69,238, or 40.3%, to 240,863 at December 31, 2003. ARPU increased from $32.89 to $34.00 before the change in accounting policy and reflects more lucrative packages and migration from analog to digital.

        Internet revenues for the year ended December 31, 2004 increased by $39.2 million, or 21.4%, as compared to 2003. The increase would have been $41.2 million, or 22.5%, if we exclude the impact of the change in accounting policy. This growth was due to a higher number of high-speed Internet customers in 2004, compared to 2003, along with price increases that we gradually implemented beginning in March 2004, offset by higher discounts on services sold to new customers. We increased the number of our high-speed Internet customers by 96,353, or 23.7%, to 502,630 at December 31, 2004, compared to 101,223, or 33.2%, to 406,277 at December 31, 2003. ARPU decreased from $39.15 to $39.10 before the change in accounting policy due to the mix of packages at lower price.

        Revenues from video stores for the year ended December 31, 2004 increased by $9.6 million, or 25.0%, as compared to 2003. This growth was due to the acquisition of all the assets of Jumbo Entertainment Inc., a franchisor and operator of 105 video and video games rental stores across Canada, which represents an increase of $4.7 million of revenues. The growth is also due to strong performance of the video game stores, higher revenues from retail sales and rentals, and the positive impact of higher royalties and annual fees.

        Other revenues, which consisted mainly of the sale of customers' equipment, were $24.3 million in the year ended December 31, 2004, compared to $24.4 million in 2003, a decrease of $0.1 million. This decline was due to a reduction of the selling price of digital terminals, offset by higher volume of sales of those terminals.

Direct Cost and Operating, General and Administrative Expenses

        Direct costs increased by $4.5 million, or 1.8%, to $250.4 million for the year ended December 31, 2004 from $246.0 million for 2003. Direct costs for cable television services for 2004, which consist of programming costs, were higher than for 2003 due to an increase in the number of our digital customers and increased penetration of our video-on-demand service. Internet access direct costs for the year ended

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December 31, 2004 were lower than for 2003 due to a significant reduction in bandwidth and transportation costs, which was partially offset by the higher volume resulting from an increased number of Internet access customers. We also benefited from lower acquisition cost and more favorable exchange rate on U.S. dollar for the set-top boxes and cable modems sold to customers.

        Operating, general and administrative expenses decreased by $3.8 million, or 1.3%, to $280.0 million for the year ended December 31, 2004 from $283.8 million for 2003. Lower operating expenses in the year ended December 31, 2004, resulted mainly from the deferral of $9.4 million of incremental and direct costs due to the adoption of the new accounting policy described above, offset by an increase in publicity and promotion expenses, plus an increase in programming fund expenses due to higher cable television revenues. The Supreme Court of Canada ruled that Internet service providers are not liable for royalties on content exchange through Internet. Therefore, a provision of $4.1 million, which was established in prior years, was recorded in 2004.

Operating Income

        Operating income for the year ended December 31, 2004 was $341.2 million, compared to $275.3 million for 2003, representing an increase of $65.9 million, or 23.9%. Operating income margin increased to 39.1% for the year ended December 31, 2004 from 34.2% for 2003. Subsidy on customers' equipment amounted to $36.7 million in the year ended December 31, 2004, or 4.2% of sales, compared to $35.6 million, or 4.4% of sales, in 2003. See note 8 under "Item 3 — Key Information — Selected Financial Data" for the reconciliation of operating income to net income.

Depreciation and Amortization

        Depreciation and amortization expenses for the year ended December 31, 2004 were $130.2 million, an increase of $7.2 million, or 5.9%, from $123.0 million for 2003. This increase was attributable to ongoing capital expenditures required to support an increased number of Internet access customers, network extensions and maintenance capital. We also revised the useful life of digital set-top boxes from 10 years to 7 years and cable modems from 6 years to 5 years, which caused additional amortization expenses of $4.6 million in 2004.

Financial Expenses, Dividend Income and Other Items

        Financial expenses for the year ended December 31, 2004 were $178.0 million, as compared to $64.6 million for 2003, an increase of $113.4 million. This increase was attributable to $108.5 million of interest expense on the $1.1 billion subordinated loan with Quebecor Media, which was compensated by $111.1 million of dividend income related to the $1.1 billion investment in the preferred shares of Quebecor Media. See "— Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan." The increase is also due to a foreign exchange loss of $1.3 million on U.S. dollar-denominated long-term debt, compared to a gain of $23.6 million in 2003, offset by a write-off of financing costs and other charges upon early redemption of long-term debt of $4.8 million, compared to $17.1 million in 2003. We also reduced our interest expenses on long-term debt due to lower interest rates in 2004.

        Other items for the year ended December 31, 2003 consisted of the reversal of $2.5 million of the revised restructuring provision that had been taken in the fourth quarter of 2002.

Income Taxes

        Income taxes recovery for the year ended December 31, 2004 was $3.4 million, compared to $26.8 million of income taxes expenses for 2003, representing an effective tax rate of -2.4%, compared to

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29.7% in 2003, a decrease of 32.1% based on income before income taxes and non-controlling interest. This decline is mainly due to tax consolidation transactions where the dividend income received from Quebecor Media was non-taxable. A reversal of an income taxes provision of $17.5 million was recorded in 2004 due to the settlement of notices of assessments also reduced our income taxes.

Net Income

        Our net income was $147.4 million for the year ended December 31, 2004, as compared to $63.3 million for 2003, an increase of $84.1 million, or 132.9%. This increase was mainly due to improvement in revenues and operating income and from a lower effective tax rate due to the tax consolidation transactions with Quebecor Media. See "— Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan."

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Revenues

        Consolidated operating revenues for the year ended December 31, 2003 were $805.0 million, compared to $781.0 million for the year ended December 31, 2002, an increase of $24.0 million or 3.1%. ARPU increased to $43.68 in the year ended December 31, 2003 from $40.70 in 2002, representing a 7.3% increase.

        Cable television revenues for the year ended December 31, 2003 decreased $20.3 million, or 3.5%, as compared to 2002. This decrease was primarily the result of the decline in the number of our basic cable customers, partially offset by price increases we implemented in February 2003. We recorded a decrease of 6,916 basic cable customers for the year ended December 31, 2003, as compared to a reduction of 79,348 basic cable customers in 2002. However, during the last two quarters of 2003, we recorded net additions to our basic cable customers of 21,146, as compared to a loss of 23,649 during the same period in 2002. This increase was due to our effort to improve customer service, the deployment of our products in retail stores and the return of our employees after an eleven-month labor conflict that was settled in April 2003. The number of our digital customers increased by 69,238, or 40.3%, from December 31, 2002 to December 31, 2003, for a total of 240,863 digital customers as of December 31, 2003. Digital penetration of our customer base increased from 12.0% as at December 31, 2002 to 16.9% at December 31, 2003.

        Internet revenues for the year ended December 31, 2003 increased $47.8 million, or 35.2%, as compared to 2002. This growth was due to the net addition of 101,223 high-speed Internet access customers in 2002 and price increases that we gradually implemented beginning in the second half of 2002. High-speed Internet penetration of our total homes passed increased from 13.1% at December 31, 2002 to 17.3% at December 31, 2003.

        Revenues from video stores for the year ended December 31, 2003 increased $3.1 million, or 8.8%, as compared to 2002. This growth was due to higher revenues generated by our franchised video stores and by a higher volume of rentals of video cassettes, DVDs and video games in our corporate video stores.

        Other revenues for year ended December 31, 2003 were $6.7 million lower than during the year ended December 31, 2002. This decrease was due to the lower selling prices for cable modems in 2003, which was partially offset by a higher volume of digital terminals sold to our customers.

Direct Costs and Operating, General and Administrative Expenses

        Direct costs declined $13.7 million, or 5.3%, to $246.0 million for the year ended December 31, 2003 from $259.7 million for 2002. As a percentage of total revenues, direct costs declined to 30.6% for the year ended December 31, 2003 from 33.3% for 2002. Direct costs for cable television services for the year ended December 31, 2003 were lower than for the year ended December 31, 2002. This was primarily the result of

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the decline in our programming costs due to a decrease in the number of our basic cable customers and the resolution of a dispute with service providers. Direct costs for Internet access for the year ended December 31, 2003 were also lower than for the previous year. This decrease was due to a significant reduction in bandwidth and transportation costs, which was partially offset by the higher volume resulting from an increased number of Internet access customers. Direct costs for customers' equipment for the year ended December 31, 2003 were the same as for 2002. Although the volume of units sold to our customers in 2003 were greater than in 2002, this was offset by a reduction in the purchase price for the equipment.

        Operating, general and administrative expenses declined $2.0 million, or 0.7%, to $283.8 million for the year ended December 31, 2003 from $285.8 million for 2002. As a percentage of total revenues, operating, general and administrative expenses declined to 35.3% in the year ended December 31, 2003 from 36.6% for 2002. Ongoing efforts to reduce costs partially served to reduce operating, general and administrative expenses in the year ended December 31, 2003, but these efforts were partially offset by the recording as indirect costs of $8.0 million in expenses that had been capitalized in prior years. In addition, higher non-recurring items in the year ended December 31, 2002, as compared to 2003, also contributed to the decline in operating, general and administrative expenses in 2003 for an amount of $7.7 million.

Operating Income

        Operating income for the year ended December 31, 2003 was $275.3 million, as compared to $235.5 million for the same period in 2002, representing an increase of $39.8 million or 16.9%. This growth in operating income was a result of the increase in revenues, combined with cost reductions and the absence of non-recurring costs. Operating income margin increased to 34.2% for the year ended December 31, 2003 from 30.1% for 2002. See note 8 under "Item 3 — Key Information — Selected Financial Data" for the reconciliation of operating income to net income.

Depreciation and Amortization

        Depreciation and amortization expenses for the year ended December 31, 2003 were $123.0 million, an increase of $3.0 million, or 2.5%, as compared to $120.0 million for 2002. This growth was attributable to ongoing capital expenditures required to support an increased number of Internet access customers, network extensions and maintenance capital, which were partially offset by lower amortization of deferred charges.

Financial Expenses and Other Items

        Financial expenses for the year ended December 31, 2003 were $64.6 million, as compared to $76.2 million for 2002, a reduction of $11.6 million, or 15.2%. This reduction in financial expenses was due to lower interest expense on long-term debt, and a $23.6 million foreign exchange gain on U.S. dollar-denominated long-term debt, as compared to a foreign exchange gain on U.S. dollar-denominated debt of $2.2 million in 2002. The write-off of financing costs and the termination costs of a swap agreement, which amounted to $17.1 million in 2003, partially offset the reduction in financial expenses.

        Other items for the year ended December 31, 2003 consisted of a $2.5 million reversal of the restructuring provision that had been taken in the fourth quarter of 2002.

Net Income

        Our net income was $63.3 million in the year ended December 31, 2003, as compared to $11.5 million in 2002, an increase of $51.8 million, or 450.4%.

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Liquidity and Capital Resources

        Our principal liquidity and capital resource requirements consist of:

•

capital expenditures to maintain and upgrade our network in order to support the growth of our customer base;



•

the cost of migrating our customers from analog to digital cable television service;



•

the service and repayment of our debt; and



•

the payment of dividends to our shareholder.

Capital Expenditures

        During the year ended December 31, 2004, we invested $123.0 million in fixed assets, as compared to $90.3 million during 2003, an increase of $32.7 million. This growth is mainly to increase the capacity of our Internet network in order to maintain and improve the quality of service offered to our Internet access customers, as the number of customers continue to grow. The speed of our Internet access service was also increased during the year. We continue to focus on success-driven capital spending and maintaining our network so that it remains in very good condition.

        During the year ended December 31, 2003, we invested $90.3 million in capital expenditures, as compared to $93.0 million in capital expenditures in 2002, representing a decline of $2.7 million, or 2.9%. We spent $7.1 million to implement our new video-on-demand service. We also invested $8.0 million to support the growth of our Internet access service.

        In addition to maintenance capital expenditures, we decided in December 2003 to invest in additional capital expenditures to upgrade our two-way capability network in Quebec City to increase the bandwidth from 480 MHz to 750 MHz or greater, and we are currently contemplating additional capital expenditures to similarly upgrade our network in Central Québec. We estimate that $26.8 million of capital expenditures over two years will be required to upgrade our network in Quebec City, and we believe that our cash flow from operating activities will be sufficient to meet these anticipated capital expenditures. If we were to proceed with the upgrade of our network in Central Québec, we estimate that these capital expenditures could amount to approximately $15 million over two years.

Servicing and Repayment of Our Debt

        During the year ended December 31, 2004, we made mandatory repayments of $37.5 million on our long-term debt, as compared to $70.8 million in 2003. During the year ended December 31, 2004, we made cash interest payments of $51.1 million (excluding the interest on the subordinated debt for tax consolidation with Quebecor Media), as compared to $61.1 million for the year ended December 31, 2003.

        On November 19, 2004, we issued US$315.0 million aggregate principal amount of our 6⁷/8% Senior Notes due January 15, 2014 and amended the terms of our credit agreement to increase our total borrowing capacity under our revolving credit facility by $350.0 million to $450.0 million and to extend its maturity to November 2009. The new notes were sold at a 5% premium to their face amount and resulted in gross proceeds of approximately US$330.8 million (or approximately Cdn$396.2 million) before accrued interest and an effective interest rate of 6.15%. The net proceeds from this offering were used to repay in full the outstanding indebtedness under the $318.1 million Term C loan of our credit facilities and to declare and pay a dividend of $54.6 million to Quebecor Media, our parent company. The remainder of such net proceeds will be used for other general corporate purposes. Financing costs of $6.2 million were incurred for the transactions and will be amortized over the life of the financings.

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        During the year ended December 31, 2003, we made cash interest payments of $61.1 million, as compared to $73.4 million for the year ended December 31, 2002. During the year ended December 31, 2003, we borrowed $150.0 million in the form of a subordinated loan from our parent company, Quebecor Media, and used the proceeds of this loan to repay an equivalent amount under our credit facilities. On October 8, 2003, we refinanced our debt. We issued US$335.0 million aggregate principal amount of our 6⁷/8% Senior Notes due January 15, 2014, repaid in full and terminated the Term A and Term B loans under our original credit facilities, borrowed $368.1 million under a new Term C loan and reduced the aggregate amount we may borrow under our revolving credit facility from $150.0 million to $100.0 million. As part of this transaction, we also terminated our foreign currency swap relating to the fully repaid and terminated Term B loan. As a result of this transaction, the mandatory repayments of our credit facilities were reduced to $50.0 million per year, with the remainder due in 2008. Financing costs of $9.1 million were incurred for this transaction and will be amortized over the life of the financing.

        For the year ended December 31, 2002, we repaid $159.3 million of our long-term debt.

Payment of Dividends

        During the year ended December 31, 2004, we paid $205.2 million in dividends to our sole shareholder, Quebecor Media, as compared to $20.0 million in 2003. No dividends were paid during the year ended December 31, 2002. We expect to pay dividends to Quebecor Media in the future, subject to the terms of our indebtedness and applicable law.

Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan

        Unlike corporations in the United States, corporations in Canada are not permitted to file consolidated tax returns. As a result, we entered into certain transactions that had the effect of consolidating tax losses within the Quebecor Media group.

        In the first quarter of 2004, our wholly owned subsidiary, Vidéotron (1998) ltée, entered into a back-to-back transaction by borrowing a $1.1 billion subordinated loan from Quebecor Media and using the proceeds to invest in $1.1 billion of Quebecor Media preferred shares. The subordinated loan, maturing on January 16, 2019 and bore interest at an annual rate of 10.75% payable semi-annually. The Quebecor Media preferred shares were redeemable at the option of Quebecor Media and retractable at our option at the paid-up value and carried a 11.0% annual fixed cumulative preferential dividend payable semi-annually. During the year ended December 31, 2004, we made cash interest payments of $108.5 million with respect to the subordinated loan and received $111.1 million in dividends with respect to our ownership of the Quebecor Media preferred shares. On December 16, 2004, this subordinated loan was repaid in full with the proceeds from the redemption of the preferred shares of Quebecor Media, and this back-to-back transaction was unwound.

        This subordinated loan and our investment in Quebecor Media preferred shares for the same principal amounts had the effect of significantly reducing our income tax obligation. This is because the interest expense on the subordinated loan was deductible for income tax purposes, while the dividend income on the Quebecor Media preferred shares was not taxable.

Retractable Preferred Shares

        During the year ended December 31, 2003, we issued one retractable Series F preferred share to Quebecor Media, which was presented as a liability in our consolidated financial statements at a retraction price of $2.0 million. During the year ended December 31, 2004, this preferred share was redeemed at the retraction price. The excess of the retraction price over the stated capital of this preferred share was credited to our contributed surplus account in an amount of $1.7 million.

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        In 2002, we issued retractable Series E preferred shares to Quebecor Media, which were presented as a liability in our consolidated financial statements at the retraction price of these shares. During the year ended December 31, 2003, these preferred shares were exchanged for our common shares. The excess of the retraction price over the stated capital of these preferred shares was credited to our contributed surplus account in an amount of $301.2 million.

Contractual Obligations and Other Commercial Commitments

        Contractual Obligations.    Our material obligations under firm contractual arrangements, including commitments for future payments under our credit facilities, notes, the CF Cable notes and operating lease arrangements, as of December 31, 2004, are summarized below and are disclosed in notes 13, 16 and 17 to our audited consolidated financial statements.

			Payments Due By Period
	Total		< 1 years		2-3 years		4-5 years		> 5 years
	(dollars in millions)
Contractual obligations:
Notes	$	796.6	$	—	$	—	$	—	$	796.6
CF Cable notes		92.3		—		92.3		—		—
QMI subordinated loan		150.0		—		—		—		150.0
Operating leases and other debt		52.0		34.8		9.8		5.1		2.3
Total contractual cash obligations	$	1,090.9	$	34.8	$	102.1	$	5.1	$	948.9

        During the year ended December 31, 2004, we made mandatory principal repayments on our bank credit facilities, and we had no outstanding balance on these facilities as of December 31, 2004. On November 19, 2004, concurrently with the issuance of US$315.0 million in principal amount of our notes (which was in addition to the US$335.0 million in principal amount of our notes then outstanding), we repaid in full the outstanding indebtedness under the $318.1 million Term C loan of our credit facilities and increased our total borrowing capacity under our revolving credit facility by $350.0 million to $450.0 million and extended its maturity to November 2009. Our subordinated loan from Quebecor Media is repayable in 2015 and requires no debt amortization. The CF Cable notes are due in 2007 and are redeemable at our option on or after July 15, 2005 at 100.0% of their principal amount.

        We rent equipment and premises under various operating leases. As of December 31, 2004, we estimated that the minimum aggregate payments under these leases over the next five years will be approximately $27.0 million. During the year ended December 31, 2004, we renewed or extended several leases and entered into new operating leases. Furthermore, we are committed to buy in 2005 customers' premise equipment from a supplier for an estimated amount of $25.0 million.

        Effective January 1, 2002, we entered into a five-year management services agreement with Quebecor Media for services it provides to us, including internal audit, legal and corporate, financial planning and treasury, tax, real estate, human resources, risk management, public relations and other services. This agreement provides for an annual management fee payable to Quebecor Media of $6.5 million for the year ended December 31, 2004 and amounts to be agreed upon for the years 2005 and 2006. Management fees payable to Quebecor Media are expected to be $10.5 million for the year ended December 31, 2005. See "Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions — Management Services and Others."

        As of December 31, 2004, there were no material commitments for capital expenditures.

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Sources of Liquidity and Capital Resources

        Our primary sources of liquidity and capital resources are:

•

funds from operations;



•

financing from related party transactions;



•

capital market debt financings; and



•

our credit facilities.

        Funds from Operations.    Cash provided by operating activities during the year ended December 31, 2004 was $310.7 million, as compared to $194.1 million in 2003, an increase of $116.6 million, or 60.1%. Cash flows from operations before changes in non-cash operating items amounted to $296.9 million for the year ended December 31, 2004, as compared to $220.4 million in 2003. This $76.5 million increase is mainly due to improved revenues and a reduction in interest expense on long-term debt (excluding the subordinated debt for tax consolidation with Quebecor Media). Cash provided by the changes in non-cash operating items was $13.8 million for the year ended December 31, 2004, as compared to $26.3 million used for 2003, an increase of $40.1 million. The variation in non-cash operating items is mainly due to the timing in the payments made to suppliers.

        Cash provided by operating activities during the year ended December 31, 2003 was $194.1 million, as compared to $195.9 million for the year ended December 31, 2002, a decline of $1.8 million. Cash flow from operations before changes in non-cash operating items, amounted to $220.4 million for the year ended December 31, 2003, as compared to $143.8 million for 2002, an increase of $76.6 million or 53.3%. This increase was due to the improvement in operating results. Non-cash operating items used $26.3 million during the year ended December 31, 2003, as compared to $52.1 million provided in 2002, a decrease of $78.4 million. The payment of accrued restructuring charges, payments to programming suppliers and to affiliated companies caused the variation.

        Financing from Related Party Transactions.    In the year ended December 31, 2003, we borrowed $150.0 million under a subordinated loan from our parent company, Quebecor Media. The loan, maturing in 2015 and bearing interest at bankers' acceptance rate plus 1.5%, is subordinated in right of payment to the prior payment in full of the entirety of our existing and future indebtedness under our credit facilities and to the notes. On October 8, 2003, the terms of this subordinated loan were amended such that interest throughout the term of the loan is payable in cash at our option. See "Item 10 — Additional Information Material Contracts — Subordinated Loan Agreement, dated as of January 16, 2004, between Quebecor Media Inc. and Vidéotron (1998) ltée."

        On January 16, 2004, we borrowed $1.1 billion in the form of a subordinated loan from our sole shareholder, Quebecor Media. We used all the proceeds from this loan to purchase 1,100,000 preferred shares, Series D of Quebecor Media. On December 16, 2004, Quebecor Media redeemed these preferred shares, and we used the proceeds from this redemption to repay in full the outstanding amounts under the $1.1 billion subordinated loan. See "Item 10 — Additional Information Material Contracts — Subordinated Loan Agreement, dated as of January 16, 2004, between Quebecor Media Inc. and Vidéotron (1998) ltée" and "— Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan."

        Interest Rate and Foreign Exchange Management.    We use certain financial instruments, such as interest rate swaps, currency swap agreements and cross-currency interest rate swap agreements, to manage our interest rate and foreign exchange exposure on debt instruments. These instruments are not used for trading or speculative purposes. See "— Quantitative and Qualitative Disclosure about Market Risk."

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        We expect that our cash requirements relating to our existing operations over the next twelve months will be to fund operating activities and working capital, capital expenditures and debt service payments. We plan to fund these requirements from the sources of cash described above.

        We believe that, based on our current levels of operations and anticipated growth, our cash from operations, together with our other available sources of liquidity, will be sufficient for the foreseeable future to fund anticipated capital expenditures and to make required payments of principal and interest on our debt, including payments due on the notes and under our credit facilities, as amended. We also expect, to the extent permitted by the terms of our indebtedness and applicable law, to pay dividends to Quebecor Media in the future.

Summary of Critical Accounting Policies

        The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Consequently, actual results could differ from these estimates. We believe that the following are some of the more critical areas requiring the use of management estimates.

Long-Lived Assets

        We review our property and equipment for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment is measured by comparing the carrying amount of the assets to the projected cash flows the assets are expected to generate. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value.

        We also evaluate goodwill for impairment on at least an annual basis and whenever events or circumstances indicate that the carrying amount may not be recoverable from its estimated future cash flows. Impairment of goodwill is measured at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit, which are established based on projected discounted future cash flows of the unit using a discount rate reflecting our average cost of funds. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired, and a second test is performed to measure the amount of impairment loss.

        In our determination of the recoverability of property, equipment and goodwill, we based our estimates used in preparing the discounted cash flows on historical and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Employee Future Benefits

        Pensions.    Pension costs of our defined benefit pension plan are determined using actuarial methods and could be impacted significantly by our assumptions regarding future events, including expected return on plan assets and rate of compensation increases. The fluctuation of the discount rate at each measurement date also has an impact.

        Other Post-Retirement Benefits.    We accrue the cost of post-retirement benefits, other than pensions, which are impacted significantly by a number of management assumptions, such as the discount rate, the rate of compensation increase, and an annual rate of increase in the per capita cost of covered benefits. These benefits, which are funded by us as they become due, include mainly health and life insurance programs and cable service.

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        Employee future benefits accounting policy is explained at note 1(m) to our audited consolidated financial statements, and assumptions on expected return on plan assets, rate of compensation increases and discount rates are disclosed in note 3 to our audited consolidated financial statements.

Subsidies on Equipment Sold to Customers

        During the fourth quarter ended December 31, 2003, we revised our accounting policies for the sale of equipment to our customers. Up to the end of the third quarter ended September 30, 2003, the costs of subsidies granted to our customers on the equipment sold were capitalized and amortized over a three-year period on a straight-line basis. We changed our accounting policies to expense, as they are incurred, the costs related to our customers' subsidies. These changes have been applied retroactively.

Off-Balance Sheet Arrangements

Operating Leases

        We have guaranteed a portion of the residual values of certain assets under our operating leases with expiry dates between 2005 and 2009, to the benefit of the lessor. If the fair value of the assets, at the end of their respective lease terms, is less than the residual value guaranteed, then we must, under certain conditions, compensate the lessor for a portion of the shortfall. The maximum exposure in respect of these guarantees is $8.3 million. As at December 31, 2004, we have not recorded a liability associated with these guarantees because we do not expect to make any payments pertaining to the guarantees of these leases.

Guarantees under Lease Agreements

        One of our subsidiaries has provided guarantees to the lessor of certain of the franchisees for operating leases, with expiry dates through 2009. If a franchisee defaults under the agreement, the subsidiary must, under certain conditions, compensate the lessor for the default. The maximum exposure in respect of these guarantees is $6.6 million. As at December 31, 2004, this subsidiary has not recorded a liability associated with these guarantees because it is its present estimation that no franchisee will default under the applicable agreement. Recourse against the sub-lessee is also available up to the total amount due.

Guarantees Related to the Notes

        Under the terms of the indenture governing the existing notes issued on October 8, 2003 and November 19, 2004, we are committed to pay any amount of withholding taxes that could eventually be levied by any Canadian Taxing Authority (as defined in the indenture) on payments made to the lenders so that the amounts the lenders would receive are not less than amounts receivable if no taxes are levied. The amount of such guarantee is not limited and it is not possible for us to establish a maximum exposure amount of the guarantee because our exposure depends exclusively on the future actions, if any, by the Canadian Taxing Authorities. Although no recourse exists for such liability, we have the right to redeem the existing notes at their face value if such taxes were levied by any Canadian Taxing Authority, thereby terminating the guarantee.

Risks and Uncertainties

        In the normal course of business, we are exposed to fluctuations in interest rates and exchange rates. We manage this exposure through staggered maturities and an optimal balance of fixed and variable rate obligations. As at December 31, 2004, we were using derivative financial instruments to reduce our exchange rate and interest rate exposure.

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        While these agreements expose us to the risk of non-performance by a third party, we believe that the possibility of incurring such loss is remote due to the creditworthiness of the parties with whom we deal. A description of the financial derivatives used by us as at December 31, 2004 is provided in note 1(j) to our audited consolidated financial statements included in this report and in "— Quantitative and Qualitative Disclosure about Market Risk."

        Concentration of credit risk with respect to trade receivables is limited due to our large customer base and low receivable amounts from individual customers. As of December 31, 2004, we had no significant concentration of credit risk.

Regulation

        We are subject to extensive government regulation mainly through the Broadcasting Act (Canada) and the Telecommunications Act (Canada), both of which are administered by the Canadian Radio-television and Telecommunications Commission. Changes to the regulations and policies governing broadcast television, specialty channels and program distribution through cable and direct broadcast satellite services, Internet service providers, Voice over IP services, the introduction of new regulations or policies or terms of license or treatment of the tax deductibility of advertising expenditures could have a material effect on our business, financial condition or results of operations. See "Item 4 — Information on the Company — Business Overview — Regulation."

Canadian and United States Accounting Policy Differences

        We prepare our financial statements in accordance with Canadian GAAP, which differ in certain respects from U.S. GAAP. The areas of material differences and their impact on our financial statements are described in note 22 to our audited annual consolidated financial statements. Significant differences include the accounting for derivative financial instruments and the accounting for development and pre-operating costs.

        Under Canadian GAAP, derivative financial instruments are accounted for on an accrual basis, with gains and losses being deferred and recognized in income in the same period and in the same financial category as the income or expenses arising from the corresponding hedged position. Under U.S. GAAP, derivative financial instruments are recorded at fair value.

        Under Canadian GAAP, certain development and pre-operating costs, which satisfy specified criteria for recoverability, are deferred and amortized. Under U.S. GAAP, these costs are expensed as incurred.

        Under U.S. GAAP, we would apply push-down accounting to reflect the new basis of the assets and liabilities after the acquisition of us by Quebecor Media. Under the push-down basis of accounting, the following adjustments were accounted from the acquisition date:

		As of October 23, 2000
		(dollars in thousands)
Fixed assets		$	114,608
Deferred charges			(22,585	)
Goodwill			4,360,512
	Change in assets		4,452,535
Accrued charges			40,445
Future income taxes			24,930
	Change in liabilities		65,375
Change in contributed surplus		$	4,387,160

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        Since the date of Quebecor Media's acquisition of us, we recorded in 2002 a goodwill impairment loss of $2.0 billion. In 2004, Quebecor Media and we materialized income tax benefits in the amount of $84.3 million, which had not been recognized at the date of Quebecor Media's acquisition of us. Consequently, for 2004, the goodwill was reduced by $84.3 million, contributed surplus was reduced by $67.4 million and income tax expense for U.S. GAAP purposes was increased by $16.9 million.

Recent Canadian GAAP Accounting Pronouncements

        In 2004, we revised our accounting policy for the timing of revenue and expense recognition regarding connection fees charged to our customers by adopting the Canadian Institute of Chartered Accountants (CICA) Emerging Issues Committee Abstract 141 for revenue recognition and Abstract 142 for revenue arrangements with multiple deliverables. We adopted the new policy prospectively without restatement of any prior period.

        Effective January 1, 2004, connection fee revenues are deferred and recognized as revenues over 30 months, which is the estimated average period that customers are expected to remain connected to our network. The incremental and direct costs related to connection fees, in an amount not exceeding the related connection fee revenue, are also deferred and recognized as an operating expense over the same 30-month period. Previously, connection fees and their related incremental and direct costs were recognized immediately in our operating revenues and expenses. This change in accounting policy had a minor effect on operating income and net income. For the year ended December 31, 2004, $9.6 million of revenues and $9.4 million of expenses were deferred in relation to this accounting change.

        The CICA has also issued section 1100 of the CICA Handbook, Generally Accepted Accounting Principles. Section 1100 establishes standards for financial reporting in accordance with generally accepted accounting principles, and it describes both what constitutes, as well as the sources of, Canadian GAAP. This section also provides guidance on which sources to consult when selecting accounting policies and determining appropriate disclosures when a matter is not dealt with explicitly in the primary sources of generally accepted accounting principles. Section 1100 of the CICA Handbook came into force on January 1, 2004. In accordance with common industry practices, equipment subsidies were deferred and amortized over a period of three years, and customer reconnection costs were capitalized and depreciated over a three-year or a four-year period on a straight-line basis. Industry practices no longer qualify as being acceptable under Canadian GAAP.

        Under new accounting principles, the proceeds from sales of equipment to customers are accounted for as revenues, the cost of the equipment sold to customers is accounted for as the cost of sales and customer reconnection costs are accounted for as operating expenses when incurred.

        During the year ended December 31, 2003, we revised our accounting policies on equipment subsidies and customer reconnection costs to be in accordance with the new accounting principles. These changes have been applied retroactively and had the following effects for the fiscal year ended December 31, 2002. The operating revenues increased by $25.4 million, the direct and operating costs increased by $63.1 million, the depreciation expense, the income tax expense and net income decreased by $21.2 million, $5.2 million and $11.3 million respectively.

        As at December 31, 2002, deferred charges decreased by $35.2 million, fixed assets decreased by $10.7 million, future income tax assets increased by $16.1 million and the deficit as at January 1, 2001 increased by $17.7 million. The retroactive application of these changes did not affect the amounts presented for prior periods under U.S. GAAP because the new accounting policies with respect to equipment subsidies and customer reconnection costs are consistent with the applicable existing accounting policies under U.S. GAAP.

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        We chose to implement this change in our accounting policies in the fourth quarter ended December 31, 2003 in accordance with the provisions of Section 1506, Accounting Changes, of the CICA Handbook. Section 1506 of the CICA Handbook generally requires that changes in accounting policies be applied retroactively, except where certain conditions apply.

        Had we not made this accounting change in 2003, we would have been required to do so on January 1, 2004, the date on which Section 1100 of the CICA Handbook came into effect. Under the provisions of Section 1100 of the CICA Handbook, the change would have been applied on a prospective basis and would have resulted in a lack of comparability of operating results for the periods in which different accounting principles were used.

        In June 2003, the CICA amended the standards on the presentation and disclosure of financial instruments included in Section 3860 of the CICA Handbook, Financial Instruments — Disclosure and Presentation. The new standards require obligations that may be settled at the issuer's option by a variable number of the issuer's own equity instruments to be presented as liabilities. Thus, securities issued by an enterprise that give the issuer unrestricted rights to settle the principal amount in cash or in the equivalent value of its own equity instruments will no longer be presented as equity. These revised standards are applicable to financial periods starting on or after November 1, 2004. We did not apply these new standards prior to that date.

        In March 2003, the CICA issued Section 3110 of the CICA Handbook, Asset Retirement Obligations. This section establishes standards for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standards require an entity to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and when a reasonable estimate of fair value can be made. The standards define the fair value as the amount at which that liability could be settled in a current transaction between willing parties, other than in a forced or liquidation transaction. An entity is subsequently required to allocate that asset retirement cost to amortize it over its useful life. The standards in Section 3110 are applicable to financial periods starting on or after January 1, 2004. We implemented these new standards in the first quarter of 2004. The adoption of these standards had no impact on our consolidated financial statements for the first quarter ended March 31, 2004.

        In December 2002, the CICA issued Section 3063 of the CICA Handbook, Impairment or Disposal of Long-lived Assets. Section 3063 amends existing guidance on long-lived asset impairment measurement and establishes standards for the recognition, measurement and disclosure of the impairment of long-lived assets held for use by us. It requires that an impairment loss be recognized when the carrying amount of a long-lived asset to be held and used exceeds the sum of the undiscounted cash flows expected from its use and eventual disposal; an impairment should be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. This guideline is harmonized with the corresponding guideline under U.S. GAAP. The new standards in Section 3063 are applicable for financial periods beginning on or after April 1, 2003. We implemented the new standards in the first quarter of 2004. The adoption of these standards had no impact on our consolidated financial statements for the first quarter ended March 31, 2004.

        Since January 1, 2002, in conformity with the recommendations of Section 3870 of the CICA Handbook, we account for all stock-based awards granted by Quebecor Media to certain of our employees that are direct award of stock or call for settlement in cash or other assets, including stock appreciation rights, by the fair value method. Under the fair-value based method, compensation cost attributable to awards to employees that call for settlement in cash or other assets is recognized over the vesting period in operating expenses. Changes in fair value between the grant date and the measurement date result in a change in the measure of the compensation cost.

        In November 2001, the CICA issued Accounting Guideline 13, Hedging Relationship, and in November 2002 the CICA amended the effective date of this guideline. This accounting guideline establishes new criteria for hedge accounting and applies to all hedging relationships in effect on or after January 1,

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2004. On January 1, 2004 we re-assessed all hedging relationships to determine whether the criteria established by the CICA's new accounting guideline were met or not and we began applying the new guideline on a prospective basis. To qualify for hedge accounting, the hedging relationship must be appropriately documented at the inception of the hedge and there must be reasonable assurance, both at the inception and throughout the term of the hedge, that the hedging relationship will be effective. Effectiveness requires a high correlation of changes in fair values or cash flow between the hedged item and the hedging item. Since the new Canadian criteria for documentation of hedge accounting are consistent with existing U.S. criteria for qualifying for hedge accounting, with which we comply, there was no material impact from adopting this accounting guideline.

        On January 27, 2005, the CICA issued the following new standards in the CICA Handbook relating to the reporting of financial instruments:

•

Section 1530, Comprehensive Income;



•

Section 3251, Equity (replacing Section 3250, Surplus);



•

Section 3855, Financial Instruments — Recognition and Measurement; and



•

Section 3865, Hedges.

These new standards will become effective for interim and annual financial statements relating to fiscal years beginning on or after October 1, 2006. Earlier adoption of these new standards is permitted only as of the beginning of a fiscal year ending on or after December 31, 2004. We are currently assessing the impact that these new standards will have on our financial statements prepared in accordance with Canadian GAAP. We believe, however, that these new standards are similar to those currently used for U.S. GAAP purposes.

Recent U.S. GAAP Accounting Pronouncements

        In May 2003, FASB issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150), which requires companies to evaluate certain financial instruments within the scope of the standard to determine their appropriate classification as liabilities measured at their fair value. FAS 150 is effective immediately for all financial instruments of public companies entered into or modified after May 31, 2003, and it is otherwise effective for the first interim period beginning on or after June 15, 2003. This Statement had no impact on our financial statements.

        In April 2003, FASB issued Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This statement amends the financial accounting and reporting for derivative instruments to clarify the definition of a derivative, expand the nature of exemptions from the statement, clarify the application of hedge accounting when using certain instruments, clarify when an embedded derivative with an underlying that is an interest rate or interest rate index is not considered clearly and closely related to the host contract, and modify the cash flow presentation of derivative instruments that contain financing elements. This statement is effective for derivative transactions and hedging relationships entered into or modified after June 30, 2003. This Statement had no impact on our financial statements.

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ITEM 6 — DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

        The following table presents certain information concerning our directors and executive officers as of February 28, 2005:

Name and Municipality of Residence	Age	Position
ROBERT DÉPATIE Rosemère, Québec	46	Director and President and Chief Executive Officer
SERGE GOUIN Outremont, Québec	61	Director and Chairman of the Board
JEAN LA COUTURE, FCA(1) Montréal, Québec	58	Director
FRANÇOIS LAURIN(1) Pointe Claire, Québec	44	Director
JACQUES MALLETTE Longueuil, Québec	47	Director and Executive Vice President
JEAN-LOUIS MONGRAIN(1) Brossard, Québec	61	Director
PIERRE KARL PÉLADEAU Montréal, Québec	43	Director
YVAN GINGRAS Montréal, Québec	47	Executive Vice President, Finance and Operations and Chief Financial Officer
BERNARD BRICAULT Cap-Rouge, Québec	52	Vice President, Technical Quality
SYLVAIN BROSSEAU Varennes, Québec	41	Vice President, Customer Service
MANON BROUILLETTE Montréal, Québec	36	Vice President, Marketing and New Product Development
MARK D'SOUZA Beaconsfield, Québec	44	Vice President and Treasurer
ANDRÉ GASCON Longueuil, Québec	43	Vice President, Information Technologies
DONALD LIZOTTE Kirland, Québec	38	Vice President, Sales
JEAN NOVAK Beaconsfield, Québec	41	President, Business Division
DANIEL PROULX Montréal, Québec	47	Vice President, Engineering
J. SERGE SASSEVILLE Westmount, Québec	46	Vice President, Legal Affairs and Secretary
LOUISE SAUVÉ Montréal, Québec	44	Vice President, Control
ÉDOUARD G. TRÉPANIER Boucherville, Québec	54	Vice President, Regulatory Affairs
NORMAND VACHON Repentigny, Québec	56	Vice President, Human Resources
STÉPHANIE LACHANCE Mount-Royal, Québec	32	Assistant Secretary
CLAUDINE TREMBLAY Montréal, Québec	51	Assistant Secretary

(1)

Member of our Audit Committee.

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Robert Dépatie, Director and President and Chief Executive Officer. Mr. Dépatie has been a director of our company and our President and Chief Executive Officer since June 2003. He joined us in December 2001 as Vice President, Sales, Marketing. Before joining us, Mr. Dépatie held numerous senior positions in the food distribution industry, such as President of Distributions Alimentaires Le Marquis/Planters from 1999 to 2001 and General Manager of Les Aliments Small-Fry (Humpty Dumpty) from 1998 to 1999. From 1988 to 1998, he held various senior positions with H.J. Heinz Canada Ltd., such as Executive Vice-President from 1993 to 1998. He has also been a director of Joncas Postexperts Inc., an indirect subsidiary of Quebecor World Inc., since April 2002.

Serge Gouin, Director and Chairman of the Board. Mr. Gouin has served as a director of our company and our Chairman of the Board since July 2001. In addition, Mr. Gouin was appointed to the position of President and Chief Executive Officer of Quebecor Media in March 2004. Mr. Gouin has also been a director of Quebecor Media since the fall of 2000 and served as Chairman of the Board of Directors of Quebecor Media from January 2003 to March 2004. He is also a member of the executive committee of the Board of Directors of Quebecor Media. Mr. Gouin was an Advisory Director of Citigroup Global Markets Canada Inc. from January 1998 to March 2004. From 1991 to 1996, Mr. Gouin served as President and Chief Operating Officer of Le Groupe Vidéotron Ltée. From 1987 to 1991, Mr. Gouin was President and Chief Executive Officer of Télé-Métropole Inc. Mr. Gouin is also a member of the board of directors of Cott Corporation, Onex Corporation and Cossette Communication Group Inc.

Jean La Couture, FCA, Director. Mr. La Couture has served as a director of our company since October 2003, and he has also been a director of Quebecor Media and the Chairman of its audit committee since May 5, 2003. Mr. La Couture, a Fellow Chartered Accountant, is President of Private Hearing Ltd., a mediation and negotiation firm, and President of Top Management Services Inc., a management firm. He also acts as President for the "Regroupement des assureurs de personnes à charte du Québec (RACQ)." From 1972 to 1994, he was President and Chief Executive Officer of three organizations, including The Guarantee Company of North America, a Canadian specialty line insurance company from 1990 to 1994. Mr. La Couture also serves as director of several corporations, including Quebecor Inc., Quebecor Media, Sun Media Corporation and Groupe Pomerleau (a Québec-based construction company). He is also Chairman of the Board of Innergex Power Trust American Disc Inc. and Maestro (a real estate capital fund).

François Laurin, Director. Mr. Laurin has served as a director of our company since July 2004. Mr. Laurin, a chartered accountant and chartered financial analyst, is Vice-President, Investments of the Private Equity group of Caisse de dépôt et placement du Québec, Canada's largest pension fund with over $140 billion in assets under management. From 2001 to 2003, Mr. Laurin was Vice-President and Controller at Bombardier Transport in Berlin, and from 2000 to 2001, he served as Vice-President, Finance and Administration of Microcell i5 Inc. Mr. Laurin was the Vice-President, Finance, and Controller of Teleglobe for eight years from 1992 to 2000 and Vice-President, Administrative Services, of Télévision Quatre-Saisons for four years from 1988 to 1992. Prior to 1988, Mr. Laurin served in various positions at Price Waterhouse, CP Rail and CFCF 12. He is a member of the Ordre des comptables agréés du Québec, the Canadian Institute of Chartered Accountants and the CFA Institute. In addition, Mr. Laurin serves as a Governor, a member of the board of directors and Chairman of the Finance Committee of Les Amis de la Montagne, an organization dedicated to the preservation and enhancement of Montréal's Mount Royal Park.

Jacques Mallette, Director and Executive Vice President. Mr. Mallette has served as a director of our company and our Executive Vice President since 2003, and he served as our Chief Financial Officer from 2003 to January 2005. Mr. Mallette has also served as Executive Vice President and Chief Financial Officer of Quebecor Inc., and Quebecor Media and as Executive Vice President of Sun Media Corporation since 2003. Mr. Mallette was also the Chief Financial Officer of Sun Media Corporation from 2003 to January 2005. He also serves as director of a number of subsidiaries of Quebecor Media. Prior to joining the Quebecor group of companies, Mr. Mallette was President and Chief Executive Officer of Cascades Boxboard Group Inc., where he started as Vice President and Chief Financial Officer in 1994. Mr. Mallette has been a member of the Canadian Institute of Chartered Accountants since 1982.

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Jean-Louis Mongrain, Director. Mr. Mongrain has served as a director of our company since October 2003. Mr. Mongrain has also been a director of Quebecor Media since December 2002, a member of the audit committee of Quebecor Media since May 2003 and a director and member of the audit committee of Sun Media Corporation since June 2003. Mr. Mongrain is an experienced banker, who successively worked for the Royal Bank of Canada and the Laurentian Bank. Mr. Mongrain graduated from Sherbrooke University where he obtained a master's degree in commerce. He worked for more than 10 years for the Royal Bank of Canada where he occupied various functions in the commercial and corporate banking sectors. After that, he worked for the Laurentian Bank from 1989 to 2000 where he served as head of the credit functions of the bank as well as President of the credit committee. He was responsible for the updating of the bank's credit policies and was also involved in several due diligence investigations in connection with various acquisitions. Mr. Mongrain also serves as a member of the board of directors of Groupe Deschênes inc.

Pierre Karl Péladeau, Director. Mr. Péladeau has served as a director of our company since June 2001. In addition, Mr. Péladeau is President and Chief Executive Officer of Quebecor Inc. and was appointed to the position of President and Chief Executive Officer of Quebecor World in March 2004. Mr. Péladeau served as President and Chief Executive Officer of Quebecor Media from August 2000 to March 2004. Mr. Péladeau joined Quebecor's communications division in 1985 as Assistant to the President. From 1989 until 1991, Mr. Péladeau was Vice-President, Operations of Quebecor Group Inc., and he was appointed President in 1991. In 1994, Mr. Péladeau helped establish Quebecor Printing Europe and, as its President, oversaw its growth through a series of acquisitions in France, the United Kingdom, Spain and Germany to become one of Europe's largest printers by 1997. In 1997, Mr. Péladeau became Executive Vice President and Chief Operating Officer of Quebecor Printing Inc. (which has since become Quebecor World Inc.). In 1999, Mr. Péladeau became President and Chief Executive Officer of Quebecor Inc. Mr. Péladeau was also our President and Chief Executive Officer from July 2001 until June 2003. Mr. Péladeau sits on the boards of directors of numerous companies in the Quebecor group and is active in many charitable and cultural organizations.

Yvan Gingras, Executive Vice President, Finance and Operations and Chief Executive Officer. Mr. Gingras joined us in 2001 as Senior Vice President, Finance and Administration and was appointed our Executive Vice President, Finance and Operations in July 2003. In addition, he was appointed our Chief Financial Officer in January 2005. Prior to joining us, Mr. Gingras was Vice President and Controller of Abitibi-Consolidated Inc. from 2000 to 2001. He also held several positions, including senior management functions, with Donohue Inc. from 1981 to 2000. Mr. Gingras has been a member of the Canadian Institute of Chartered Accountants since 1980. Mr. Gingras also serves as the Chairman of the Board of Directors of Société d'édition et de transcodage t.e. ltée (SETTE).

Bernard Bricault, Vice President, Technical Quality. Mr. Bricault has served as our Vice President, Technical Quality since September 1997. Mr. Bricault has been with us for more than 20 years and has held various senior management positions since 1987.

Sylvain Brosseau, Vice President, Customer Service. Mr. Brosseau has served as our Vice President, Customer Service since July 2003. From 1996 to July 2003, Mr. Brosseau held various management positions with us, including Executive Director, Customer Service and Executive Director, Technical Support.

Manon Brouillette, Vice President, Marketing and New Product Development. Ms. Brouillette has been our Vice President, Marketing since July 2004 and our Vice President, New Product Development since January 2005. Before joining our company, Ms. Brouillette was Vice President, Marketing and Communications of the San Francisco Group from April 2003 to February 2004. She was also responsible for the national and regional accounts of the Blitz division of Groupe Cossette Communication Marketing from April 2002 to April 2003. From September 1998 to April 2002, she worked at Publicité Martin inc. Ms. Brouillette holds a major in communications and a minor in marketing from Laval University.

Mark D'Souza, Vice President and Treasurer. Mr. D'Souza has served as our Vice President and Treasurer since April 2002. Mr. D'Souza also serves as Vice President and Treasurer of Quebecor Media and

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Quebecor Inc. He was Chief Financial Officer of Quebecor World Europe from June 2000 to April 2002. He was Vice President and Treasurer of Quebecor World Inc. from September 1997 to June 2000. Prior to joining the Quebecor group of companies, he served as Director, Finance of Société Générale de Financement du Québec from March 1995 to September 1997 and served in corporate finance positions at the Royal Bank of Canada and Union Bank of Switzerland from July 1989 to March 1995.

André Gascon, Vice President, Information Technologies. Mr. Gascon joined us in October 2003. Prior to his appointment as Vice President, Information Technologies, Mr. Gascon served for more than two years as Team Manager of Service Conseil Mona inc., an information technology consulting firm based in Montréal. From 1998 to 2001, he was Director, Information Technology of Microcell Telecommunications Inc. Between 1986 and 1998, Mr. Gascon has held various management positions relating to information technology with Larochelle Gratton Inc. and Société de Transport de Laval. Mr. Gascon holds a master degree in business administration from Sherbrooke University.

Donald Lizotte, Vice President, Sales. Mr. Lizotte joined us as Vice President, Sales in January 2005. Between 2000 and January 2005, Mr. Lizotte held different positions in sales and distribution for Molson Breweries, Canada's largest brewing company, including General Manager, Key Accounts as well as Regional Manager for the Montreal region. Prior to Molson Breweries, Mr. Lizotte spent nine years in Toronto, Ontario where he held various sales management positions, including National Sales Manager for the Perrier Group, a Nestlé division, from 1998 to 2000. Mr. Lizotte has a bachelor's degree in Management from the Université du Québec à Montréal.

Jean Novak, President, Business Division. Mr. Novak joined us in May 2004 as our Vice President, Sales and became our President, Business Division in January 2005. Between 1988 and May 2004, Mr. Novak held various management positions in sales and distribution for Molson Breweries, Canada's largest brewing company including General Manager for all on premise accounts and the Montreal sales region as well as Manager, Customer Service and Telesales in Quebec. Mr. Novak holds a bachelor's degree in marketing from the HEC Montréal.

Daniel Proulx, Vice President, Engineering. Prior to his appointment as Vice President, Engineering in July 2003, Mr. Proulx served as our Vice President, Information Technology. Mr. Proulx has held various management positions since joining us in 1995.

J. Serge Sasseville, Vice President, Legal Affairs and Secretary. Mr. Sasseville was appointed our Vice President, Legal Affairs and Secretary in November 2001. He is also Vice President, Strategy, Legal and Corporate Affairs and Corporate Secretary, Cable TV and Internet Portals of Quebecor Media and Vice-President, Legal Affairs and Secretary of Canoe Inc. Mr. Sasseville has held various senior management positions in the Quebecor group of companies since 1987. Mr. Sasseville is and has been a member of the boards of numerous organizations promoting Canadian cultural and entertainment industries. He has been a member of the Québec Bar since 1981.

Louise Sauvé, Vice President, Control. Ms. Sauvé joined us in June 2004 as Vice President, Control. Prior to joining us, she was Vice President, Finance and Operations of Québec Blue Cross from 1999 to 2004. She has held various management positions at Québec Blue Cross from 1987 to 1998. Ms. Sauvé has been a member of the Canadian Institute of Chartered Accountants since 1982.

Edouard G. Trépanier, Vice President, Regulatory Affairs. Mr. Trépanier has served as our Vice President, Regulatory Affairs since March 2002. Mr. Trépanier also serves as Vice President, Regulatory Affairs of Quebecor Media. Mr. Trépanier was our Director, Regulatory Affairs from 1994 to 2001. Prior to joining us in 1994, he held several positions at the CRTC, including Interim General Director of Operations, Pay-television and Speciality Services. Prior to joining the CRTC, Mr. Trépanier worked as a television producer for TVA Group Inc., Rogers Communications Inc. and the Canadian Broadcasting Corporation in Ottawa. Mr. Trépanier is and has been a member of the boards of numerous cable industry organizations.

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Normand Vachon, Vice President, Human Resources. Mr. Vachon joined us in January 2005 as Vice President, Human Resources. Prior to joining us, Mr. Vachon acted as senior executive officer and organizational development consultant for many private organizations in the province of Quebec between 2001 and 2004 and held the position of Vice President, Corporate and Vice President Human Resources and Organizational Development at Nova Bus Corporation from 1995 to 2000. He was successively entrusted with the positions of Director of Operations at Alcan Smelters & Chemicals in Shawinigan, Manager of Alcan Wire and Cable's Saint-Augustin plant in Quebec City Region and General Manager of Alcan Extrusions' Laval Plant from 1972 to 1994.

Stéphanie Lachance, Assistant Secretary. Ms. Lachance has served as our Assistant Secretary since December 2004. In addition, Ms. Lachance is currently Legal Counsel — Compliance, Corporate Secretariat of Quebecor Media Inc. She also serves as either Secretary or Assistant Secretary of various subsidiaries of Quebecor Media Inc. Before joining Quebecor Media Inc. in October 2004, Ms. Lachance was Manager Corporate Finance, Capital Markets at the Autorité des marchés financiers from March 2003 to October 2004. From January 2000 to March 2003 she was Legal Counsel at the Toronto Stock Exchange. She has been a member of the Barreau du Québec since 1995.

Claudine Tremblay, Assistant Secretary. Ms. Tremblay has served as our Assistant Secretary since November 2001. In addition, Ms. Tremblay is currently Senior Director, Corporate Secretariat of Quebecor Inc. and Quebecor Media Inc. and has been Assistant Secretary of Quebecor Media since its inception. Since August 1987, Ms. Tremblay has been Assistant Secretary of Quebecor Inc. She also serves as either Secretary or Assistant Secretary of various subsidiaries of Quebecor Inc. Ms. Tremblay was Assistant Secretary and Administrative Assistant at the National Bank of Canada from 1979 to 1987. She has also been a member of the Chambre des Notaires du Québec since 1977.

COMPENSATION

        Except for our President and Chief Executive Officer, Mr. Robert Dépatie, and our Executive Vice President, Mr. Jacques Mallette, all of our directors are also directors of Quebecor Media, and, as such, do not receive any remuneration in their capacity as directors of Vidéotron, except for the members of our audit committee who receive attendance fees of $1,500 per meeting and Mr. La Couture who receives an annual fee of $3,500 to act as Chairman of the audit committee. Mr. Mallette does not receive any remuneration as a director of Vidéotron. Mr. Dépatie, who is an employee of Vidéotron, is not entitled to receive any additional compensation for serving as our director. Our directors are reimbursed for their reasonable out-of-pocket expenses incurred in connection with meetings of our board of directors and our audit committee. We paid $33,500 aggregate amount of cash compensation to the members of our audit committee as a group in annual fees and attendance fees for the year ended December 31, 2004.

        The aggregate amount of compensation we paid for the year ended December 31, 2004 to our executive officers as a group, excluding those who are also executive officers of, and compensated by, Quebecor Media, was $2.8 million, including salaries, bonuses and profit-sharing payments.

Quebecor Media's Stock Option Plan

        On January 29, 2002, Quebecor Media established a stock option plan to attract, retain and motivate the directors, executive officers and key contributors to the success of Quebecor Media and its subsidiaries. The compensation and human resources committee of Quebecor Media is responsible for the administration of this stock option plan and, as such, designates the participants under this stock option plan and determines the number of options granted, the vesting schedule, the expiration date and any other terms and conditions relating to the options.

        All of the options granted under this stock option plan entitle the holder thereof to acquire common shares of Quebecor Media. Each option may be exercised within a maximum period of ten years following the date of grant at an exercise price not lower than, as the case may be, the fair market value of the common

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shares as determined by the board of directors of Quebecor Media (if the common shares of Quebecor Media are not listed at the time of the grant) or the trading price (as defined in this stock option plan) of the common shares on the stock exchanges where such shares are listed at the time of the grant. Unless authorized by the compensation and human resources committee for a change in control transaction, no option may be exercised by an optionee if the shares of Quebecor Media have not been listed on a recognized stock exchange.

        Except under specific circumstances and unless the compensation and human resources committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by the compensation and human resources committee at the time of the grant: (1) equally over five years with the first 20.0% vesting on the first anniversary of the date of the grant; (2) equally over four years with the first 25.0% vesting on the second anniversary of the date of the grant; and (3) equally over three years with the first 33.3% vesting on the third anniversary of the date of the grant.

        On December 31, 2007, if the shares of Quebecor Media have not been so listed, optionees may exercise annually, between January 1 and January 31 of such year, their right to receive an amount in cash equal to the difference between the fair market value and the exercise price of their revested options. Options not exercised prior to their expiration will be forfeited and may be re-issued pursuant to this stock option plan.

        Following the reverse stock split in December 2003, the maximum number of common shares of Quebecor Media that may be issued under this stock option plan is 6,185,714 common shares (representing 5% of all of the outstanding shares of Quebecor Media), and no optionee may hold options representing more than 5.0% of the issued and outstanding shares of Quebecor Media.

        During the year ended December 31, 2004, twenty of our executive officers were granted options to purchase 48,756 common shares of Quebecor Media at a price determined by the compensation and human resources committee of Quebecor Media in accordance with the terms and conditions of this stock option plan.

Pension Benefits

        Both Quebecor Media and we maintain pension plans for our non-unionized employees.

        Quebecor Media's pension plan provides higher pension benefits to eligible executive officers than those provided to other employees. The higher pension benefits under this plan equal 2.0% of average salary over the best five consecutive years of salary (including bonuses), multiplied by the number of years of membership in the plan as an executive officer. The pension benefits so calculated are payable at the normal retirement age of 65 years, or sooner at the election of the executive officer, and from the age of 61 years without early retirement reduction. In addition, the pension benefits may be deferred, but not beyond the age limit under the relevant provisions of the Income Tax Act (Canada), in which case the pension benefits are adjusted to take into account the delay in their payment in relation to the normal retirement age. The maximum pension benefits payable under Quebecor Media's pension plan are as prescribed by the Income Tax Act (Canada). An executive officer contributes to this plan an amount equal to 5.0% of his or her salary up to a maximum of $5,000 in 2005.

        Our pension plan provides pension benefits to our executive officers equal to 2.0% of salary (excluding bonuses) for each year of membership in the plan. The pension benefits so calculated are payable at the normal retirement age of 65 years, or sooner at the election of the executive officer, subject to an early retirement reduction. In addition, the pension benefits may be deferred, but not beyond the age limit under the relevant provisions of the Income Tax Act (Canada), in which case the pension benefits are adjusted to take into account the delay in their payment in relation to the normal retirement age. The maximum pension benefits payable under our pension plan are as prescribed under the Income Tax Act (Canada). An executive officer contributes to this plan an amount equal to 5.0% of his or her salary up to a maximum of $3,500 per year.

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        The table below indicates the annual pension benefits that would be payable at the normal retirement age of 65 years under both Quebecor Media's and our pension plans:

	Years of Membership
Compensation
	10		15		20		25		30
$100,000 or more	$	20,000	$	30,000	$	40,000	$	50,000	$	60,000

Supplemental Retirement Benefit Plan for Designated Executives

        In addition to Quebecor Media's and our pension plans, both Quebecor Inc., or Quebecor, and we provide supplemental retirement benefits to certain designated executives. As of December 31, 2004, three of our senior executive officers were participants under Quebecor's supplemental retirement benefit plan, and two of our senior executive officers were participants under our supplemental retirement benefit plan.

        The benefits payable to the senior executive officers who participate in Quebecor's supplemental retirement benefit plan are calculated on the basis of their respective average salaries (including bonuses) for the best five consecutive years. The pension is payable for life without reduction from the age of 61. In case of death after retirement and from the date of death, Quebecor's supplemental retirement benefit plan provides for the payment of a survivor pension to the eligible surviving spouse, representing 50.0% of the retiree's pension for a period of up to ten years.

        As of December 31, 2004, our senior executive officers participating in Quebecor's supplemental retirement benefit plan each had credited service of less than three years.

        The benefits payable to our two senior executive officers who participate in our supplemental retirement benefit plan are calculated on the basis of their respective average salaries (excluding bonuses) for the best five consecutive years. The benefits so calculated are payable at the normal retirement age of 65 years, or sooner at the election of the senior executive officer, subject to an early retirement reduction. In case of death after retirement and from the date of death, our supplemental retirement benefit plan provides for the payment of a survivor pension to the eligible surviving spouse representing 60.0% of the retiree's pension.

        As of December 31, 2004, one of our senior executive officers had a credited service of 3.3644 years under our supplemental retirement benefit plan, while a second senior executive officer began to accrue service on February 4, 2003 under such plan.

        The table below indicates the annual supplemental pension that would be payable at the normal retirement age of 65 years:

	Years of Credited Service
Compensation
	10		15		20		25		30
$   200,000	$	20,000	$	30,000	$	40,000	$	50,000	$	60,000
300,000		40,000		60,000		80,000		100,000		120,000
400,000		60,000		90,000		120,000		150,000		180,000
500,000		80,000		120,000		160,000		200,000		240,000
600,000		100,000		150,000		200,000		250,000		300,000
800,000		140,000		210,000		280,000		350,000		420,000
1,000,000		180,000		270,000		360,000		450,000		540,000

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Liability Insurance

        Quebecor Inc. carries liability insurance for the benefit of its directors and officers, as well as for the directors and officers of its direct and indirect subsidiaries, including us and some of our associated companies, against certain liabilities incurred by them in such capacity.

BOARD PRACTICES

        Reference is made to "Item 6 — Directors, Senior Management and Employees — Directors and Senior Management" for the current term of office, if applicable, and the period during which our directors and senior management have served in that office.

        There are no directors' service contracts with us or any of our subsidiaries providing for benefits upon termination of employment.

        Our board of directors has seven directors. Each director is selected by Quebecor Media, our sole shareholder, to serve until a successor director is elected or appointed. On October 9, 2003, we formed a three-person audit committee. Our audit committee is composed of Messrs. François Laurin, Jean La Couture and Jean-Louis Mongrain. Mr. La Couture is the Chairman of our audit committee and our audit committee financial expert. See "Item 16A — Audit Committee Financial Expert." We do not have a remuneration committee.

        Our board of directors adopted the mandate of our audit committee in light of the Sarbanes-Oxley Act of 2002. In general, our audit committee assists our board of directors in overseeing our financial controls and reporting. Our audit committee also oversees our compliance with financial covenants and legal and regulatory requirements governing financial disclosure matters and financial risk management.

        The current mandate of our audit committee provides, among other things, that our audit committee reviews our annual and quarterly financial statements before they are submitted to our board of directors, as well as the financial information contained in our annual reports on Form 20-F, our management's discussion and analysis of financial conditions and results of operations, our quarterly reports furnished to the SEC under cover of Form 6-K and other documents containing similar information before their public disclosure or filing with regulatory authorities; reviews our accounting policies and practices; and discusses with our independent auditors the scope of their audit and reviews their recommendations and the responses of our management to their recommendations. Our audit committee is also responsible for ensuring that we have in place adequate and efficient internal control and management information systems to monitor our financial information and to ensure that our transactions with related parties are made on terms that are fair for us. Our audit committee pre-approves all audit services and permitted non-audit services and pre-approves all the fees pertaining to those services that are payable to our independent auditors, and it submits the appropriate recommendations to our board of directors in connection with these services and fees. Our audit committee also reviews the scope of the audit and the results of the examinations conducted by our internal audit department. In addition, our audit committee recommends the appointment of our independent auditors, subject to our sole shareholder's approval.

EMPLOYEES

        As of December 31, 2004, we had 2,488 full-time and part-time employees. Substantially all of our employees are based and work in the Province of Québec. Approximately 2,000 of our employees are unionized, and the terms of their employment are governed by one of our four regional collective bargaining agreements. Our two most important collective bargaining agreements, covering our unionized employees in the Montréal and Quebec City regions, will expire on December 31, 2006. We also have two other collective bargaining agreements that cover our unionized employees in the Chicoutimi and Hull regions, which will expire on December 31, 2007 and August 31, 2008, respectively.

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        We have had significant labor disputes in the past. The renewal in April 2003 of our collective bargaining agreements for the Montréal and Quebec City regions ended a labor dispute, which began in May 2002, that disrupted our operations, resulted in damages to our network and impaired our operating results. The terms of the new collective bargaining agreements, however, enable us to reduce our operating costs and enhance productivity and provide us with greater flexibility in the management of our operations. We believe these new agreements have resulted in operating expenses that are approximately $20 million lower, on an annualized basis, than what we would have incurred under our previous labor agreements. The terms of these new agreements include:

•

an increase in the standard number of hours worked per week;



•

greater flexibility in the management of outsourcing and working schedules;



•

reductions in employee benefits; and



•

no salary increases through 2004 and 2.5% salary increases for 2005 and 2006.

SHARE OWNERSHIP

        None of our equity securities are held by any of our directors or senior executive officers.

ITEM 7 — MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

        We are a wholly owned subsidiary of Quebecor Media. Quebecor Media is a leading Canadian-based media company with interests in newspaper publishing operations, television broadcasting, business telecommunications, book and magazine publishing and new media services, as well as our cable operations. Through these interests, Quebecor Media holds leading positions in the creation, promotion and distribution of news, entertainment and Internet-related services that are designed to appeal to audiences in every demographic category.

        Quebecor Media is 54.7% owned by Quebecor Inc., a communications holding company, and 45.3% owned by Capital d'Amérique CDPQ inc. Quebecor Inc.'s primary assets are its interests in Quebecor Media and Quebecor World Inc., one of the world's largest commercial printers. Capital d'Amérique CDPQ inc. is a wholly owned subsidiary of Caisse de dépôt et placement du Québec, Canada's largest pension fund with over $170 billion in assets under management.

RELATED PARTY TRANSACTIONS

        The following describes some transactions in which we and our directors, executive officers and affiliates are involved, as well as a transaction between Quebecor World Inc. and Videotron Telecom, which is described under "— Quebecor World Outsourcing of Information Technology," to which we will become a party only upon effectiveness of the integration of the operations of Videotron Telecom within our own operations, which we currently expect to occur in 2005, subject to the approval of the CRTC, as well as the satisfactory completion of discussions with our labor unions. We believe that each of the transactions described below was on terms no less favorable to us than could have been obtained from independent third parties.

Video-On-Demand Services

        Groupe Archambault Inc., or Archambault, which is a subsidiary of Quebecor Media, was granted a video-on-demand service license by the CRTC in July 2002. Effective March 1, 2003, we entered into an affiliation agreement with Archambault granting us the non-exclusive right to offer Archambault's video-on-demand services to our customers. This agreement provides that we pay to Archambault 62% of all revenues generated from the fees paid by our customers to use Archambault's video-on-demand services. This

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agreement expires on August 31, 2008, which is also the expiration date of Archambault's CRTC license, but if Archambault obtains a renewed video-on-demand license from the CRTC, this agreement will be automatically renewed for a period equal to the length of this renewed license.

        In connection with this affiliation agreement, we also entered into a video-on-demand services agreement with Archambault. Pursuant to this services agreement, we have agreed to provide various technical services to Archambault to enable it to provide to our customers its video-on-demand services over our network. In consideration of these technical services, Archambault will pay us a fee of 8% of all revenues generated from fees paid by our customers to use Archambault's video-on-demand services. The term of this agreement is the same as that of the affiliation agreement.

        For the year ended December 31, 2003, we paid a fee of $0.9 million to Archambault under the affiliation agreement, and we received a fee of $0.1 million from Archambault under the services agreement. For the year ended December 31, 2004, we paid a fee of $3.7 million to Archambault under the affiliation agreement and received a fee of $0.5 million from Archambault under the services agreement.

Telecommunications Services

        We have entered into several contracts with Videotron Telecom, a business telecommunications company wholly owned by Quebecor Media, for the provision or exchange of telecommunications services.

Telecommunications Services Agreements

        In September 1999, we entered into a fifteen-year agreement pursuant to which Videotron Telecom provides us with inter-city connections for the transmission of both one-way and two-way video and telephony signals. Under the agreement, Videotron Telecom also leases to us fiber-optic and other equipment and provides maintenance and management services for our inter-city transmission circuits. We have an option to renew the contract for an additional fifteen year-term upon its expiration in 2014. In addition, in December 2000, we entered into a five-year contract, automatically renewable for one-year periods thereafter, pursuant to which Videotron Telecom provides us with intra-city transmission and other telecommunications services.

Fiber Optic Maintenance Agreement

        In September 1999, we entered into a long-term mutual maintenance agreement pursuant to which Videotron Telecom provides maintenance services on our fiber optic strands that are located within Videotron Telecom's fiber optic cables, and we provide the same services on Videotron Telecom's fiber optic strands that are located within our fiber optic cables. Each party is billed monthly for the costs attributable to the maintenance of such party's fiber optic strands.

Internet Services Agreements

        We provide dial-up and high-speed Internet access to our customers. Vidéotron Télécom (1998) ltée, a wholly owned subsidiary of Videotron Telecom, provides to us access services relating to the provision of Internet access to our customers. Access fees paid to Vidéotron Télécom were $12.2 million for the year ended December 31, 2003 and $6.1 million for the year ended December 31, 2004.

Call Center and Customer Support Agreement

        On May 3, 2002, we entered into a service agreement with Joncas Télexperts, a division of Joncas Postexperts Inc., or Joncas, an indirect subsidiary of Quebecor World Inc., itself an indirect subsidiary of Quebecor Inc. Under this service agreement, Joncas has agreed to provide us with certain administrative services, including the planning, set-up, operation and management of a new call center located in Montréal, and to provide operational and management services related to a second call center located in Montréal.

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These call centers offer us sales and after-sales customer support for our cable television and Internet access customers. The agreement terminates on December 31, 2004 and will be automatically renewed thereafter for successive one year periods, unless notice to the contrary is provided by either us or Joncas. The total amount we paid to Joncas under this agreement in 2003 was approximately $9.1 million. For the year ended December 31, 2004, we paid $5.7 million to Joncas under this agreement.

Management Services and Others

        We have earned revenue from TVA Group for providing it with access to a specialty advertising channel carried on our network and incurred expenses for purchases and services obtained from related companies at prices and conditions prevailing on the market, as summarized below. The majority of our related party purchases were related to the telecommunications and Internet services agreements described above and for programming purchases, advertising purchases, outsourcing of call center operations and information technology services.

        The following table presents the amounts of our revenues, accounts receivable, purchases, accounts payable and fixed assets from transactions with related parties during the periods indicated:

	Year Ended December 31,
	2003		2004
	(dollars in millions)
Revenues	$	2.5	$	1.9
Accounts receivable		0.1		—
Purchases		60.6		55.8
Accounts payable		18.4		51.7
Fixed assets		1.6		—

        We entered into a five-year management services agreement with Quebecor Media for services it provides to us, including internal audit, legal and corporate, financial planning and treasury, tax, real estate, human resources, risk management, public relations and other services. Under this agreement, management fees paid to Quebecor Media were $2.5 million for the year ended December 31, 2002, $6.0 million for the year ended December 31, 2003 and $6.5 million for the year ended December 31, 2004. Management fees payable to Quebecor Media will be agreed upon for the years 2005 and 2006. Management fees payable to Quebecor Media are expected to be $10.5 million for the year ended December 31, 2005.

Income Tax Transactions

        During the year ended December 31, 2003, we obtained from Quebecor World income tax deductions of $9.7 million, of which $9.6 million was recorded as income taxes receivable and $0.1 million as future income tax assets. The consideration payable to Quebecor World for these income tax deductions was $6.3 million as at December 31, 2004. This transaction allowed us to realize a gain of $3.4 million, which was credited to contributed surplus. During the year ended December 31, 2004, an adjustment was made to this transaction and $0.07 million was debited from contributed surplus.

        During the year ended December 31, 2004, we acquired from Quebecor Media income tax assets of $62.0 million, of which $55.5 million was recorded as future income tax assets and $6.5 million as income taxes receivable. The consideration payable to Quebecor Media for these income tax assets was $35.2 million as at December 31, 2004. The difference of $26.8 million was credited to contributed surplus.

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Indebtedness to Quebecor Media

        We entered into a subordinated loan agreement with Quebecor Media on March 24, 2003. In addition, on January 16, 2004, our subsidiary Vidéotron (1998) ltée borrowed $1.1 billion from Quebecor Media in the form of a subordinated loan, which was repaid in full on December 16, 2004 with the proceeds from the redemption by Quebecor Media of retractable preferred shares held by Vidéotron (1998) ltée. See "Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan," "Item 10 — Additional Information — Material Contracts — Subordinated Loan Agreement effective as of January 1, 2002 between Quebecor Media Inc. and Vidéotron Ltée, as amended by a First Amending Agreement dated as of October 8, 2003 between Quebecor Media Inc. and Vidéotron Ltée" and "Item 10 — Additional Information — Material Contracts — Subordinated Loan Agreement, dated as of January 16, 2004, between Quebecor Media Inc. and Vidéotron (1998) ltée."

Quebecor World Outsourcing of Information Technology

        Although neither we nor any of our directors, executive officers or affiliates is currently a party to the transaction between Quebecor World Inc. and Videotron Telecom described below, we will become a party to this transaction upon the effectiveness of the integration of the operations of Videotron Telecom within our own operations, which we currently expect to occur in 2005, subject to the approval of the CRTC, as well as the satisfactory completion of discussions with our labor unions.

        Quebecor World Inc. has retained Videotron Telecom to outsource all of Quebecor World Inc.'s corporate information technology services. This transaction is effective as of July 2004 and contemplates:

•

the purchase by Videotron Telecom of the information technology infrastructure equipment of Quebecor World;



•

the provision of consulting services by certain Quebecor World Inc. personnel to Videotron Telecom for corporate information technology services; and



•

the provision of information technology managed services by Videotron Telecom to Quebecor World Inc. in North America.

        Under the seven-year information technology managed services agreement, Videotron Telecom will provide infrastructure services in support of hosting server-based applications in the Videotron Telecom data centers and services related to computer operations, production control, technical support, network support, regional support, desktop support for certain sites, help-desk and corporate assistance, firewall and security support, business continuity and disaster recovery and voice and video support. The monthly revenues for such services are $1,512,205, for an annual total of $18,146,471. The agreement will expire on June 30, 2011.

INTERESTS OF EXPERTS AND COUNSEL

        Not applicable.

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ITEM 8 — FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

        Our consolidated balance sheets as at December 31, 2003 and 2004 and our consolidated statements of operations, shareholder's equity and cash flows for the years ended December 31, 2002, 2003 and 2004, including the notes thereto and together with the auditors' report thereon, are presented at Item 17 of this annual report. In addition, the audited financial statements of Videotron Telecom Ltd. are included in this annual report.

LEGAL PROCEEDINGS

        In October 2001, Illico Informatique inc. instituted legal action against us and Quebecor Media seeking permanent injunctive relief preventing us from using the illico™ trademark and damages in the amount of $25,000. The plaintiff is alleging, among other matters, that it has used the "Illico" trademark since 1988 with respect to the provision of legal services, legal research services with the assistance of computers, computer science and legal publishing via telecommunications. On August 20, 2004, the Superior Court of Quebec found in favor of Vidéotron and rejected the claims of the plaintiff. The plaintiff has not appealed this decision, and the time period during which the plaintiff may appeal this decision expired.

        On March 13, 2002, an action was filed in the Superior Court of Quebec by Investissement Novacap inc., Telus Québec inc. and Paul Girard against Vidéotron, in which the plaintiffs allege that we wrongfully terminated our obligations under a share purchase agreement entered into in August 2000 and are seeking damages of approximately $26 million.

        In November 2001, Voca-tel Communications Inc. instituted legal proceedings against us for wrongful breach of contract in the amount of $4.7 million.

        In 1999, Regional Cablesystems Inc. (now Persona Communications Inc.) initiated an arbitration in which it is seeking an amount of $8.6 million as a reduction of the purchase price of the shares of Northern Cable Holdings Limited sold to Regional Cablesystems Inc. by CF Cable in October 1998. A settlement in principle has been reached subject to finalization of settlement documentation.

        We believe that the legal actions described above are unfounded, and we intend to vigorously defend our position in each of these matters.

        We are also involved from time to time in various claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts that we believe to be reasonable under the circumstances. We believe that an adverse outcome of such legal proceedings will not have a material adverse impact on our operating results or our financial condition.

DIVIDEND POLICY

        As of December 31, 2004, our outstanding share capital consists of 11,174,813 common shares all of which are held by Quebecor Media Inc.

        No dividends were paid during the year ended December 31, 2002. In the fourth quarter of 2003, we paid a dividend of $20.0 million to Quebecor Media. During the year ended December 31, 2004, we paid $205.2 million in dividends to Quebecor Media. We expect to pay dividends to Quebecor Media, our sole shareholder, in the future, subject to the terms of our indebtedness and applicable law.

SIGNIFICANT CHANGES

        We intend to enter into a management services agreement with Videotron Telecom to be effective from April 1, 2005 to December 31, 2006. We expect that this management services agreement will provide that we will manage the business activities of Videotron Telecom, including all their employees, and Videotron Telecom will pay us an amount equal to the actual cost of the services rendered plus a management fee of 7% of such actual cost.

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        Except as otherwise disclosed in this annual report, there has been no other material adverse change in our financial position since December 31, 2004.

ITEM 9 — THE OFFER AND LISTING

OFFER AND LISTING DETAILS

        Not applicable.

PLAN OF DISTRIBUTION

        Not applicable.

MARKETS

        On October 8, 2003 and November 19, 2004, we issued and sold our 6⁷/8% Senior Notes due January 15, 2014 in private placements exempt from the registration requirements of the Securities Act of 1933, and the initial purchasers of these old notes then resold them in reliance on other exemptions from the registration requirements of the Securities Act of 1933. In connection with the issuance of these old notes, we and our subsidiaries guaranteeing these old notes entered into registration rights agreements with the initial purchasers. Pursuant to these registration rights agreements, we agreed, among other things, to file exchange offer registration statements with the Securities and Exchange Commission with respect to registered offers to exchange without novation these old notes for our new 6⁷/8% Senior Notes due January 15, 2014, which would be registered under the Securities Act of 1933. Accordingly, we filed a registration statement on Form F-4 with the Securities and Exchange Commission on November 24, 2003 and completed this registered exchange offer on February 9, 2004, and we filed another registration statement on Form F-4 with the Securities and Exchange Commission on December 7, 2004 and completed this registered exchange offer on March 4, 2005. Consequently, we have US$650.0 million in aggregate principal amount of our notes, which are registered under the Securities Act of 1933, outstanding.

        Although our notes are registered under the Securities Act of 1933, there can be no assurance as to (1) the liquidity of the market, if any, for our notes, (2) the ability of the holders of the notes to sell them or (3) the prices at which any sales may be made. Our notes are not currently listed on any national securities exchange or quoted on a quotation system. We do not presently intend to apply to list our notes on any national securities exchange or to have them quoted on a quotation system. The record holder of our notes is Cede & Co., a nominee of The Depository Trust Company.

SELLING SHAREHOLDERS

        Not applicable.

DILUTION

        Not applicable.

EXPENSES OF THE ISSUER

        Not applicable.

ITEM 10 — ADDITIONAL INFORMATION

SHARE CAPITAL

        Not applicable.

MEMORANDUM AND ARTICLES OF ASSOCIATION

        The Articles of Amalgamation and the Articles of Incorporation of Vidéotron and the subsidiaries guaranteeing out notes, as well as the various Articles of Amendment to these Articles of Amalgamation and

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Articles of Incorporation, have been filed by us and are incorporated by reference from Amendment No. 1 to our Registration Statement on Form F-4 filed with the Securities and Exchange Commission on January 8, 2004 (Registration No. 333-110697), our Annual Report on Form 20-F for the year ended December 31, 2003 and Amendment No. 1 to our Registration Statement on form F-4 files with the Securities and Exchange Commission on January 18, 2005 (Registration No. 333-121032). Vidéotron's Articles of Amalgamation and the Articles of Amendment to the Articles of Amalgamation filed by us are collectively referred to as the "Articles." The following is a summary of certain provisions of Vidéotron's Articles and Vidéotron's by-laws:

1.

On September 1, 1989, Télécable St-Damien Inc. and Vidéotron Ltée amalgamated, under the authority of Part IA of the Companies Act (Québec), into a single company using the name "Vidéotron Ltée" with the Designating Number 1140137788. The Articles describe the purposes of our company to be the following:

•

manufacture, import, export, buy, sell, lease, rent, use, install, repair any device, instrument or machine for the production, preservation, accumulation, transmission or distribution of electrical current of any nature, or any device or electrical supply, including, without limiting the generality of the foregoing, electronic devices of all kinds, radios and televisions, broadcasting and radio wave reception equipment, the parts, materials and devices that can be used in relation to the production, sale, renting, loan, operation, repair and distribution of such objects;

•

manufacture, import, export, buy, sell, lease, rent, use, install and repair all merchandise, materials and objects of any kind and deal in them in any way;

•

do business as agent or representative of manufacturers and act as agent of manufacturers;

•

organize, administer, develop, all business or enterprises and collaborate in the organization, administration and development of all corporations, companies, unions, partnerships or businesses and acquire and administer any business or enterprise in which we may have an interest and to dispose of them at our discretion;

•

purchase or otherwise acquire and hold real estate or any interest in real estate to obtain revenue from them or to occupy them;

•

acquire or hold in order to obtain interest or dividends from them but not to deal in them for profit, shares, debentures, warrants, bonds and securities issued or guaranteed by any government, board, public agency, municipality or other, in Canada or elsewhere, and any rights or interests in these assets;

•

serve as guarantor to any bank, person, firm or corporation for the payment of any sum by any person, firm or corporation and for the execution by any person, firm or corporation of its undertakings and stipulations pursuant to any contract or other obligations; and

•

broadcast, transmit or receive sound, images, signs, signals, data or messages by wire, cable, waves or any electrical, electronic, magnetic, electromagnetic or optical means and, without limiting the generality of the foregoing, cable television.

These purposes can be found in the provisions respecting the limits imposed on our activities, where appropriate, stated in Schedule C to our Articles of Amalgamation of September 1, 1989.

2. (a) Our by-laws provide that we may transact business with one or more of our directors or with any company of which one or more of our directors are members or employees or with any corporation or association of which one or more of our directors are shareholders, directors, officers or employees. The director who has an interest in the transaction must disclose his or her interest to us and to the other directors before expressing a view of this transaction and shall refrain from deliberating or voting on the transaction, except if his or her vote is necessary to commit us in respect of the transaction.

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(b)

Neither the Articles nor our by-laws contain provisions with respect to directors' power, in the absence of an independent quorum, to determine their remuneration.



(c)

Subject to any restriction which may from time to time be included in the Articles or our by-laws, or the terms, rights or restrictions of any of our shares or securities outstanding, our directors may authorize us, by simple resolution, to borrow money and obtain advances upon the credit of our company when they consider it appropriate. Our directors also may, by simple resolution, when they consider it appropriate, (i) issue bonds or other securities of our company and give them in guarantee or sell them for prices and amounts deemed appropriate; (ii) mortgage, pledge or give as surety our present or future movable and immovable property to ensure the payment of these bonds or other securities or give a part only of these guarantees for the same purposes; and (iii) mortgage or pledge our real estate or give as security or otherwise encumber with any charge our movables or give these various kinds of securities to assure the payment of loans made other than by the issuance of bonds as well as the payment or the execution of other debts, contracts and commitments of our company.

Neither the Articles nor our by-laws contain any provision with respect to (d) the retirement or non-retirement of our directors under an age limit requirement or (e) the number of shares, if any, required for the qualification of our directors.

3.

The rights, preferences and restrictions attaching to our common shares and our preferred shares (consisting of our Series A, Series B, Series C, Series D, Series E, Series F and Series G preferred shares) are set forth below:

Common Shares

(a)

Dividend rights: Subject to the rights of the holders of our preferred shares, each common share is entitled to receive such dividends as our board of directors shall determine.



(b)

Voting rights: The holders of our common shares are entitled to vote at each shareholders' meeting at which the holders of at least 30% of the outstanding shares of our share capital carrying voting rights at such meeting are present in person or represented by proxy. Each common share entitles the holder to one vote. Except in the case of a vacancy occurring on our board of directors during the term of such director's office, each director shall be elected at an annual meeting of our shareholders or at any special general meeting of our shareholders called for that purpose by a majority of the votes cast in respect of such election.



(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our common shares are entitled to receive dividends as determined by our board of directors) and paragraph (d) below (pursuant to which the holders of our common shares are entitled to participation in the remaining property and assets of our company available for distribution in the event of liquidation or dissolution), none.



(d)

Rights upon liquidation: In the event of our liquidation or dissolution or any other distribution of our assets among our shareholders for the purpose of winding up our affairs, whether voluntarily or involuntarily, the holders of our common shares shall be entitled, subject to the rights of the holders of our preferred shares, to participate equally, share for share, in our remaining property and assets available for distribution to our shareholders, without preference or distinction.



(e)

Redemption provisions: None.



(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the

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resolutions of our board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.

(h)

Provisions discriminating against existing or prospective holders of common shares as a result of such holder owning a substantial number of common shares: None.

Preferred Shares

Series A Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, the registered holders of our Series A preferred shares are entitled to receive, during each fiscal year, if and when declared by our board of directors, from the funds available for payment of dividends, fixed, non-cumulative and preferential dividends at a rate of 10% per year, of the total amount paid for the Series A preferred shares.



(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series A preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series A preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series A preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series A preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital

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and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary as involuntary. However, in the case where our assets are not sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

(e)

Redemption provisions: Subject to the provisions of the Companies Act (Québec), each registered holder of our Series A preferred shares has the right, at his or her discretion, to require us to redeem from him or her at any time all or on occasion a portion of the Series A preferred shares he or she holds for a redemption price equal to the excess of the fair market value of the assets or shares received in exchange for the issuance of such Series A preferred shares on the total of (1) the fair market value of any consideration (other than the Series A preferred shares) paid by us at this exchange and (2) the value of any obligation assured by us as part of this exchange, plus all declared and unpaid dividends on the Series A preferred shares being redeemed. This redemption price shall be adjusted accordingly if the department of national revenue, the minister of revenue of Québec or a court with jurisdiction decides that the fair market value of the assets or shares received in exchange for the issuance of the Series A preferred shares or the fair market value of any consideration (other than the Series A preferred shares) paid by us during this exchange differs from that established by our auditors.

In addition, we may, at our option, redeem our Series A preferred shares at any time at the redemption price that is determined by our board of directors for such series before the issuance of any preferred shares of such series plus any declared and unpaid dividends.

(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any money unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series A preferred shares as a result of such holder owning a substantial number of our Series A preferred shares: None.

Series B Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, the registered holders of our Series B preferred shares are entitled to receive, during each fiscal year, if and when declared by our board of directors, from the funds available for payment of dividends, fixed, non-cumulative and preferential dividends at a rate of 9% per year, of the total amount paid for the Series B preferred shares.

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(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series B preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series B preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series B preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series B preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary or involuntary. However, in the case where our assets are not sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared

73

and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

(e)

Redemption provisions: Subject to the provisions of the Companies Act (Québec), each registered holder of our Series B preferred shares has the right, at his or her discretion, to require us to redeem from him or her at any time all or on occasion a portion of the Series B preferred shares he or she holds for a redemption price equal to the excess of the fair market value of the assets or shares received in exchange for the issuance of such Series B preferred shares on the total of (1) the fair market value of any consideration (other than the Series B preferred shares) paid by us at this exchange and (2) the value of any obligation assumed by us as part of this exchange, plus all declared and unpaid dividends on the Series B preferred shares being redeemed. This redemption price shall be adjusted accordingly if the department of national revenue, the minister of revenue of Québec or a court with jurisdiction decides that the fair market value of the assets or shares received in exchange for the issuance of the Series B preferred shares or the fair market value of any consideration (other than the Series B preferred shares) paid by us during this exchange, differs from that established by our auditors.

In addition, we may, at our option, redeem the Series B preferred shares at any time at the redemption price that is determined by the board of directors for such series before the issuance of any preferred shares in such series plus any declared and unpaid dividends.

(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series B preferred shares as a result of such holder owning a substantial number of our Series B preferred shares: None.

Series C Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, the registered holders of our Series C preferred shares are entitled to receive, during each month of any fiscal year, if and when declared by our board of directors, from the funds available for payment of dividends, fixed, non-cumulative and preferential dividends at a rate equal to the prime rate of our lead banker less 0.75% of the total amount of the contribution received in consideration of the Series C preferred shares at the times and for the amounts and at the place or places that our board of directors may, on occasion, determine.



(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series C preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters

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described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series C preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series C preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series C preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary or involuntary. However, in the case where our assets are not sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

(e)

Redemption provisions: Subject to the provisions of the Companies Act (Québec), each registered holder of our Series C preferred shares has the right, at his or her discretion, to ask us to redeem from him or her at any time all or some of the Series C preferred shares he or she holds for an amount equal to their redemption price or the total amount of the contribution received as consideration for the Series C preferred shares being redeemed plus an amount equal to all dividends then declared by us and unpaid.

In addition, we may, at our option, redeem the Series C preferred shares at any time at the redemption price that is determined by the board of directors for such series before the issuance of any preferred shares in such series plus any declared and unpaid dividends.

(f)

Sinking fund provisions: None.

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(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series C preferred shares as a result of such holder owning a substantial number of our Series C preferred shares: None.

Series D Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, when our board of directors declares a dividend, the holders of our Series D preferred shares have the right to receive, up to the amount of the declared dividend, with priority over the holders of our common shares and from the funds applicable to the payment of the dividends, a monthly preferential and non-cumulative dividend, of 1% per month, calculated on the applicable redemption value of our Series D preferred shares.



(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series D preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series D preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series D preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series D preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the

76

preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary or involuntary. However, in the case where our assets are not sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

(e)

Redemption provisions: Subject to the provisions of the Companies Act (Québec), the holders of our Series D preferred shares have, at any time, the right to demand us to redeem their shares at a price equal to the amount paid for these shares to the subdivision of the issued and paid-up share capital account related to the Series D preferred shares plus a premium equal to the difference between the fair market value of the consideration received by us when these Series D preferred shares were issued in consideration for their issue and the total formed by (1) the amount paid for these shares to the subdivision of the issued and paid-up share capital account attached to the Series D preferred shares and (2) the fair market value of any asset, other than a Series D preferred share, given by us on payment of this consideration, plus declared but unpaid dividends. The amount of this premium shall be adjusted accordingly if the federal or provincial revenue department decides that the fair market value of this consideration differs from that determined by us and the subscriber of the Series D preferred shares by mutual consent at the time of issuance.

In addition, we may, when we deem it appropriate and without giving notice or taking into account the other classes of shares, buy in a private agreement and at the best possible price, all or some of the Series D preferred shares outstanding. This purchase price shall however never exceed the redemption price nor exceed the liquidation value of the net assets of our company.

(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series D preferred shares as a result of such holder owning a substantial number of our Series D preferred shares: None.

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Series E Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, the registered holders of our Series E preferred shares are entitled to receive, during each fiscal year, if and when declared by our board of directors, from the funds available for payment of dividends, fixed, non-cumulative and preferential cash dividends at a rate of 4% per year, of the redemption price of our Series E preferred shares.



(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series E preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series E preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series E preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series E preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary or involuntary. However, in the case where our assets are not

78

sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

With respect to the Series E preferred shares, the Articles specifically provide that in case of our voluntary or involuntary liquidation or dissolution, or any other distribution of our assets to our shareholders for the purposes of the liquidation of our affairs, the holders of our Series E preferred shares shall have the right, subject to the rights of the holders of our Series G preferred shares, to receive from our assets a sum equal to the applicable redemption price, as well as a sum equal to all dividends declared on these shares and unpaid on the date of our liquidation, dissolution or other distribution, all before any sum is paid by us or our assets are distributed to the holders of our common shares or other shares of our share capital ranking after the Series E preferred shares. The Articles also specifically provide that after payment of these amounts to the holders of our Series E preferred shares, these shareholders shall have no right in any other distribution of our assets.

(e)

Redemption provisions: Subject to applicable law, a holder of Series E preferred shares is entitled to require us to redeem at any time all or any of the Series E preferred shares registered in the name of such holder at a redemption price equal to the fair market value of the consideration received for the Series E preferred shares, together with an amount equal to all dividends declared and unpaid up to the date on which redemption is to be made. If, at any time subsequent to the issue of Series E preferred shares, we, any holder of the Series E preferred shares or any taxation authority establishes that the fair market value (at the time of issue of the Series E preferred shares) of the consideration received on the issue of the Series E preferred shares is different from the fair market value determination made at the time of issuance of these Series E preferred shares by our board of directors, auditors or other independent person appointed by our board of directors, as the case may be, then the redemption price shall be adjusted accordingly with retroactive effect on previous redemptions or purchases of our Series E preferred shares and previously declared and paid dividends on our Series E preferred shares.

In addition, we may, upon giving notice to each registered holder of our Series E preferred shares, redeem at any time the whole or from time to time any part of the outstanding Series E preferred shares at the redemption price. In case only part of the outstanding Series E preferred shares are to be redeemed by us, the shares to be so redeemed shall be selected by lot or some other random selection method in such manner as our board of directors in its sole discretion determines or selected in such other manner as our board of directors in its sole discretion determines to be equitable.

(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series E preferred shares as a result of such holder owning a substantial number of our Series E preferred shares: None.

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Series F Preferred Shares

(a)

Dividend rights: Subject to the rights of the holders of our Series G preferred shares, the registered holders of our Series F preferred shares are entitled to receive, during each fiscal year, if and when declared by our board of directors, from the funds available for payment of dividends, fixed, non-cumulative and preferential cash dividends at a rate of 4% per year, of the redemption price of our Series F preferred shares.



(b)

Voting rights: Except for expressly contrary provisions contained in the Articles and in the Companies Act (Québec), the holders of our Series F preferred shares do not have any right to vote in the election of directors or for any other purposes and do not have the right to receive notice of meetings of shareholders or to attend them.

The Articles provide, however, that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Other than as provided in paragraph (a) above (pursuant to which the holders of our Series F preferred shares are entitled to receive certain dividends, if and when declared by our board of directors), paragraph (d) below (pursuant to which the holders of our Series F preferred shares are entitled to participation in the property and assets of our company available for distribution in the event of our liquidation or dissolution) and paragraph (e) below (pursuant to which the holders of our Series F preferred shares have redemption rights), none.



(d)

Rights upon liquidation: The Articles provide that in case of our liquidation or dissolution or any other distribution of our capital, no amount is paid and no asset distributed to the holders of any other class of shares of our share capital until there has been paid first to the holders of our Series G preferred shares, in preference to all of our other shareholders, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and then to the holders of our preferred shares of other series the total amount of the contribution received in consideration for the preferred shares held by them respectively and, in the case of preferred shares with cumulative dividends, of all dividends then accumulated on them and unpaid and, in the case of preferred shares with non-cumulative dividends, of all dividends then declared on them and unpaid, if any, plus any other amount, if any, that is determined by our directors relative to each series before the issue of any preferred shares of such a series, and the holders of the preferred shares are entitled to payment, according to their respective rights, of all this money from our assets, with preference to the holders of shares of any other class of shares of our share capital and with priority over them. All the rest of our assets and funds are then distributed and paid to the holders of shares of the classes of our share capital according to their respective rights.

The Articles further provide that, subject to the rights of the holders of our Series G preferred shares, our preferred shares of each series (other than our Series G preferred shares) rank equally with our preferred shares of each other series (other than our Series G preferred shares) with respect to the payment of dividends and the distribution of our assets in case of our liquidation or dissolution, whether voluntary or involuntary. However, in the case where our assets are not

80

sufficient to fully reimburse the amount due on our preferred shares of all series outstanding, our assets will be applied, first, to the payment to the holders of our Series G preferred shares of an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto and, second, to the equal and proportional payment of the contribution received in consideration for our preferred shares of each series (other than our Series G preferred shares) outstanding and third for the equal and proportional payment of the accumulated and unpaid cumulative dividends, whether they were declared or not, and the non-cumulative dividends declared and unpaid, with respect to our preferred shares of such series (other than our Series G preferred shares).

With respect to the Series F preferred shares, the Articles specifically provide that in case of our voluntary or involuntary liquidation or dissolution, or any other distribution of our assets to our shareholders for the purposes of the liquidation of our affairs, the holders of our Series F preferred shares shall have the right, subject to the rights of the holders of our Series G preferred shares, to receive from our assets a sum equal to the applicable redemption price, as well as a sum equal to all dividends declared on these shares and unpaid on the date of our liquidation, dissolution or other distribution, all before any sum is paid by us or our assets are distributed to the holders of our common shares or other shares of our share capital ranking after the Series F preferred shares. The Articles also specifically provide that after payment of these amounts to the holders of our Series F preferred shares, these shareholders shall have no right in any other distribution of our assets.

(e)

Redemption provisions: Subject to applicable law, a holder of Series F preferred shares has the right to require us to redeem at any time some or all of the Series F preferred shares registered in his or her name at a redemption price equal to the fair market value of the consideration received for the Series F preferred shares, plus an amount equal to all dividends declared and not paid until the date on which redemption must be made. If, at any time after the issuance of the Series F preferred shares, we, a holder of the Series F preferred shares or any fiscal authority determines that the fair market value (at the time of issuance of the Series F preferred shares) of the consideration received for the Series F preferred shares is different from the fair market value determination made at the time of issuance of these Series F preferred shares by our board of directors, auditors or other independent person appointed by our board of directors, as the case may be, then the redemption price shall be adjusted accordingly with retroactive effect on previous redemptions or purchases of our Series F preferred shares and previously declared and paid dividends on our Series F preferred shares.

In addition, we may, by giving notice to each registered holder of our Series F preferred shares, redeem at any time all or on occasion some of our outstanding Series F preferred shares at the redemption price. If only a portion of the Series F preferred shares must be redeemed at any given time, the shares to be redeemed shall be selected at random or otherwise in a random fashion, in the manner that our board of directors deems fair, at its discretion.

(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors. Our directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series F preferred shares as a result of such holder owning a substantial number of our Series F preferred shares: None.

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Series G Preferred Shares

(a)

Dividend rights: The holders of record of the Series G preferred shares shall be entitled to receive in each fiscal year fixed cumulative preferential dividends at the rate of 11.25% per share per annum. No dividends may be paid on any shares ranking junior to the Series G preferred shares unless all dividends which shall have become payable on the Series G preferred shares have been paid or set aside for payment. Our Series G preferred shares have priority over our common shares and our preferred shares of other series as to the order of priority of the payment of dividends.



(b)

Voting rights: Holders of Series G preferred shares shall not, as such, be entitled to receive notice of, or attend or vote at, any meeting of our shareholders unless we shall have failed to pay eight half-yearly dividends on the Series G preferred shares. In that event and only for so long as the dividend remains in arrears, the holders of Series G preferred shares shall be entitled to receive notice of, and to attend and vote at, all shareholders' meetings, except meetings at which only holders of another specified series or class of shares are entitled to vote. At each such meeting, each Series G preferred share shall entitle the holder thereof to one vote.

The Articles further provide that as long as there are preferred shares of any series outstanding, we may not, except with the approval of the holders of the preferred shares of such series, and after complying with the provisions of the Companies Act (Québec), create any other shares with priority over or having the same rank as the preferred shares of such series, liquidate voluntarily or dissolve our company or conduct any reduction of the capital resulting in the distribution of our assets to other shares of our share capital or revoke, amend or otherwise change any of the provisions in the Articles related to the preferred shares of such series. We will be deemed to have obtained the approval of the holders of the preferred shares of any series outstanding with respect to the matters described in the foregoing sentence if it is contained in a resolution (i) adopted by at least two-thirds (²/3) of the votes expressed by holders of the preferred shares of such series voting on this resolution at a meeting or (ii) in a document signed by all the holders of the preferred shares of such series outstanding.

(c)

Rights to share in our profits: Except as provided in paragraph (a) above (pursuant to which the holders of our Series G preferred shares are entitled to receive a 11.25% cumulative preferential dividend in preference to the holders of our common shares and other series of our preferred shares) and paragraph (d) below (pursuant to which the holders of our Series G preferred shares are entitled to receive, in preference to the holders of our common shares and other series of our preferred shares, an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto in the event of our liquidation, dissolution or reorganisation), None.



(d)

Rights upon liquidation: In the event of our liquidation, dissolution or reorganization or any other distribution of our assets among our shareholders for the purpose of winding-up our affairs, whether voluntarily or involuntarily, the holders of our Series G preferred shares shall be entitled to receive in preference to the holders of our common shares and our preferred shares of other series an amount equal to $1,000 per Series G preferred share and any accumulated and unpaid dividends with respect thereto. Our Series G preferred shares have priority over our common shares and our preferred shares of other series as to the order of priority of the distribution of assets in case of the liquidation or dissolution of our company, voluntary or involuntary, or of any other distribution of our assets to our shareholders for the purpose of winding up our affairs.



(e)

Redemption provisions: Holders of our Series G preferred shares may require us to redeem the Series G preferred shares at any time at a redemption price of $1,000 per share plus any accumulated and unpaid dividends with respect thereto. In addition, we may, at our option, redeem the Series G preferred shares at any time at a redemption price of $1,000 per share plus any accumulated and unpaid dividends with respect thereto.

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(f)

Sinking fund provisions: None.



(g)

Liability to further capital calls by us: Our by-laws provide that our directors may, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares of our share capital on such terms and conditions, for such consideration not contrary to law or to the Companies Act (Québec) and as prescribed in the resolutions of the board of directors, the directors may, from time to time, make calls upon the shareholders in respect of any moneys unpaid upon their shares.



(h)

Provisions discriminating against existing or prospective holders of our Series G preferred shares as a result of such holder owning a substantial number of our Series G preferred shares: None.

4.

For a description of the action necessary to change the rights of holders of the preferred shares, see "Section 3, Preferred Shares" above. Under the Companies Act (Québec), (i) the Articles may be amended by the affirmative vote of the holders of two-thirds (²/3) of the vote cast by the shareholders at a special meeting and (ii) our by-laws may be amended by our directors and ratified by the majority of the vote cast by the shareholders at the meeting.

5.

Our by-laws provide that the annual meeting of our shareholders shall be held at such place, on such date and at such time as our board of directors may determine from time to time. Annual meetings of our shareholders may be called at any time by order of our board of directors, our chairman of the board or, provided they are members of our board directors, the president or any vice-president of our company. Special general meetings of our shareholders shall be held at such place, on such date and at such time as our board of directors may determine from time to time or at any place where all our shareholders entitled to vote are present in person or represented by proxy or at such other place as all our shareholders shall approve in writing. Special general meetings of our shareholders may be called at any time by order of our board of directors, our chairman of the board or, provided they are members of our board of directors, the president or any vice-president of our company.

Our by-laws provide that notice specifying the place, date, time and purpose of any meeting of our shareholders shall be given to all the shareholders entitled to this notice at least 21 days but not more than 50 days prior to the date fixed for the meeting. The notice may be mailed, postage prepaid, to the shareholders at their respective addresses as they appear on our books or delivered by hand or transmitted by any means of telecommunication.

Our chairman of the board or, in his absence, our president, if he is a director or, in his absence, one of our vice-presidents who is a director shall preside at all meetings of our shareholders. If all of the aforesaid officers are absent or decline to act, the persons present and entitled to vote may choose one of their number to act as chairman of the meeting.

Our by-laws provide that the holders of not less than 30% of the outstanding shares of our share capital carrying the right to vote at a shareholders' meeting, present in person or represented by proxy, shall constitute a quorum for any meeting of our shareholders.

6.

There is no limitation imposed by Canadian law or by the Articles or our other constituent documents on the right of nonresidents or foreign owners to hold or vote shares, other than as provided in the Investment Canada Act (Canada). The Investment Canada Act (Canada) requires "non-Canadian" (as defined in the Investment Canada Act (Canada)) individuals, governments, corporations and other entities who wish to acquire control of a "Canadian business" (as defined in the Investment Canada Act (Canada)) to file either an application for review (when certain asset value thresholds are met) or a post closing notification with the Director of Investments appointed under the Investment Canada Act (Canada), unless a specific exemption applies. The Investment Canada Act (Canada) requires that, when an acquisition of control of a Canadian business by a "non-Canadian" is subject to review, it must be approved by the Minister responsible for the Investment Canada Act (Canada) on the basis that the

83

Minister is satisfied that the acquisition is "likely to be of net benefit to Canada," having regard to criteria set forth in the Investment Canada Act (Canada).

7.

The Articles provide that our directors shall refuse to issue (including on the occasion or because of a conversion of shares or in shares), and to allow a transfer of, any share of our capital stock if this issuance or transfer would, in the opinion of our directors, affect our eligibility or of any other company or partnership in which we have or may have an interest, to obtain, preserve or renew a license or authorization required for the operation or continuation of its broadcasting company (as defined in the Broadcasting Act (Canada), as amended) (or any part thereof) or of any other activity necessary for the continuation of our company. See "Item 4 — Information on the Company — Business Overview — Regulation — Ownership and Control of Canadian Broadcast Undertakings."

The Articles also provide that the holders of our Series E preferred shares have the right, at their option and at any time, to convert all or part of the Series E preferred shares which they hold to our common shares at 750,000 common shares for each Series E preferred share so converted. We currently have 10 authorized Series E preferred shares, of which none are issued and outstanding.

8.

Not applicable.

9.

Not applicable.

10.

Not applicable.

MATERIAL CONTRACTS

        The following is a summary of each material contract, other than contracts entered into in the ordinary course of business, to which we or any of our subsidiaries is a party, for the two years preceding publication of this annual report.

(a)

Indenture relating to US$650,000,000 6⁷/8% Senior Notes due January 15, 2014 dated as of October 8, 2003 by and among Vidéotron Ltée, the guarantors party thereto and Wells Fargo Bank Minnesota, N.A. (now named Wells Fargo Bank, National Association, as trustee, as supplemented by the First Supplemental Indenture dated as of July 12, 2004.

On October 8, 2003, we issued US$335.0 million in aggregate principal amount of 6⁷/8% Senior Notes due January 15, 2014, and on November 19, 2004, we issued an additional US$315.0 million in aggregate principal amount of the notes. The notes are unsecured and are due January 15, 2014. Interest on the notes is payable semi-annually in arrears on January 15 and July 15 of each year. Our obligations under the notes are guaranteed by most, but not all, of our subsidiaries. The notes are redeemable, at our option, under certain circumstances and at the redemption prices set forth in the indenture. The indenture contains customary restrictive covenants with respect to Vidéotron Ltée and certain of our subsidiaries and customary events of default. If an event of default occurs and is continuing, other than our bankruptcy or insolvency, the trustee or the holders of a least 25% in principal amount at maturity of the then-outstanding notes may declare all the notes to be due and payable immediately.

(b)

Seventh Amending Agreement dated as of November 19, 2004 to the Credit Agreement dated as of November 28, 2000, as amended by the First Amending Agreement dated as of January 5, 2001, a Second Amending Agreement dated as of June 29, 2001, a Third Amending Agreement dated December 12, 2001 and accepted by the Lenders as of December 21, 2001, a Fourth Amending Agreement dated as of December 23, 2002, a Fifth Amending Agreement dated as of March 24, 2003 and a Sixth Amending Agreement dated as of October 8, 2004, among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto and acknowledged by Le SuperClub Vidéotron ltée, Goupe de Divertissement SuperClub inc., Vidéotron (1998) ltée, CF Cable TV Inc., Videotron

84

(Regional) Ltd., 9139-3256 Québec inc., Vidéotron TVN inc., Les Propriétés SuperClub inc. and SuperClub Vidéotron Canada inc., as guarantors thereto, and by Quebecor Media Inc.

On November 19, 2004, concurrently with the closing of the private placement of an additional US$315.0 million in aggregate principal amount of our 6⁷/8% Senior Notes due January 15, 2014, we amended and restated our credit agreement dated as of November 28, 2000 by executing and delivering the Seventh Amending Agreement described above and following the satisfaction of certain conditions precedent. Consequently, our credit agreement, as amended, provides for a $450.0 million revolving credit facility maturing in November 2009.

The proceeds of our revolving credit facility are to be used exclusively for general corporate purposes.

Advances under our revolving credit facility will be in Canadian dollars alone. Advances will bear interest at the Canadian prime rate, the bankers' acceptance rate or LIBOR, plus in each case an applicable margin.

This amended and restated credit agreement contains customary restrictive and financial covenants with respect to us and our consolidated subsidiaries and customary events of default. It, however, permits us to make distributions by way of dividends, share repurchases, purchases of Quebecor Media's preferred shares or loans to Quebecor Media under certain circumstances. It also permits our repayment of interest on our subordinated debt, payment of management fees or other similar expenses to our direct or indirect parent and transactions for the primary purpose of creating tax benefits. In addition, this amended and restated credit agreement provides the required consent to allow us to eventually amalgamate with Videotron Telecom.

As of December 31, 2004, no amount had been drawn under our credit facilities under this amended and restated credit agreement.

(c)

Management Services Agreement effective as of January 1, 2002 between Quebecor Media Inc. and Vidéotron Ltée.

Effective January 1, 2002, we entered into a five-year management services agreement with Quebecor Media for services it provides to us, including internal audit, legal and corporate, financial planning and treasury, tax, real estate, human resources, risk management, public relations and other services. Under this agreement, management fees paid to Quebecor Media were $2.4 million for the year ended December 31, 2002, $5.3 million for the year ended December 31, 2003 and $6.5 million for the year ended December 31, 2004. Management fees payable to Quebecor Media will be agreed upon for the years 2005 and 2006. Management fees payable to Quebecor Media are expected to be $10.5 million for the year ended December 31, 2005.

(d)

Subordinated Loan Agreement effective as of January 1, 2002 between Quebecor Media Inc. and Vidéotron Ltée, as amended by a First Amending Agreement dated as of October 8, 2003 between Quebecor Media Inc. and Vidéotron Ltée.

On March 24, 2003, we entered into a subordinated loan agreement with Quebecor Media pursuant to which Quebecor Media agreed to provide us with a subordinated loan in the principal amount of $150.0 million bearing interest at the three-month bankers' acceptance rate plus a 1.5% margin. The proceeds of this subordinated loan were used to reduce outstanding indebtedness under our credit facilities. Interest on this subordinated loan throughout its term is payable in cash at our option. Under the terms of the indenture governing the notes, all cash payments on this loan are restricted payments treated in the same manner as dividends on our common shares.

Our obligations under this loan are subordinated in right of payment to the prior payment in full of all our existing and future indebtedness under our credit facilities. In addition, the holders of all our other senior indebtedness, including the notes, will be entitled to receive payment in full of all

85

amounts due on or in respect of all our other existing and future senior indebtedness before Quebecor Media is entitled to receive or retain payment of principal under this loan.

The subordinated loan agreement also provides that, for so long as indebtedness, obligations and liabilities are due and owing to the creditors under our credit facilities, Quebecor Media shall not be entitled to enforce its rights under this subordinated loan agreement without the prior consent of the administrative agent under the credit facilities.

(e)

Subordinated Loan Agreement, dated as of January 16, 2004, between Québecor Media Inc. and Videotron (1998) Ltée.

On January 16, 2004, Vidéotron (1998) ltée, our wholly owned subsidiary, entered into a subordinated loan agreement with Quebecor Media pursuant to which Quebecor Media agreed to provide it with a subordinated loan in the principal amount of $1.1 billion. The proceeds of this subordinated loan were used to invest in $1.1 billion of Quebecor Media preferred shares. On December 16, 2004, Quebecor Media redeemed these preferred shares, and we used the proceeds from this redemption to repay in full this subordinated loan. This subordinated loan would have matured on January 16, 2019 and bore interest at 10.75% payable semi-annually. The Quebecor Media preferred shares were redeemable at the option of Quebecor Media and retractable at our option at the paid-up value and carried a 11.0% annual fixed cumulative preferential dividend payable semi-annually.

Our obligations under this loan were subordinated in right of payment to the prior payment in full of all our existing and future indebtedness under our credit facilities. In addition, the holders of all our other senior indebtedness, including the notes, were entitled to receive payment in full of all amounts due on or in respect of all our other existing and future senior indebtedness before Quebecor Media would have been entitled to receive or retain payment of principal under this loan.

Unlike corporations in the United States, corporations in Canada are not permitted to file consolidated tax returns. Therefore, this subordinated loan and our investment in the Quebecor Media preferred shares for the same principal amount significantly reduce our income tax obligation. This is because the interest expense on the subordinated loan is deductible for income tax purposes, while the dividend income on the Quebecor Media preferred shares is not taxable. See "Item 5 — Operating and Financial Review and Prospects — Liquidity and Capital Resources — Purchase of Shares of Quebecor Media and Service of Subsidiary Subordinated Loan."

EXCHANGE CONTROLS

        There are currently no laws, decrees, regulations or other legislation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to non-resident holders of our securities, other than withholding tax requirements. See "— Taxation — Canadian Material Federal Income Tax Considerations for Non-Residents of Canada" below.

        There is no limitation imposed by Canadian law or by the Articles or our other charter documents on the right of a non-resident to hold our voting shares, other than as provided by the Investment Canada Act, as amended (the "Act"), as amended by the North American Free Trade Agreement Implementation Act (Canada), and the World Trade Organization (WTO) Agreement Implementation Act. The Act requires notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a "non-Canadian" of "control of a Canadian business," all as defined in the Act. Generally, the threshold for review will be higher in monetary terms for a member of the WTO or NAFTA. In addition, there are regulations related to the ownership and control of Canadian broadcast undertakings. See "Item 4 — Information on the Company — Business Overview — Regulation".

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TAXATION

Certain U.S. Federal Income Tax Considerations

        The following is a summary of certain U.S. federal income tax consequences applicable to the acquisition, ownership and disposition of our notes by a "U.S. Holder." This summary is based on the Internal Revenue Code of 1986, as amended, which we refer to as the Code; Treasury Regulations; Internal Revenue Service, or IRS, rulings; and judicial decisions now in effect. All of these are subject to change, possibly with retroactive effect, or different interpretations. For purposes of this summary, "U.S. Holder" means the beneficial holder of a note who or that for U.S. federal income tax purposes is:

•

an individual citizen or resident alien of the United States;



•

a corporation or other entity treated as such formed in or under the laws of the United States or any political subdivision of the United States;



•

an estate, the income of which is subject to U.S. federal income taxation regardless of its source;



•

a trust, if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more "U.S. persons" (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or if a valid election is in effect to be treated as a U.S. person; or



•

a partnership or other entity treated as such, but only with respect to partners that are U.S. Holders under any of the foregoing clauses.

        This summary does not cover all aspects of U.S. federal income taxation that may be relevant to particular U.S. Holders in light of their specific circumstances (for example, U.S. Holders subject to the alternative minimum tax provisions of the Code) or to investors that may be subject to special treatment under U.S. federal income tax law, including:

•

dealers in stocks, securities or currencies;



•

securities traders that use a mark-to-market accounting method;



•

banks;



•

insurance companies;



•

tax-exempt organizations;



•

persons holding notes as part of a hedging or conversion transaction or a straddle;



•

persons deemed to sell notes under the constructive sale provisions of the Code;



•

persons who or that are, or may become, subject to the expatriation provisions of the Code;



•

persons whose functional currency is not the U.S. dollar; and



•

direct, indirect or constructive owners of 10% or more of our outstanding voting shares.

        The summary also does not discuss any aspect of state, local or foreign law, or U.S. federal estate and gift tax law as applicable to U.S. Holders. In addition, it is limited to U.S. Holders who purchase and hold the notes as "capital assets" within the meaning of the Code, generally, property held for investment.

You should consult your own tax advisor regarding the federal, state, local and foreign tax consequences of the acquisition, ownership and disposition of the notes.

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Exchange of Notes

        The exchange of an old note for a new note by a holder pursuant to either of our exchange offers, one of which was completed on February 9, 2004 and the other of which was completed on March 4, 2005, did not constitute a taxable exchange for U.S. federal income tax purposes. A U.S. Holder did not recognize any gain or loss upon the receipt of a new note pursuant to either of those exchange offers and a U.S. Holder is required to continue to include interest on the new note in gross income, and to account for any bond premium, in the manner and to the extent described below. A U.S. Holder's holding period for a new note includes the holding period for the old note exchanged pursuant to either of those exchange offers, and such U.S. Holder's basis in the new note immediately after the exchange was the same as such U.S. Holder's basis in such old note immediately before the exchange.

Interest on the Notes

        Stated interest on the notes will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes. Interest on the notes will constitute income from sources outside the United States. Interest paid in taxable years beginning before January 1, 2007, with certain exceptions, will be "passive" or "financial services" income, while interest paid in taxable years beginning after December 31, 2006 will, depending on your circumstances, be "passive" or "general" income. In either case, that interest will be treated separately from other types of income for purposes of computing the foreign tax credit allowable to you under the Code.

Redemption

        In the event of a Change of Control (as defined in the indenture governing our notes), the U.S. Holders will have the right to require us to purchase their notes. Under the Treasury Regulations, the right of U.S. Holders to require redemption of the notes upon the occurrence of a Change of Control will not give rise to original issue discount on the notes if the likelihood of the occurrence, as of the date the notes are issued, is remote. We believe that the likelihood of a Change of Control is remote under this rule, and therefore we will treat this possibility as if it will not give rise to original issue discount on the notes.

        We may redeem the notes at any time on or after a certain date, and, in certain circumstances, we may redeem or repurchase a portion of the notes at any time prior to a certain date. Under the Treasury Regulations, we will be deemed to exercise any option to redeem the notes if the exercise of such option would lower the yield of the notes. We believe, and will take the position for all U.S. federal income tax purposes, that we will not be treated as having exercised the option to redeem the notes under these rules.

Sale, Exchange or Retirement of a Note

        A U.S. Holder generally will recognize gain or loss upon the sale, exchange, redemption, retirement or other disposition of a note, measured by the difference, if any, between:

•

the amount of cash and the fair market value of any property received, except to the extent that the cash or other property is attributable to the payment of accrued interest not previously included in income, which amount will be taxable as ordinary income; and



•

the holder's tax basis in the notes.

        Any such gain or loss will generally be capital gain or loss and will generally be long-term capital gain or loss if the note has been held or deemed held for more than one year at the time of the disposition. Net capital gains of noncorporate U.S. Holders, including individuals, may be taxed at lower rates than items of ordinary income. The ability of a U.S. Holder to offset capital losses against ordinary income is limited. Any gain or loss recognized by a U.S. Holder on the sale or other disposition of a note generally will be treated as income from sources within the United States or loss allocable to income from sources within the

88

United States. Any loss attributable to accrued but unpaid interest will be allocated against income of the same category and source as the interest on the notes.

        A U.S. Holder's tax basis in a note will generally equal its cost to the U.S. Holder.

Information Reporting and Backup Withholding

        A U.S. Holder of the notes may be subject to "backup withholding" with respect to certain "reportable payments," including interest payments and, under certain circumstances, principal payments on the notes. These backup withholding rules apply if the U.S. Holder, among other things:

•

fails to furnish a social security number or other taxpayer identification number, or TIN, certified under penalty of perjury within a reasonable time after the request for the TIN;



•

furnishes an incorrect TIN;



•

fails to report properly interest or dividends; or



•

under certain circumstances, fails to provide a certified statement, signed under penalties of perjury, that the TIN furnished is the correct number and that such holder is not subject to backup withholding.

        A U.S. Holder that does not provide us with its correct TIN also may be subject to penalties imposed by the IRS. Any amount withheld from a payment to a U.S. Holder under the backup withholding rules is creditable against the U.S. Holder's federal income tax liability, provided that the required information is furnished to the IRS. Backup withholding will not apply, however, with respect to payments made to certain U.S. Holders, including corporations and tax-exempt organizations, provided their exemptions from backup withholding are properly established.

        We will report to the U.S. Holders of notes and to the IRS the amount of any "reportable payments" for each calendar year and the amount of tax withheld, if any, with respect to these payments.

Canadian Material Federal Income Tax Considerations for Non-Residents of Canada

        The following summary fairly describes the main Canadian federal income tax consequences applicable to you if you exchanged old notes for new notes pursuant to any of our exchange offers, one of which was completed on February 9, 2004 and the other of which was completed on March 4, 2005, or if you invested, as initial purchaser, in the notes and, for purposes of the Income Tax Act (Canada), which we refer to as the Act, you hold such notes as capital property. Generally, a note will be considered to be capital property to a holder provided the holder does not hold the note in the course of carrying on a business and has not acquired the note in one or more transactions considered to be an adventure or concerns in the nature of trade. This summary is based on the Canada-United States Income Tax Convention (1980), as amended, or the Convention, the relevant provisions of the Act and the Regulations thereunder, or the Regulations, as in force on the date hereof, and our understanding of the administrative practices of the Canada Revenue Agency. It assumes that the specific proposals to amend the Act and the Regulations publicly announced by the Minister of Finance of Canada prior to the date of this annual report are enacted in their present form, but the Act or the Regulations may not be amended as proposed or at all. This summary does not address provincial, territorial or foreign income tax considerations. Changes in the law or administrative practices or future court decisions may affect your tax treatment.

        The following commentary is generally applicable to a holder who, at all times for purposes of the Act, deals at arm's length with us and who, for the purposes of the Convention and the Act, is not and is not deemed to be a resident of Canada during any taxation year in which it owns the notes and does not use or hold, and is not deemed to use or hold the notes in the course of carrying on a business in Canada and to an insurer or an authorized foreign bank who carries on an insurance business or a bank business in Canada, who we refer to as a Non-Resident Holder.

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Interest Payments

        A Non-Resident Holder will not be subject to tax (including withholding tax) under the Act on interest, principal or premium on the notes.

Dispositions

        Gains realized on the disposition or deemed disposition of a note by a Non-Resident Holder will not be subject to tax under the Act.

Exchange of Old Notes for New Notes

        The exchange of an old note for a new note by a Non-Resident Holder pursuant to any of our exchange offers, one of which was completed on February 9, 2004 and the other of which was completed on March 4, 2005, did not constitute a taxable transaction for the purposes of the Act.

The preceding discussions of federal income tax consequences is for general information only and is not legal or tax advice. Accordingly, you should consult your own tax advisor as to particular tax consequences of purchasing, holding, and disposing of the notes, including the applicability and effect of any state, provincial, local or foreign tax laws, and of any proposed changes in applicable laws.

DIVIDENDS AND PAYING AGENTS

        Not applicable.

STATEMENT BY EXPERTS

        Not applicable.

DOCUMENTS ON DISPLAY

        We file reports and other information with the United States Securities and Exchange Commission. These reports include certain financial and statistical information about us and may be accompanied by exhibits. You may read and copy any document we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the SEC's Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of this Internet site is http://www.sec.gov. Any documents referred to in this annual report may also be inspected at our offices at 300 Viger Avenue East, Montréal, Québec, Canada H2X 3W5.

SUBSIDIARY INFORMATION

        Not applicable.

ITEM 11 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        In the normal course of business, we are exposed to market risks. In addition to market risks associated with changes in interest rates and the exchange rate of the U.S. dollar to the Canadian dollar, we are also exposed to credit risk. We use certain financial instruments, such as interest rate swaps, currency swap agreements and cross-currency interest rate swap agreements, to manage our interest rate and foreign exchange exposure. These instruments are not used for trading or speculative purposes.

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        The table below provides information on the derivative financial instruments and other financial instruments that are sensitive to changes in interest rates and foreign currencies as of the date shown.

	December 31, 2004
					Fair Value
	Years of Maturity	Year-end Effective Interest Rate	Carrying Amount(1)		Primary Debt Instrument		Currency & Interest Instruments		Total Financial Instruments
	(in millions of dollars, except for maturity and percentage information)
Debt:
CF Cable notes(2)	2007	7.59%	(92.3	)	(93.3	)	—		(93.3	)
Notes(2)	2014	6.59%	(842.0	)	(807.7	)	(72.3	)	(880.0	)
QMI subordinated loan	2015	3.86%	(150.0	)	(150.0	)	—		(150.0	)
			(1,084.3	)	(1,051.0	)	(80.8	)	(1,123.3	)
Other contracts:
Interest rate swap agreements(3)	2005-2007		(4.6	)	—		(4.6	)	(4.6	)
Forward exchange contracts (4)	2005		(8.4	)	—		(8.4	)	(8.4	)
			(1,097.3	)	(1,051.0	)	(93.8	)	(1,136.3	)

(1)

Including the carrying amount of primary debt instrument and the carrying amount of the currency and interest instrument.

(2)

The fair values of the notes issued on October 8, 2003 and November 19, 2004 and the CF Cable notes are estimated based on their quoted market prices, the estimated value of the foreign exchange and interest rate swap agreements, and the year-end foreign exchange rate.

(3)

The fair value of the interest rate swap agreements is estimated based upon discounted cash flows using applicable market rates as of December 31, 2004.

(4)

The forward exchange contracts cover $53.5 million of the CF Cable notes and $18.5 million of customers' equipment purchases in 2005.

	December 31, 2003
					Fair Value
	Years of Maturity	Year-end Effective Interest Rate	Carrying Amount(1)		Primary Debt Instrument		Currency & Interest Instruments		Total Financial Instruments
	(in millions of dollars, except for maturity and percentage information)
Debt:
Credit facilities(2)	2008	3.86%-5.00%	(355.6	)	(355.6	)	—		(355.6	)
CF Cable notes(3)	2007	7.59%	(100.6	)	(103.4	)	—		(103.4	)
Notes(3)	2014	7.00%	(445.7	)	(448.4	)	(24.6	)	(473.0	)
QMI subordinated loan	2015	4.80%	(150.0	)	(150.0	)	—		(150.0	)
			(1,051.9	)	(1,057.4	)	(24.6	)	(1,082.0	)
Interest rate contracts:
Interest rate swap agreements(4)(5)	2004-2006		—		—		(9.5	)	(9.5	)

(1)

Including the carrying amount of primary debt instrument and the carrying amount of the currency and interest instrument.

(2)

The fair value of our credit facilities is estimated to approximate carrying value as rates are tied to short-term indexes.

(3)

The fair values of the notes issued on October 8, 2003 and the CF Cable notes are estimated based on their quoted market prices, the estimated value of the foreign exchange and interest rate swap agreements, and the year-end foreign exchange rate.

(4)

The fair value of the interest rate swap agreements is estimated based upon discounted cash flows using applicable market rates as of December 31, 2003.

(5)

The interest rate swap agreements cover $315.0 million of the term credit facilities.

91

        Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of professional judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

        As of December 31, 2004, the aggregate amount of minimum principal payments required in each of the next five years and thereafter based on borrowing levels as at that date are as follows:

Year ending December 31,	(in thousands)
2005	$	—
2006		—
2007		92,271
2008		—
2009		—
Thereafter		946,637

        We manage our exposure to interest rate risk by having a combination of fixed and variable rate obligations and by periodically using financial instruments such as interest rate swap agreements. We are also exposed to changes in the exchange rate of the U.S. dollar to the Canadian dollar since our revenues are received in Canadian dollars while the interest and principal on our notes and the CF Cable notes are denominated in U.S. dollars. During the year ended December 31, 2004, we concluded cross-currency interest swaps to hedge the foreign exchange fluctuations relating to the additional issuance of US$315.0 million in principal amount of our notes by fixing the U.S. dollar/Canadian dollar exchange rate at 1.1950 and by fixing the interest rate at 7.45% and on a notional amount of $149.4 million and fixing the exchange rate at 1.2000 and by opting for a floating interest rate based on the bankers' acceptance rate plus 2.80% on a notional amount of $228.0 million. We also concluded forward exchange contracts to hedge the foreign exchange fluctuations relating to our CF Cable notes by fixing the U.S. dollar/Canadian dollar exchange rate at 1.3573 on a notional amount of $53.5 million.

        During the year ended December 31, 2003, we concluded cross-currency interest swaps to hedge the foreign exchange fluctuations relating to our notes issued on October 8, 2003 by fixing the U.S. dollar/Canadian dollar exchange rate at 1.3425 on a notional amount of US$335.0 million and by fixing the interest rate at 7.66% on a notional amount of $181.2 million and by opting for a floating interest rate based on the bankers' acceptance rate plus 2.73% on a notional amount of $268.5 million. During the year ended December 31, 2004, we concluded forward exchange contract to hedge the foreign exchange fluctuations relating to our 2005 customers' equipment purchases by fixing the U.S. dollar/Canadian dollar exchange rate at 1.1974 on an amount of $18.5 million.

        Foreign currency fluctuations have created gains or losses in our results on the non-hedged U.S. dollar-denominated long-term debt. For the year ended December 31, 2004, we had unrealized foreign exchange loss of $1.3 million, as compared to a gain of $23.6 million and $2.2 million for the same periods in 2003 and 2002, respectively.

        We are exposed to credit risk in the event of non-performance by the counterparties to our foreign currency contracts and interest rate swap agreements. We do not obtain collateral or other security to secure performance of obligations under financial instruments subject to credit risk, but we mitigate this risk by generally dealing only with major Canadian and U.S. financial institutions with a Standard & Poor's rating (or the equivalent) of at least A. Accordingly, we do not anticipate incurring any losses as a result of non-performance by the counterparties to our foreign currency contracts and interest rate swap agreements.

        We are exposed to credit risk towards our customers. Concentrations of credit risk with respect to trade receivables are limited due to our very large customer base and low receivable amounts from individual customers.

92

ITEM 12 — DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

        Not applicable.

PART II

ITEM 13 — DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

        None.

ITEM 14 — MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

        These have been no material modifications to the rights of security holders.

USE OF PROCEEDS

        Not applicable.

ITEM 15 — CONTROLS AND PROCEDURES

        Our chief executive officer and our chief financial officer have concluded, based on their evaluation, that our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) are effective as of the end of the period covered by this annual report.

        Our chief executive officer and our chief financial officer have concluded, based on their evaluation, that there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15 or 15d-15 under the Exchange Act) that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A — AUDIT COMMITTEE FINANCIAL EXPERT

        Our board of directors has determined that we have at least one audit committee financial expert (as defined in Item 16A of Form 20-F) and that Mr. Jean La Couture is our audit committee financial expert serving on the audit committee of our board of directors.

ITEM 16B — CODE OF ETHICS

        We have adopted a code of ethics (as defined in Item 16B of Form 20-F) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have filed a copy of this code of ethics as an exhibit to our Annual Report on Form 20-F for the year ended December 31, 2003.

ITEM 16C — PRINCIPAL ACCOUNTANT FEES AND SERVICES

        KPMG LLP has served as our independent public accountant for each of the fiscal years in the three-year period ended December 31, 2004, for which audited consolidated financial statements appear in this annual report on Form 20-F.

        The audit committee of our board of directors establishes the external auditors' compensation. In 2003, our audit committee also established a policy to pre-approve all audit services, determining which non-audit services the external auditors are prohibited from providing, and, exceptionally, authorizing permitted non-audit services to be performed by the external auditors; however, only to the extent those services are permitted by the Sarbanes-Oxley Act and Canadian law. For the year ended December 31, 2003, none of the non-audit services described below were approved by the audit committee of our board of directors pursuant

93

to the "de minimis exception" to the pre-approval requirement for non-audit services. For the year ended December 31, 2004, 3.6% of the non-audit services described below were approved by the audit committee of our board of directors pursuant to this "de minimis exception." The following table presents the aggregate fees billed for professional services and other services rendered by KPMG LLP for each of the years ended December 31, 2003 and 2004.

	Year Ended December 31,
	2003		2004
	(in thousands)
Audit Fees	$	309.8	$	453.6
Audit-Related Fees(1)		548.0		391.5
Tax Fees(2)		—		1.2
All Other Fees(3)		63.9		8.0
Total	$	921.7	$	854.3

(1)

Audit-Related Fees include fees for the reviews of our employee pension plans and assistance with the preparation of our private placement offerings of our 6⁷/8% Senior Notes due January 15, 2014, which were completed on October 8, 2003 and on November 19, 2004, and the exchange offers for such notes, one of which was completed on February 9, 2004 and the other of which was completed on March 4, 2005.

(2)

Tax Fees include fees billed for tax compliance services, tax consultations and tax planning services.

(3)

All Other Fees include fees billed for regulatory services.

ITEM 16D — EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

        Not applicable.

ITEM 16E — PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

        Not applicable.

PART III

ITEM 17 — FINANCIAL STATEMENTS

        Our consolidated balance sheets as at December 31, 2003 and 2004 and our consolidated statements of operations, shareholder's equity and cash flows for the years ended December 31, 2002, 2003 and 2004, including the notes thereto and together with the auditors' report thereon, are included at pages F-1 to F-39 to this annual report.

ITEM 18 — FINANCIAL STATEMENTS

        Not applicable.

94

ITEM 19 — EXHIBITS

EXHIBITS

        The following documents are filed as exhibits to this Form 20-F:

1.1**	Articles of Incorporation of Vidéotron Ltée (translation).
1.2	Articles of Amendment dated January 16, 2004 to Articles of Incorporation of Vidéotron Ltée (translation) (incorporated by reference to Exhibit 1.2 to Vidéotron Ltée's Annual Report on Form 20-F for the year ended December 31, 2003 dated April 20, 2004).
1.3**	By-laws of Vidéotron Ltée.
1.4††	By-law No. 2004-1 of Vidéotron Ltée adopted January 16, 2004 (translation).
1.5**	Articles of Incorporation of Vidéotron TVN inc. (translation).
1.6**	By-laws of Vidéotron TVN inc.
1.7**	Articles of Incorporation of Vidéotron (1998) ltée (translation).
1.8††	Articles of Amendment dated January 16, 2004 to Articles of Incorporation of Vidéotron (1998) ltée (translation).
1.9**	By-laws of Vidéotron (1998) ltée.
1.10††	By-law No. 2004-1 of Vidéotron (1998) ltée (translation).
1.11**	Articles of Incorporation of Le SuperClub Vidéotron ltée (translation).
1.12**	By-laws of Le SuperClub Vidéotron ltée.
1.13**	Articles of Incorporation of Groupe de Divertissement SuperClub inc. (translation).
1.14††	Articles of Amendment dated January 16, 2004 to Articles of Incorporation of Groupe de Divertissement SuperClub inc. (translation).
1.15**	By-laws of Groupe de Divertissement SuperClub inc.
1.16††	By-law No. 2004-1 of Groupe de Divertissement SuperClub inc. adopted January 16, 2004 (translation).
1.17††	Articles of Incorporation of SuperClub Vidéotron Canada inc. (translation).
1.18††	By-laws of SuperClub Vidéotron Canada inc. (translation).
1.19††	Articles of Incorporation of Les Propriétés SuperClub inc. (translation).
1.20††	By-laws of Les Propriétés SuperClub inc. (translation).
2.1*	Form of 67/8% Senior Notes due January 15, 2014 of Vidéotron Ltée being registered pursuant to the Securities Act of 1933 (included as Exhibit A to Exhibit 2.3 below).
2.2*	Form of Notation of Guarantee by the subsidiary guarantors of the 67/8% Senior Notes due January 15, 2014 of Vidéotron Ltée (included as Exhibit E to Exhibit 2.3 below).
2.3*	Indenture dated as of October 8, 2003 (the "Indenture") by and among Vidéotron Ltée, the subsidiary guarantors signatory thereto and Wells Fargo Bank Minnesota, N.A. (now named Wells Fargo Bank, National Association), as trustee.
2.4†	Trust Supplemental Indenture dated as of July 12, 2004 by and among Vidéotron Ltée, SuperClub Vidéotron Canada inc., Les Propriétés SuperClub inc. and Wells Fargo Bank, National Association, as trustee.

95

2.5	Form of 91/8% Senior Secured First Priority Notes due 2007 of CF Cable TV Inc. (incorporated by reference to Exhibit 4.2 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.6	Form of Indenture dated as of July 11, 1995 among CF Cable TV Inc., the guarantors signatory thereto and Chemical Bank (now named JPMorgan Chase Bank), as trustee (the "CF Cable Indenture") (incorporated by reference to Exhibit 4.1 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.7*	First Supplemental Indenture dated as of November 1, 1996 among CF Cable TV Inc., the guarantors signatory thereto and The Chase Manhattan Bank (formerly named Chemical Bank, now named JPMorgan Chase Bank), as trustee.
2.8*	Second Supplemental Indenture dated as of October 28, 1998 among CF Cable TV Inc., the guarantors signatory thereto and The Chase Manhattan Bank (formerly named Chemical Bank, now named JPMorgan Chase Bank), as trustee.
2.9*	Third Supplemental Indenture dated as of December 21, 2001 among CF Cable TV Inc., the guarantors signatory thereto and JPMorgan Chase Bank (formerly named The Chase Manhattan Bank and previously named Chemical Bank), as trustee.
2.10*	Fourth Supplemental Indenture dated as of March 11, 2002 among CF Cable TV Inc., the guarantors signatory thereto and JPMorgan Chase Bank (formerly named The Chase Manhattan Bank and previously named Chemical Bank), as trustee.
2.11	Forms of Guarantee under the CF Cable Indenture (incorporated by reference to Exhibit 4.3 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1, dated July 6, 1995, Registration Statement No. 33-93440).
2.12	Forms of Deed of Hypothec under the CF Cable Indenture (incorporated by reference to Exhibit 4.4 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.13	Form of General Security Agreement under the CF Cable Indenture (incorporated by reference to Exhibit 4.4 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.14	Form of General Assignment of Book Debts under the CF Cable Indenture (incorporated by reference to Exhibit 4.4 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.15	Forms of Mortgage under the CF Cable Indenture (incorporated by reference to Exhibit 4.4 to CF Cable TV Inc.'s Amendment No. 1 to the Registration Statement on Form F-1 dated July 6, 1995, Registration Statement No. 33-93440).
2.16*	Inter-Creditor Agreement made as of June 29, 2001 among Royal Bank of Canada, The Chase Manhattan Bank (now named JPMorgan Chase Bank), CF Cable TV Inc. and the guarantors signatory thereto (the "Inter-Creditor Agreement").
2.17*	Amending Agreement to the Inter-Creditor Agreement made as of October 8, 2003 among Royal Bank of Canada, JPMorgan Chase Bank, CF Cable TV Inc. and the guarantors signatory thereto.

96

4.1*	Sixth Amending Agreement, dated as of October 8, 2003, to the Credit Agreement dated as of November 28, 2000, as amended by the First Amending Agreement dated as of January 5, 2001, a Second Amending Agreement dated as of June 29, 2001, a Third Amending Agreement dated December 12, 2001 and accepted by the Lenders as of December 21, 2001, a Fourth Amending Agreement dated as of December 23, 2002 and a Fifth Amending Agreement dated as of March 24, 2003, among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto and acknowledged by Le SuperClub Vidéotron ltée, Groupe de Divertissement SuperClub inc., Vidéotron (1998) ltée, CF Cable TV Inc., Videotron (Regional) Ltd, Télé-Câble Charlevoix (1997) inc., Vidéotron TVN inc. and Câblage QMI inc., as guarantors, and by Quebecor Media Inc.
4.2†	Seventh Amending Agreement dated as of November 19, 2004 to the Credit Agreement dated as of November 28, 2000, as amended by the First Amending Agreement dated as of January 5, 2001, a Second Amending Agreement dated as of June 29, 2001, a Third Amending Agreement dated as of December 12, 2001, a Fourth Amending Agreement dated as of December 23, 2002, a Fifth Amending Agreement dated as of March 24, 2003 and a Sixth Amending Agreement dated as of October 8, 2003 among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto and acknowledged by Le SuperClub-Vidéotron ltée, Groupe de Divertissement SuperClub inc., Vidéotron (1998) ltée, CF Cable TV Inc. Videotron Regional Ltd., 9139-3256 Québec inc., Vidéotron TUN inc., Les Propriétés SuperClub inc. and SuperClub Vidéotron Canada inc., as guarantors (the "Guarantors"), and by Quebecor Media Inc.
4.3*	Form of Amended and Restated Credit Agreement (the "Credit Agreement") entered into as of November 28, 2000, as amended by a First Amending Agreement dated as of January 5, 2001, as Second Amending Agreement dated as of June 29, 2001, a Third Amending Agreement dated December 12, 2001 and accepted by the Lenders as of December 21, 2001, a Fourth Amending Agreement dated as of December 23, 2002, a Fifth Amending Agreement dated as of March 24, 2003, a Sixth Amending Agreement dated as of October 8, 2003, among Vidéotron Ltée, Royal Bank of Canada, as administrative agent, and the financial institutions signatory thereto (included as Schedule 2 to Exhibit 4.2 above).
4.4	Form of Guarantee by the Guarantors of the Credit Agreement (incorporated by reference to Schedule D of Exhibit 10.5 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).
4.5	Form of Share Pledge of the shares of Vidéotron Ltée and the Guarantors of the Credit Agreement (incorporated by reference to Schedule E of Exhibit 10.5 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).
4.6*	Management Services Agreement effective as of January 1, 2002 between Quebecor Media Inc. and Vidéotron Ltée.
4.7*	Subordinated Loan Agreement dated as of March 24, 2003 (the "2003 Subordinated Loan Agreement") between Quebecor Media Inc. and Vidéotron Ltée.
4.8*	First Amending Agreement to the 2003 Subordinated Loan Agreement, dated as of October 8, 2003, between Quebecor Media Inc. and Vidéotron Ltée.
4.9††	Subordinated Loan Agreement, dated as of January 16, 2004 (the "2004 Subordinated Loan Agreement"), between Quebecor Media Inc. and Vidéotron (1998) ltée.
4.10††	Subordination Agreement dated as of January 16, 2004 by Vidéotron (1998) ltée and Quebecor Media Inc. to Wells Fargo Bank Minnesota, N.A. (now named Wells Fargo Bank, National Association), for itself and as trustee under the Indenture, with respect to the 2004 Subordinated Loan Agreement.

97

4.11††	Subordination Agreement dated as of January 16, 2004 by Vidéotron (1998) ltée and Quebecor Media Inc. to Royal Bank of Canada for itself and as agent under the Credit Agreement, with respect to the 2004 Subordinated Loan Agreement.
4.12	Lease Agreement dated November 24, 1993 between Le Groupe Vidéotron Ltée and National Bank of Canada for the property located at 300 Viger Street East, Montreal, Province of Quebec, Canada, together with a summary thereof in the English language (incorporated by reference to Exhibit 10.3 to Quebecor Media Inc.'s Registration Statement on Form F-4 dated September 5, 2001, Registration Statement No. 333-13792).
7.1	Schedule of Valuation and Qualifying Accounts.
8.1†	Subsidiaries of Vidéotron Ltée.
11.1	Code of Ethics (incorporated by reference to Exhibit 11.1 to Vidéotron Ltée's Annual Report on Form 20-F for the year ended December 31, 2003 dated April 29, 2004.
12.1	Certification of the President and Chief Executive officer of Vidéotron Ltée required by Exchange Act Rule 13a-14(a) or 15d-14(a).
12.2	Certification of the Executive Vice President, Finance and Operations and Chief Financial Officer of Vidéotron Ltée required by Exchange Act Rule 13a-14(a) or 15d-14(a).
13.1	Certification of the President and Chief Executive Officer of Vidéotron Ltée required by Exchange Act Rule 13a-14(b) or 15d-14(b).
13.2	Certification of the Executive Vice President, Finance and Operations and Chief Financial Officer of Vidéotron Ltée required by Exchange Act Rule 13a-14(b) or 15d-14(b).

*

Previously filed as, and incorporated by reference to, the applicable exhibit to Vidéotron Ltée's Registration Statement on Form F-4 dated November 24, 2003, Registration Statement No. 333-110697.

**

Previously filed as, and incorporated by reference to, the applicable exhibit to Vidéotron Ltée's Amendment No. 1 to the Registration Statement on Form F-4 dated January 8, 2004, Registration Statement No. 333-110697.

†

Previously filed as, and incorporated by reference to, the applicable exhibit to Vidéotron Ltée's Registration Statement on Form F-4 dated December 6, 2004, Registration Statement No. 333-121032.

††

Previously filed as, and incorporated by reference to, the applicable exhibit to Vidéotron Ltée's Amendment No. 1 to the Registration Statement on Form F-4 dated January 14, 2005, Registration Statement No. 333-121032.

98

SIGNATURE

        The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

VIDÉOTRON LTÉE
By:	/s/  YVAN GINGRAS Name: Yvan Gingras Title: Executive Vice President, Finance and Operations and Chief Financial Officer

Dated: March 24, 2005

99

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Vidéotron Ltée
Annual Consolidated Financial Information as at December 31, 2003 and 2004 and for the Years Ended December 31, 2002, 2003 and 2004
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the years ended December 31, 2002, 2003 and 2004	F-3
Consolidated Statements of Shareholder's Equity for the years ended December 31, 2002, 2003 and 2004	F-4
Consolidated Balance Sheets as at December 31, 2003 and 2004	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2003 and 2004	F-6
Notes to Consolidated Financial Statements for the years ended December 31, 2002, 2003 and 2004	F-8
Vidéotron Telecom Ltée.
Annual Financial Information as at and for the years ended December 31, 2003 and 2004
Report of Independent Registered Public Accounting Firm	F-40
Statements of Operations and Deficit for the years ended December 31, 2003 and 2004	F-41
Balance Sheets as at December 31, 2003 and 2004	F-42
Statements of Cash Flows for the years ended December 31, 2003 and 2004	F-43
Notes to Financial Statements for the years ended December 31, 2003 and 2004	F-44

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND
TO THE SHAREHOLDER OF VIDÉOTRON LTÉE

        We have audited the accompanying consolidated balance sheets of Vidéotron Ltée and its subsidiaries as at December 31, 2003 and 2004 and the related consolidated statements of operations, shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vidéotron Ltée and its subsidiaries at December 31, 2003 and 2004 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with Canadian generally accepted accounting principles.

        Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 22 to the financial statements.

Chartered Accountants

Montréal, Canada
January 28, 2005

F-2

VIDÉOTRON LTÉE

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2002, 2003 and 2004
(in thousands of Canadian dollars)

		2002			2003			2004
		(Restated — note 1 (b) (iv))
Operating revenues
	Cable television	$	579,200		$	558,887		$	576,825
	Internet		135,514			183,268			222,458
	Video stores		35,344			38,450			48,058
	Other		30,982			24,396			24,277
			781,040			805,001			871,618
Operating expenses
	Direct cost		259,686			245,967			250,442
	Operating, general and administrative expenses		285,816			283,784			279,999
			545,502			529,751			530,441
Operating income before the undernoted			235,538			275,250			341,177
Depreciation and amortization (note 4)			120,016			122,958			130,215
Financial expenses (note 5)			76,188			64,602			177,985
Dividend income from parent company			—			—			(111,055	)
Other items (note 6)			25,000			(2,500	)		—
Income before income taxes and non-controlling interest			14,334			90,190			144,032
Income taxes (note 7):
	Current		5,074			14,063			2,086
	Future		(2,411	)		12,767			(5,526	)
			2,663			26,830			(3,440	)
			11,671			63,360			147,472
Non-controlling interest in a subsidiary			188			49			100
Net income		$	11,483		$	63,311		$	147,372

See accompanying notes to consolidated financial statements.

F-3

VIDÉOTRON LTÉE

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

Years ended December 31, 2002, 2003 and 2004
(in thousands of Canadian dollars)

	Share capital		Contributed surplus			Deficit			Total shareholder's equity
Balance as at December 31, 2001 (note 1(b) (iv))	$	1	$	84,357		$	(413,031	)	$	(328,673	)
Excess of the Series E preferred share retractable value over the stated capital (note 14)		—		—			(27,999	)		(27,999	)
Net income for the year		—		—			11,483			11,483
Balance as at December 31, 2002		1		84,357			(429,547	)		(345,189	)
Conversion of 2 Series E preferred shares into 820,000 common shares (note 14)		31,310		—			—			31,310
Excess of the Series E preferred share retractable value over the stated capital converted into Class A shares (note 14)		—		301,170			—			301,170
Excess of purchase price over the carrying value of assets transferred by the parent company		—		—			(2,000	)		(2,000	)
Issuance of common shares (note 14)		141,925		—			—			141,925
Excess of consideration issued to the parent company over the net book value of business acquired (note 14)		—		(26,699	)		(76,437	)		(103,136	)
Transfer of tax deductions from a company controlled by the ultimate parent company (note 7)		—		3,382			—			3,382
Net income for the year		—		—			63,311			63,311
Dividend		—		—			(19,956	)		(19,956	)
Balance as at December 31, 2003		173,236		362,210			(464,629	)		70,817
Transfer of tax deductions from a company controlled by the ultimate parent company (note 7)		—		(66	)		—			(66	)
Excess of the Series F preferred share retractable value over the stated capital (note 14)		—		—			(1,660	)		(1,660	)
Transfer of tax deductions from the parent company (note 2)		—		26,800			—			26,800
Net income for the year		—		—			147,372			147,372
Dividend		—		—			(205,233	)		(205,233	)
Balance as at December 31, 2004	$	173,236	$	388,944		$	(524,150	)	$	38,030

See accompanying notes to consolidated financial statements.

F-4

VIDÉOTRON LTÉE

CONSOLIDATED BALANCE SHEETS

As at December 31
(in thousands of Canadian dollars)

		2003			2004
Assets
Current assets:
	Cash and cash equivalents	$	28,329		$	36,230
	Marketable securities		23,130			21,250
	Accounts receivable (note 8)		69,088			90,488
	Amounts receivable from affiliated companies (note 19)		105			5
	Income taxes receivable		6,535			8,624
	Inventories (note 9)		23,198			30,151
	Prepaid expenses		6,938			5,399
	Future income taxes (note 7)		10,762			58,228
			168,085			250,375
Fixed assets (note 10)			899,002			884,003
Goodwill			433,215			438,426
Other assets (note 11)			19,927			34,498
Future income taxes (note 7)			5,376			23,559
		$	1,525,605		$	1,630,861
Liabilities and Shareholder's Equity
Current liabilities:
	Issued and outstanding cheques	$	3,051		$	3,903
	Accounts payable and accrued liabilities (note 12)		163,074			194,890
	Amounts payable to affiliated companies (note 19)		18,355			51,718
	Deferred revenue		89,315			105,410
	Income taxes payable		8,139			1,643
	Current portion of long-term debt (note 13)		50,000			—
			331,934			357,564
Deferred revenue			—			15,558
Forward exchange contract and interest rate swaps			15,272			57,249
Future tax liabilities (note 7)			118,202			122,846
Retractable preferred shares (note 14)			2,000			—
Long-term debt (note 13)			986,677			1,038,908
Non-controlling interest in subsidiaries			703			706
			1,454,788			1,592,831
Shareholder's equity:
	Common shares (note 14)		173,236			173,236
	Contributed surplus		362,210			388,944
	Deficit		(464,629	)		(524,150	)
			70,817			38,030
		$	1,525,605		$	1,630,861

Commitments and guarantees (note 17)
Contingencies (note 20)
Subsequent event (note 21)

On behalf of the Board:

See accompanying notes to consolidated financial statements.

F-5

VIDÉOTRON LTÉE

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2002, 2003 and 2004
(in thousands of Canadian dollars)

			2002			2003			2004
			(Restated — note 1 (b) (iv))
Cash flows from operating activities:
	Net income		$	11,483		$	63,311		$	147,372
	Adjustments for the following items:
		Depreciation and amortization (notes 1 (b) (iv), 4 and 5)		129,985			132,866			136,842
		Future income taxes		(2,411	)		12,767			(5,526	)
		Loss on disposal of fixed assets		7,566			18,447			13,174
		Non-controlling interest in a subsidiary		188			49			100
		Amortization of debt premium and discount		(973	)		(1,066	)		(1,106	)
		Net premium, write-off of financing costs and termination costs of swap agreement (note 5)		—			17,094			4,766
		(Gain) loss on foreign currency denominated long-term debt (note 5)		(2,211	)		(23,623	)		1,298
		Other		205			549			(8	)
Cash flows from operations				143,832			220,394			296,912
	Net change in non-cash operating items:
		Accounts receivable		10,201			2,629			(21,400	)
		Current income taxes		126			10,928			(2,213	)
		Amounts receivable from and payable to affiliated companies		(9,007	)		(1,953	)		(1,405	)
		Inventories		10,604			(4,068	)		(5,900	)
		Prepaid expenses		1,857			(2,720	)		1,539
		Accounts payable and accrued liabilities		70,184			(40,516	)		26,872
		Promissory notes payable to a company under common control		(22,543	)		—			—
		Deferred revenue		(9,320	)		9,384			31,653
		Other assets		—			—			(15,383	)
				52,102			(26,316	)		13,763
	Cash flows from operating activities			195,934			194,078			310,675
Cash flows from investing activities:
	Acquisition of fixed assets			(93,041	)		(90,284	)		(123,030	)
	Acquisition of other assets			(1,050	)		(313	)		(1,991	)
	Proceeds on disposal of fixed assets and investments			4,103			3,825			1,446
	Acquisition of shares of parent company			—			—			(1,100,000	)
	Proceeds from disposal of shares of parent company			—			—			1,100,000
	Acquisition of marketable securities			—			(23,130	)		1,880
	Acquisition of Internet subscribers (note 2 (b))			—			(900	)		—
	Acquisition of video stores assets (note 2 (e))			—			—			(7,162	)
	Acquisition of non-controlling interest (note 2 (a))			(1,890	)		—			(10	)
	Cash flows used in investing activities			(91,878	)		(110,802	)		(128,867	)

F-6

Cash flows from financing activities:
	Repayment of long-term debt	$	(159,277	)	$	(1,033,345	)	$	(355,630	)
	Issuance of long-term debt		—			1,038,732			396,244
	Increase in intercompany loan from parent company		—			—			1,100,000
	Repayment of intercompany loan from parent company		—			—			(1,100,000	)
	Redemption of shares		—			—			(3,660	)
	Financing cost on long-term debt		—			(9,086	)		(6,401	)
	Recouponing fees and termination of swaps		—			(48,375	)		—
	Dividend to parent company		—			(19,956	)		(205,233	)
	Other		(95	)		(64	)		(79	)
	Cash flows used in financing activities		(159,372	)		(72,094	)		(174,759	)
Net change in cash and cash equivalents			(55,316	)		11,182			7,049
Cash and cash equivalents at beginning of year			69,412			14,096			25,278
Cash and cash equivalents at end of year		$	14,096		$	25,278		$	32,327
Cash and cash equivalents are comprised of:
	Cash and cash equivalents	$	16,041		$	28,329		$	36,230
	Issued and outstanding cheques		(1,945	)		(3,051	)		(3,903	)
		$	14,096		$	25,278		$	32,327

See accompanying notes to consolidated financial statements.

F-7

VIDÉOTRON LTÉE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2002, 2003 and 2004

1.     SIGNIFICANT ACCOUNTING POLICIES:

(a)

Consolidated financial statements:

The Company is a cable services provider in the Province of Québec for pay-television services and Internet access. It also operates the largest chain of video stores in Québec and a chain of video stores in Ontario and in the Atlantic provinces.

These consolidated financial statements, expressed in Canadian dollars, have been prepared in accordance with Canadian generally accepted accounting principles and include the consolidated financial statements of Vidéotron Ltée and its subsidiaries, CF Cable TV Inc., Vidéotron TVN Inc., Le SuperClub Vidéotron Ltée and Société d'édition et de transcodage T.E. ltée.

(b)

Changes in accounting principles:



(i)

Stock-based compensation:

Since January 1, 2002, in conformity with the recommendations of Section 3870 of the Canadian Institute of Chartered Accountants ("CICA") Handbook, the Company accounts for all stock-based awards granted by the parent company to certain of its employees that are direct awards of stock or call for settlement in cash or other assets, including stock appreciation rights, by the fair value method. Under the fair-value based method, compensation cost attributable to awards to employees that call for settlement in cash or other assets is recognized over the vesting period in operating expenses. Changes in fair value between the grant date and the measurement date result in a change in the measure of the compensation cost.

(ii)

Long-lived assets:

Effective January 1, 2004, the Company adopted the CICA Handbook Section 3063, "Impairment of Long-Lived Assets". Long-lived assets, including fixed assets and intangible assets with finite useful lives, are amortized over their useful lives. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. If the sum of undiscounted net cash flows expected to result from the use and eventual disposition of a group of assets is less than its carrying amount, it is considered to be impaired. An impairment loss is measured as the amount by which the carrying amount of the group of assets exceeds its fair value. At December 31, 2004, no such impairment had occurred.

(iii)

Asset retirement obligation:

Effective January 1, 2004, the Company retroactively adopted CICA Handbook Section 3110 "Asset Retirement Obligation". The standard provides guidance for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of a tangible long-lived asset that result from acquisition, construction, development or normal operations.

The standard requires the Company to record the fair value of a liability for an asset retirement obligation in the year in which it is incurred and when a reasonable estimate of fair value can be made. The asset retirement cost is capitalized as part of the related asset and is amortized to earnings over time. The standard describes the fair value of a liability for an asset retirement obligation as the amount at which that liability could be settled in a current transaction between willing parties, that is, other than in forced or liquidation transaction and is adjusted for any changes resulting from passage of time and any changes to the timing or the amount of the original estimate or undiscounted cash flows. The Company is subsequently required to allocate the asset retirement cost to expense using a systematic and rational method over the assets useful life.

The adoption of this standard had no impact on the Company's financial position, results of operations or cash flows.

(iv)

Equipment subsidies and reconnection costs:

During the year ended December 31, 2003, the Company revised its accounting for the sale of equipment to subscribers and the accounting of the reconnecting costs. Before this change, the costs of subsidies granted to the subscribers on the equipment sold were capitalized and amortized over a three-year period on a straight-line basis, and the costs of

F-8

reconnecting subscribers, which included material, direct labor, and certain overhead charges were capitalized to fixed assets and depreciated over a three-year or a four-year period on a straight-line basis.

The Company changed its accounting principles to expense as they are incurred, the costs related to subscribers' subsidies as well as the costs of reconnecting subscribers. These changes have been applied retroactively and had the following effects for the year ended December 31, 2002. The operating revenues increased by $25.4 million, the direct and operating costs increased by $63.1 million, the depreciation expense, the income tax expense and net income decreased by $21.2 million, $5.2 million and $11.3 million, respectively.

As at December 31 2002, deferred charges decreased by $35.2 million, fixed assets decreased by $10.7 million, future income tax assets increased by $16.1 million and the deficit as at January 1, 2001 increased by $17.7 million.

The following table reconciles the deficit for the year ended December 31, 2002:

		2002
Balance at beginning of year:
	As previously reported	$	(394,532	)
	Changes in accounting principles		(18,499	)
	As restated		(413,031	)
Excess of the preferred share retractable value over the stated capital (note 14)			(27,999	)
Net income for the year			11,483
Balance at end of year		$	(429,547	)

(v)

Revenue recognition and revenue arrangements with multiple deliverables:

In 2004, the Company revised and adopted an accounting policy for the timing of revenue and expense recognition regarding connection fees based on CICA Emerging Issues Committee Abstracts 141 and 142. The Company chose to adopt the new policy prospectively without restatement of prior periods.

Effective January 1, 2004, the connection fee revenues are now deferred and recognized as revenues over 30 months, the estimated average period that subscribers are expected to remain connected to the network. The incremental and direct costs related to connection and reconnection fees, in an amount not exceeding the revenue, are now deferred and recognized as an operating expense over the same 30-month period. Previously, the connection fees and the incremental and direct costs were recognized immediately in operating revenues and expenses, and the reconnecting costs were capitalized and amortized over a three-year or a four-year period. This change in accounting policy had no effect on the amounts of reported operating income and net income. For the year ended December 31, 2004, deferred revenue and deferred charges increased by $9.6 million and $9.4 million, respectively.

(vi)

Generally accepted accounting principles:

In June 2003, the CICA released Handbook Section 1100, "Generally Accepted Accounting Principles". This section establishes standards for financial reporting in accordance with Canadian GAAP, and describes what constitutes Canadian GAAP and its sources. This section also provides guidance on sources to consult when selecting accounting policies and determining appropriate disclosures, when a matter is not dealt with explicitly in the primary source of GAAP. The adoption of this standard had no impact on the Company's financial position, results of operations or cash flows.

(c)

Marketable securities:

Marketable securities consist primarily of commercial paper maturing in the short-term, and are recorded at the lower of cost and market value.

F-9

(d)

Fixed assets:

Fixed assets are recorded at cost, net of related grants and income tax credits. Cost includes material, direct labour, certain overhead charges and interest expenses relating to the projects to construct and connect receiving and distribution networks. Expenditures for additions, improvements and replacements are capitalized, whereas expenses for maintenance and repairs are charged to operating and administrative expenses as incurred.

Depreciation is calculated using the following depreciation basis and periods or rates:

Asset	Basis	Period/rate
Receiving and distribution networks	Straight-line	3 years to 20 years
Furniture and equipment	Declining balance	20% to 33.3%
	and straight-line	3 years to 7 years
Terminals and operating system	Straight-line	5 years and 10 years
Buildings	Declining balance	5%
Coding and transmission material	Declining balance	20%

(e)

Goodwill:

Goodwill is not amortized. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared with its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is not required. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit's goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. When the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and is presented as a separate line item in the income statement before extraordinary items and discontinued operations.

The Company carried out the test in 2002, 2003 and 2004 and concluded it was not required to record an impairment in the carrying value of goodwill.

(f)

Other assets:

Deferred charges are recorded at cost and include long-term financing costs that are amortized over the term of the debt using the straight-line method. Development costs related to new specialty services and pre-operating expenditures are amortized when commercial operations begin, using the straight-line method over a three-year period. Depreciation of video rental inventory is charged to direct costs on a straight-line basis over three years.

(g)

Inventories:

Inventories are recorded at the lower of cost, using the average cost method, or replacement value.

(h)

Revenue recognition:

Operating revenues from cable television and other services, such as Internet access, are recognized when services are provided. When subscribers are invoiced, the portion of unearned revenues is recorded under "Deferred revenue". Revenues from video rentals are recorded as services are provided.

Promotional offers are accounted for as a reduction of the related service revenue when customers are taking advantage of the offer.

F-10

(i)

Foreign currency translation:

Transactions originating in foreign currencies are translated into Canadian dollars at the exchange rate at the date of the transaction. Monetary assets and liabilities are translated at the year-end rate of exchange and non-monetary items are translated at historic exchange rates. Translation gains and losses are recognized in the statement of operations.

(j)

Derivative financial instruments:

The Company uses various derivative financial instruments to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Company does not hold or issue derivative instruments for speculative purposes.

The Company entered into cross-currency interest rate swap agreements to hedge the foreign currency denominated debt and manage exchange rate exposures relating to certain debt instruments denominated in foreign currency. These swaps are designated as hedges of firm commitments to pay interest, and change the basis from Libor to Bankers' Acceptance rates, on the foreign currency denominated debt and the principal at maturity, which would otherwise expose the Company to foreign currency risk. Translation gains and losses on the related foreign currency denominated debt are offset by corresponding translation losses or gains on the swap agreements.

The Company also enters into interest rate swaps in order to manage the impact of fluctuating interest rates on its long-term debt. These swap agreements require the periodic exchange of payments without the exchange of the notional principal amount on which the payments are based. The Company designates its interest rate swap agreements as hedges of the underlying contractual interest payments on the debt. Interest expense on the debt is adjusted to include the payments made or received under the interest rate swaps, which are accounted for on the accrual basis.

The derivative financial instruments that have not been designated as hedge of foreign currency risk are marked to market with changes in fair value recognized in the statement of operations.

(k)

Cash and cash equivalents:

Cash and cash equivalents are comprised of cash and short-term liquid investments maturing within three months from the date of acquisition, net of issued and outstanding cheques.

(l)

Income taxes:

The Company follows the asset and liability method of accounting for income taxes. Under the asset and liability method, future income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment or substantively enactment date. Future income tax assets are recognized and, if realization is not considered "more likely than not", a valuation allowance is provided.

(m)

Employee future benefits:

The Company and an affiliated company offer defined benefit career salary pension plan and a last five years average salary pension plan for certain employees. The Company also maintains defined contribution pension plans for other employees. Defined benefit pension plan costs are determined using actuarial methods and are funded through contributions determined in accordance with the projected benefit method pro-rated on service, which incorporates management's best estimate of future salary levels, other cost escalations, retirement ages of employees and other actuarial assumptions.

Pension plan expense is charged to operations and includes:

•

The cost of pension plan benefits provided in exchange for employees' services rendered during the year;



•

The amortization of the initial net transition asset, prior service costs and amendments on a straight-line basis over the expected average remaining service period of the active employee group covered by the plans;

F-11

•

The interest cost of pension plan obligations, the expected return on pension fund assets, and the amortization of cumulative unrecognized net actuarial gains and losses in excess of 10% of the greater of the benefit obligation or fair value of plan assets over the expected average remaining service life of the employee group covered by the plans for the purpose of calculating the expected return on plan assets, those assets are valued at fair value.

The Company provides post-retirement benefits to eligible employees. The costs of these benefits, which are principally life insurance and health care, are accounted for during the employees' working active period.

(n)

Advertising:

Advertising cost is expensed as incurred. The advertising expenses for 2002, 2003 and 2004 are $18.6 million, $17.8 million and $21.9 million, respectively.

(o)

Use of estimates:

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant areas requiring the use of management estimates relate to the determination of pension and other employee benefits, the useful life of assets for depreciation, amortization and evaluation of net recoverable amount of fixed assets, goodwill, and development and pre-operating costs and provisions for income taxes. Accordingly, actual results could differ from those estimates.

2.     BUSINESS COMBINATIONS AND REORGANIZATION:

(a)

In 2002, Télé-Câble Charlevoix (1977) Inc., a subsidiary of CF Cable TV Inc., a subsidiary of Vidéotron Ltée, purchased from its non-controlling shareholder 189,000 Class "D" preferred shares for a total consideration of $2.0 million including cumulative unpaid dividends of $0.1 million.



(b)

On June 30, 2003, a subsidiary of the Company acquired for a cash consideration of $0.9 million, at the carrying value of the investment held by the parent company, a small group of Internet (dial-up) customers from its parent company. Assets acquired, amounting to $0.9 million, have been recorded as goodwill.



(c)

On October 7, 2003, the Company acquired from its parent company all the issued and outstanding shares of Vidéotron TVN Inc. and of Le SuperClub Vidéotron Ltée in consideration of the issuance of 354,813 common shares for a total stated capital of $141.9 million. The excess of the consideration issued over the net book value of the business acquired, amounting to $103.1 million, has been charged to deficit and contributed surplus. This business combination was accounted for using the continuity of interest method, and the results of operations of the acquired companies have been included in these consolidated financial statements as if this group of companies had always been subsidiaries of the Company.



(d)

On February 8, 2002, the Company sold its internal wire business to an affiliated company, Câblage QMI Inc., and received as consideration $19.5 million in preferred shares. On December 23, 2003, Câblage QMI Inc. sold back its business to the Company and received in exchange notes amounting to $16.1 million. On the same date, the parent company of Câblage QMI Inc. sold its investment in Câblage QMI Inc. to the Company and received in exchange 1 Series F preferred share of the Company's capital stock retractable at an amount of $2.0 million. On December 27, 2004, Câblage QMI Inc. was wound up into the Company. Since all these transactions are between companies under common control, they have been accounted for at book value.



(e)

On May 20, 2004, a subsidiary of the Company acquired the assets of Jumbo Entertainment Inc. for a total cash consideration of $7.2 million.

F-12

This acquisition is summarized as follows:

		(in millions)
Assets acquired:
	Inventories	$	1.1
	Fixed assets		0.9
	Goodwill		5.2
Assets acquired at fair value		$	7.2

(f)

During the year ended December 31, 2004, the Company acquired from the parent company, income tax deductions of $62.0 million, of which $55.5 million is recorded as future income tax assets and $6.5 million as income taxes receivable. The consideration payable to the parent company amounts to $35.2 million. The difference of $26.8 million has been credited to contributed surplus.



(g)

On December 31, 2004, the subsidiary Videotron (1998) ltée has been wound up into Videotron Ltée. This transaction had no impact on the consolidated financial statements.



(h)

On January 16, 2004, Videotron (1998) Ltée, a subsidiary of the Company, contracted a subordinated loan of $1.1 billion bearing interest at 10.75% from Quebecor Media Inc. On the same day, Videotron (1998) Ltée invested the whole proceeds of $1.1 billion into 1,100,000 preferred shares, Series D of Quebecor Media Inc. Those shares, carry the rights to receive an annual dividend of 11%. In December 2004, Videotron (1998) Ltée reimbursed the loan and Quebecor Media Inc. redeemed the preferred shares for $1.1 billion.

3.     EMPLOYEE FUTURE BENEFITS:

The Company and affiliated companies maintain various defined benefit plans and defined contribution plans. The Company's policy is to maintain its contribution at a level sufficient to cover benefits. Actuarial valuations of the Company's pension plans were performed on December 31, 2001 and December 31, 2003. The next actuarial valuations will be performed as at December 31, 2004 for one plan and as at December 31, 2006, at the latest, for the other plan.

The Company provides postretirement benefits to eligible employees. The costs of these benefits, which are principally life insurance and health care, are accounted for during the employee's active service period.

The following tables provide a reconciliation of the changes in the plans' benefit obligations and fair value of plan assets for the years ended December 31, 2003 and 2004, and a statement of funded status as at these dates:

		2003									2004
		Pension benefits			Post-retirement benefits			Total			Pension benefits			Post-retirement benefits			Total
		(in thousands of Canadian dollars)
Change in benefit obligations:
	Benefit obligations, beginning of year	$	36,542		$	3,635		$	40,177		$	44,012		$	3,046		$	47,058
	Service costs		1,999			175			2,174			2,717			2,119			4,836
	Plan participants' contributions		2,373			—			2,373			2,046			—			2,046
	Interest costs		2,554			256			2,810			2,984			321			3,305
	Changes in assumptions		3,705			292			3,997			—			—			—
	Actuarial loss		1,914			—			1,914			3,438			59			3,497
	Curtailment gain		—			(1,265	)		(1,265	)		—			—			—
	Transfer from another pension plan		—			—			—			853			—			853
	Benefits and settlement paid		(5,075	)		(47	)		(5,122	)		(3,494	)		(57	)		(3,551	)
Benefit obligations, end of year		$	44,012		$	3,046		$	47,058		$	52,556		$	5,488		$	58,044

F-13

		2003									2004
		Pension benefits			Post-retirement benefits			Total			Pension benefits			Post-retirement benefits			Total
		(in thousands of Canadian dollars)
Change in plan assets:
	Fair value of plan assets at beginning of year	$	43,604		$	—		$	43,604		$	51,174		$	—		$	51,174
	Plan participants' contribution		2,373			—			2,373			2,046			—			2,046
	Actual return on plan assets		8,123			—			8,123			7,776			—			7,776
	Employer contributions		1,901			47			1,948			1,200			57			1,257
	Other employee contribution		248			—			248			—			—			—
	Transfer from another pension plan		—			—			—			626			—			626
	Benefits and settlement paid		(5,075	)		(47	)		(5,122	)		(3,494	)		(57	)		(3,551	)
Fair value of plan assets, end of year		$	51,174		$	—		$	51,174		$	59,328		$	—		$	59,328

The plan assets are comprised of:

	2003	2004
Equity securities	69.5%	68.9%
Debt securities	29.8%	27.1%
Real estate	0.7%	4.0%

As at December 31, 2004, plan assets included shares of the parent company and of a company under common control at a market value of $0.9 million ($1.0 million in 2003).

		2003									2004
		Pension benefits			Post-retirement benefits			Total			Pension benefits			Post-retirement benefits			Total
		(in thousands of Canadian dollars)
Reconciliation of funded status:
	Excess of fair value of plan assets over benefit obligations, end of year	$	7,162		$	(3,046	)	$	4,116		$	6,772		$	(5,488	)	$	1,284
	Unrecognized actuarial gain		(2,422	)		(466	)		(2,888	)		(2,448	)		(345	)		(2,793	)
Net amount recognized in balance sheet		$	4,740		$	(3,512	)	$	1,228		$	4,324		$	(5,833	)	$	(1,509	)

Presented as follows:

	2003									2004
	Pension benefits			Post-retirement benefits			Total			Pension benefits		Post-retirement benefits			Total
	(in thousands of Canadian dollars)
Deferred pension charges	$	5,523		$	—		$	5,523		$	4,324	$	—		$	4,324
Accrued benefit liability		(783	)		(3,512	)		(4,295	)		—		(5,833	)		(5,833	)
Net amount recognized	$	4,740		$	(3,512	)	$	1,228		$	4,324	$	(5,833	)	$	(1,509	)

F-14

Components of the net benefit costs are as follows:

	2002
	Pension benefits			Post-retirement benefits			Total
	(in thousands of Canadian dollars)
Service costs	$	2,067		$	164		$	2,231
Interest costs		2,559			231			2,790
Actual return on plan assets		(2,181	)		—			(2,181	)
Actuarial loss on accrued benefit obligation		(1,620	)		—			(1,620	)
Curtailment loss		37			—			37
Elements of net benefit cost adjustments to recognize the long-term nature and valuation allowance		862			395			1,257
Difference between actual and expected return on plan assets		(1,236	)		—			(1,236	)
Deferral of actuarial loss on accrued benefit obligation		1,620			—			1,620
Amortization of previously deferred actuarial loss		—			14			14
Total adjustments to recognize the long-term nature of benefit costs		384			14			398
Defined contribution pension plan:
Employer's contribution during the period		2,542			—			2,542
		3,788			409			4,197
Portion related to affiliated companies		(1,139	)		(31	)		(1,170	)
Net benefit costs	$	2,649		$	378		$	3,027

		2003
		Pension benefits			Post-retirement benefits		Total
		(in thousands of Canadian dollars)
Service costs		$	1,999		$	175	$	2,174
Interest costs			2,554			256		2,810
Actual return on plan assets			(8,123	)		—		(8,123	)
Actuarial loss on accrued benefit obligation			1,914			—		1,914
Elements of net benefit cost adjustments to recognize the long-term nature and valuation allowance			(1,656	)		431		(1,225	)
Difference between actual and expected return on plan assets			4,798			—		4,798
Deferral of actuarial loss on accrued benefit obligation			(1,914	)		—		(1,914	)
Amortization of previously deferred actuarial loss			(109	)		11		(98	)
Total adjustments to recognize the long-term nature of benefit costs			2,775			11		2,786
Defined contribution pension plan:
	Employer's contribution during the period		2,954			—		2,954
			4,073			442		4,515
Portion related to affiliated companies			(1,048	)		—		(1,048	)
Net benefit costs		$	3,025		$	442	$	3,467

F-15

		2004
		Pension benefits			Post-retirement benefits			Total
		(in thousands of Canadian dollars)
Service costs		$	2,717		$	2,119		$	4,836
Interest costs			2,984			321			3,305
Actual return on plan assets			(7,776	)		—			(7,776	)
Actuarial loss on accrued benefit obligation			3,438			59			3,497
Elements of net benefit cost adjustments to recognize the long-term nature and valuation allowance			1,363			2,499			3,862
Difference between actual and expected return on plan assets			3,771			—			3,771
Deferral of actuarial loss on accrued benefit obligation			(3,383	)		(59	)		(3,442	)
Amortization of previously deferred actuarial loss			—			21			21
Other			—			(83	)		(83	)
Total adjustments to recognize the long-term nature of benefit costs			388			(121	)		267
Defined contribution pension plan:
	Employer's contribution during the period		4,337			—			4,337
			6,088			2,378			8,466
Portion related to affiliated companies			(1,118	)		—			(1,118	)
Net benefit costs		$	4,970		$	2,378		$	7,348

The expense related to defined contribution pension plans amounts to $4.0 million ($2.6 million in 2003 and $2.0 million in 2002), net of portion related to affiliated companies.

Also, the total cash amount paid or payable for employee future benefits for all plans, consisting of cash contributed by the Company to its funded pension plans, cash payment directly to beneficiaries for its unfunded other benefit plans and cash contributed to its defined contribution plans, totaled $5.6 million for the year ended December 31, 2004 ($4.9 million in 2003 and $4.5 million in 2002).

The weighted average rates used in the measurement of the Company's benefit obligations as at December 31, 2004, 2003 and 2002 and current periodic costs are as follows:

		2002	2003	2004
Benefit obligations:
Rates at end of year:
	Discount rate	6.75%	6.25%	6.00%
	Expected return on plan assets	7.75%	7.75%	7.50%
	Rate of compensation increase	3.25%	3.25%	3.50%
Current periodic costs:
Rates at beginning of year:
	Discount rate	6.50%	6.75%	6.25%
	Expected return on plan assets	8.00%	7.75%	7.75%
	Rate of compensation increase	3.45%	3.50%	3.50%

F-16

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations was 8% at the end of 2004. The cost is expected to decrease gradually over the next five years to 5% and remain at that level thereafter. A one-percentage point change in the assumed health care cost trend would have the following effects:

	Post-retirement benefits
Sensitivity analysis	Increase 1%		Decrease 1%
Effect on service and interest costs	$	70	$	(51	)
Effect on benefit obligations		657		(494	)

4.     DEPRECIATION AND AMORTIZATION:

	2002		2003		2004
	(in thousands of Canadian dollars)
Fixed assets	$	114,305	$	121,928	$	129,642
Other assets		5,711		1,030		573
	$	120,016	$	122,958	$	130,215

Direct costs include $5.4 million in 2002, $5.8 million in 2003 and $3.3 million in 2004 of depreciation on video rental inventory. Operating, general and administrative expenses include $1.9 million in 2004 of amortization of connection fees.

5.     FINANCIAL EXPENSES:

		2002			2003			2004
		(in thousands of Canadian dollars)
Third parties:
	Interest on long-term debt	$	74,522		$	63,588		$	57,180
	Write-off and amortization of deferred financing costs		4,607			4,128			1,397
	Amortization of debt premium and discount		(973	)		(1,066	)		(1,106	)
	Net premium, write-off of financing costs and termination costs of swap agreement		—			17,094			4,766
	(Gain) loss on foreign currency denominated long-term debt		(2,211	)		(23,623	)		1,298
	(Gain) loss on foreign currency denominated short-term monetary items		348			(1,848	)		(857	)
	Bank fees		1,504			1,339			1,543
	Other interests and penalty charges		390			171			635
			78,187			59,783			64,856
	Interest income		(2,289	)		(676	)		(1,396	)
			75,898			59,107			63,460
Parent company:
	Interest (income) expense (note 2 (h))		(178	)		5,495			114,525
Companies under common control:
	Interest expense		468			—			—
		$	76,188		$	64,602		$	177,985

Interest paid to and interest received from third parties in 2002 amounted to $72.3 million and $2.1 million, respectively, $61.0 million and $0.7 million in 2003 and $51.1 million and $1.2 million in 2004.

Interest paid to and interest received from affiliated companies in 2002 amounted to $1.1 million and $0.2 million, respectively, $0.1 million and nil in 2003 and $108.5 million and nil in 2004.

F-17

6.     OTHER ITEMS:

	2002		2003			2004
	(in thousands of Canadian dollars)
Restructuring costs(1)	$	25,000	$	(2,500	)	$	—

(1)

The Company conducted cost reduction programs which included labour reductions and consequently employees and other related charges. As of December 31, 2002, a $25.0 million restructuring provision has been recorded in connection with a work force reduction program. The final costs were lower than estimated and the excess amount was reversed in 2003.

7.     INCOME TAXES:

The following schedule reconciles income taxes computed on income before income taxes and non-controlling interest in a subsidiary based on the consolidated basic income tax rate and the effective income tax rate:

		2002			2003			2004
		(in thousands of Canadian dollars)
Income taxes based on the combined Federal and Provincial (Quebec) basic income tax rate of 35.12% in 2002, 33.12% in 2003 and 31.02% in 2004		$	5,034		$	29,871		$	44,679
Change due to the following items:
	Federal large corporations tax		2,315			2,405			1,822
	Non-taxable dividend from the parent company		—			—			(34,449	)
	Settlement of notices of assessments		—			—			(17,483	)
	Non-deductible charges and/or loss deductible at a lower rate or for which the tax benefit was not recorded		204			(4,432	)		1,776
	Reduction of enacted tax rate		(1,422	)		(1,097	)		—
	Other		(3,468	)		83			215
Income taxes based on the effective income tax rate		$	2,663		$	26,830		$	(3,440	)

Income taxes paid in 2002 amounted to $5.1 million, $3.1 million in 2003 and $8.8 million in 2004.

F-18

The tax effects of significant items comprising the Company's net future tax liability are as follows:

			2003			2004
			(in thousands of Canadian dollars)
Future income tax assets:
	Operating loss carryforwards		$	56,565		$	108,883
	Other provisions			10,762			8,706
	Differences between book and tax basis of fixed assets and other assets			11,278			9,049
				78,605			126,638
Future income tax liabilities:
	Differences between book and tax basis of fixed assets			(176,726	)		(164,112	)
	Differences between book and tax basis of other assets			(3,943	)		(3,585	)
				(180,669	)		(167,697	)
Net future income tax liability			$	(102,064	)	$	(41,059	)
Presented as follows:
	Future income tax assets:
		Short-term	$	10,762		$	58,228
		Long-term		5,376			23,559
				16,138			81,787
	Future income tax long-term liability			(118,202	)		(122,846	)
Net future income tax liability			$	(102,064	)	$	(41,059	)

During the year ended December 31, 2003, the Company obtained from a company under common control of the ultimate parent company, income tax deductions of $9.7 million, of which $9.6 million is recorded as income taxes receivable and $0.1 million as future income tax assets. The consideration payable to this company under common control amounts to $6.3 million. This transaction allows the Company to realize a gain of $3.4 million which has been credited to contributed surplus. During the year ended December 31, 2004, an adjustment has been made to this transaction and $0.07 million has been debited to contributed surplus.

During the year ended December 31, 2004, the Company acquired from the parent company, income tax assets of $62.0 million, of which $55.5 million is recorded as future income tax assets and $6.5 million as income taxes receivable. The consideration payable to the parent company amounts to $35.2 million. The difference of $26.8 million has been credited to contributed surplus.

As at December 31, 2004, the Company had net operating loss carryforwards for income tax purposes available to reduce future federal and provincial taxable income of approximately $346.0 million and $357.5 million as follows:

	Federal		Provincial
	(in thousands of Canadian dollars)
2006	$	111,937	$	90,641
2007		24,554		45,980
2008		8,028		6,770
2009		31,507		27,691
2010		108,312		127,944
2011		62,396		59,294
	$	346,734	$	358,320

F-19

8.     ACCOUNTS RECEIVABLE:

	2003			2004
	(in thousands of Canadian dollars)
Trade	$	76,308		$	91,933
Interest receivable on swaps		—			4,689
Allowance for doubtful accounts		(7,220	)		(6,134	)
	$	69,088		$	90,488

Allowance for doubtful accounts is provided for based systematically on the aging of the receivables.

9.     INVENTORIES:

	2003		2004
	(in thousands of Canadian dollars)
Subscribers' equipment	$	11,828	$	17,700
Video store materials		2,948		5,416
Other supplies and spare parts		8,422		7,035
	$	23,198	$	30,151

10.   FIXED ASSETS:

	2003
	Cost		Accumulated depreciation		Net book value
	(in thousands of Canadian dollars)
Receiving and distribution networks	$	1,446,970	$	685,404	$	761,566
Furniture and equipment		211,320		149,742		61,578
Terminals and operating system		140,467		82,384		58,083
Buildings		21,656		8,533		13,123
Coding and transmission material		7,481		4,651		2,830
Land		1,822		—		1,822
	$	1,829,716	$	930,714	$	899,002
Receiving and distribution networks	$	1,564,393	$	778,741	$	785,652
Furniture and equipment		218,065		164,794		53,271
Terminals and operating system		103,382		75,063		28,319
Buildings		21,364		8,777		12,587
Coding and transmission material		7,648		5,154		2,494
Land		1,680		—		1,680
	$	1,916,532	$	1,032,529	$	884,003

F-20

11.   OTHER ASSETS:

	2003		2004
	(in thousands of Canadian dollars)
Long-term financing fees	$	10,934	$	15,765
Employee future benefit costs (note 3)		5,523		4,324
Development and pre-operating costs		438		1,648
Deferred connection fees		—		9,354
Video rental inventory		2,559		2,734
Investment		66		66
Other		407		607
	$	19,927	$	34,498

12.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

	2003		2004
	(in thousands of Canadian dollars)
Trade accounts payable and accruals	$	47,971	$	55,015
Subscribers' equipment suppliers		13,643		18,215
Royalties and service providers dues		56,858		46,100
Employees' salaries and dues		18,058		25,428
Pension plan and post-retirement accrued liability (note 3)		4,295		5,833
Provincial and federal sales tax		9,262		12,786
Interest		12,987		31,513
	$	163,074	$	194,890

13.   LONG-TERM DEBT:

		2003		2004
		(in thousands of Canadian dollars)
Bank facility (a):
	Revolving credit	$	—	$	—
	Term-loan C		355,630		—
Senior Secured First Priority Notes (b)			100,615		92,271
Senior Notes (c)			430,432		796,637
Subordinated loan — Quebecor Media Inc.			150,000		150,000
			1,036,677		1,038,908
Short-term portion of the long-term debt			50,000		—
Long-term portion of the long-term debt		$	986,677	$	1,038,908

(a)

Bank facility:

Bank credit facility, bearing interest at Bankers' Acceptances and Canadian LIBOR rates, plus, in each case, a margin depending upon Vidéotron Ltée leverage ratio, is secured by a first ranking hypothec on the universality of all tangible and intangible assets, current and future, of Vidéotron Ltée and its subsidiaries, with some restrictions regarding CF Cable TV Inc. and its subsidiaries' assets.

F-21

The credit facilities contain usual covenants such as maintaining certain financial ratios and certain restrictions as to the payment of dividends and acquisitions and dispositions of assets. The unused amount under the Revolving Facility at year-end is $450.0 million as at December 31, 2004 and $100.0 million as at December 31, 2003.

On October 8, 2003, concurrently with the issuance of the Senior Notes, the Company repaid entirely and terminated its former bank facility term-loans A and B, borrowed an amount of $368.1 million under a term-loan C and reduced the authorized amount under the revolving credit facility from $150.0 million to $100.0 million. Term-loan C was payable in quarterly installments of $12.5 million beginning on December 1, 2003, and maturing on October 8, 2008 with a bullet payment of $118.1 million. The Company has reduced the interest fluctuation risk associated with the facility by using interest rate swaps under which the Company has fixed the payment of the interest. As at December 31, 2003, the outstanding balances include Bankers' Acceptance based advances of $355.2 million, and Prime Rate based advances of $0.4 million and the effective rates range from 3.86% to 5.0% at that date. On November 19, 2004, concurrently with the issuance of Senior Notes, the term-loan C, having a balance of $318.1 million, was repaid in full and the revolving credit facility was increased from $100.0 million to $450.0 million with an extended maturity date to November 2009.

(b)

Senior Secured First Priority Notes:

Senior Secured First Priority Notes having a par value of US$75.6 million in 2003 and 2004 bear interest at the rate of 9.125% and mature in 2007. The Notes are redeemable at the option of the subsidiary, CF Cable TV Inc. on or after July 15, 2005 at 100% of the principal amount. These Notes are secured by first-ranking hypothecs on substantially all of the assets of CF Cable TV Inc. and certain of its subsidiaries. In addition, CF Cable TV Inc. and its subsidiaries have provided, to the extent permitted under the Notes Trust Indenture, guarantees in favour of the lenders under its parent credit agreement. In the case of realization on the assets of CF Cable TV Inc. and its subsidiaries, the proceeds thereof would be first used to repay, on a pro rata basis, and as described in an inter-creditor agreement entered into on June 29, 2001, between, among others, the agent under the parent's credit agreement and the trustee under the Notes Trust Indenture, the Senior Secured First Priority Notes and the first priority guarantees provided to the lenders under the parent's credit agreement.

(c)

Senior Notes:

On October 8, 2003, the Company issued US$335.0 million of aggregate principal amount of Senior Notes at a discount rate of 99.0806% for net proceeds of US$331.9 million, before issuance fees of US$5.7 million. These Notes bear interest at a rate of 6.875% payable every six months on January 15 and July 15, and mature on January 15, 2014. The first interest payment is due on July 15, 2004. The Notes contain certain restrictions for Vidéotron Ltée, including limitations on its ability to incur additional indebtedness, and are unsecured. Vidéotron Ltée entered into cross-currency interest swaps to hedge foreign exchange fluctuations related to the interest and capital repayment of these Notes denominated in foreign currency.

On November 19, 2004, the Company issued US$315.0 million of aggregate principal amount of Senior Notes at a premium of 5.0% for total proceeds of CA$396.2 million (US$330.8 million), before issuance fees of US$4.1 million. These Notes contain the same terms and conditions as described above and the Company has contracted cross-currency interest swaps to hedge foreign exchange fluctuations related to the interest and capital repayment of these Notes denominated in foreign currency. The first interest payment is due on January 15, 2005.

In accordance with the Registered Exchange Offer, Vidéotron Ltée will complete, during the first quarter of 2005, the exchange of those Senior Notes for new Notes having substantially identical terms to the Senior Notes. These new Notes have been registered under the United States Securities Act of 1933. The Notes will be redeemable, in whole or in part, at any time on or after January 15, 2009, with a premium decreasing from 3.438% on January 15, 2009 to nil on January 15, 2012.

(d)

Subordinated loan — Quebecor Media Inc.:

On March 24, 2003, the Company contracted a subordinated loan of $150.0 million from its parent company. The $150.0 million subordinated loan, maturing in March 2015, bears interest at the rate of 90-day Bankers' Acceptance rates plus 1.5%, payable in arrears on the last day of each quarter starting June 30, 2003. The obligations of the Company are subordinated in right of payment to the prior payment in full of all existing and future indebtedness of the Company under or in connection with the Credit Agreement. The holders of all other senior indebtedness of the Company will be entitled to

F-22

receive payments in full of all amounts due on or in respect of all other existing and future senior indebtedness of the Company before the Lender is entitled to receive or retain payment of principal.

In June 2003, the Company notified the Lender according to the subordinated loan agreement that it will stop the payment of all interests on the loan indefinitely. The amount of interests owed to Quebecor Media Inc. as at December 31, 2004 totaled $10.7 million ($5.4 million at December 31, 2003).

Minimum principal payments on long-term debt in each of the next five years and thereafter are as follows:

	(in thousands of Canadian dollars)
2005	$	—
2006		—
2007		92,271
2008		—
2009		—
2010 and thereafter		946,637

14.   SHARE CAPITAL:

Authorized:

A limited number of preferred shares, without par value, ranking prior to the common shares with regard to payment of dividends and repayment of capital, without voting rights, issuable in Series. The following Series were designated:

1,000 Preferred Shares, Series A, carrying the rights and restrictions attached to the class as well as a fixed annual non-cumulative preferred dividend of 10% and redeemable at the holder's option

1,000 Preferred Shares, Series B, carrying the rights and restrictions attached to the class as well as a fixed annual non-cumulative preferred dividend of 9% and redeemable at the holder's option

100 Preferred Shares, Series C, carrying the rights and restrictions attached to the class as well as a fixed monthly non-cumulative preferred dividend at a rate equal to the prime rate of the Company's lead banker less 0.75% and redeemable at the holder's option

100 Preferred Shares, Series D, carrying the rights and restrictions attached to the class as well as a fixed monthly non-cumulative preferred dividend of 1%, computed on the redemption price of the preferred shares

10 Preferred Shares, Series E, carrying the rights and restrictions attached to the class as well as a fixed annual non-cumulative preferred cash dividend of 4%, retractable at the holder's option

10 Preferred Shares, Series F, carrying the rights and restrictions attached to the class as well as a fixed annual non-cumulative preferred cash dividend of 4%, retractable at the holder's option

An unlimited number of common shares, without par value, voting and participating

		2003				2004
		Common Shares		Retractable preferred shares		Common shares		Retractable preferred shares
		(in thousands of Canadian dollars)
Issued and paid:
	11,174,813 common shares	$	173,236	$	—	$	173,236	$	—
	1 Preferred share, Series F		—		2,000		—		—
		$	173,236	$	2,000	$	173,236	$	—

F-23

Vidéotron Ltée modified its articles of amalgamation as follows:

On December 5, 2002, Vidéotron Ltée acquired from its parent company certain trademarks and the related future tax asset of $4.5 million. In consideration for this asset acquisition, the Company issued one Series E preferred share retractable at the option of the holder at $32.5 million. Since this transaction was between companies under common control, the stated capital of this share, amounting to the carrying value of the net assets acquired, being $4.5 million, has been recorded in share capital and the $28.0 million excess has been charged to retained earnings.

On March 28, 2003, the parent company converted one of its Series E preferred shares into 750,000 common shares at a stated capital of $26.8 million. Furthermore, on May 14, 2003, the parent company converted its last Series E preferred shares into 70,000 common shares at a stated capital of $4.5 million. The excess of the preferred share retractable value over the stated capital converted into common shares, amounting to $301.2 million, has been credited to the contributed surplus.

On October 7, 2003, the Company acquired from its parent company all the issued and outstanding shares of Vidéotron TVN Inc. and of Le SuperClub Vidéotron Ltée in consideration of the issuance of 354,813 common shares for a total stated capital of $141.9 million. The excess of the consideration issued over the net book value of the business acquired, amounted to $103.1 million, of which $26.7 million has been charged to the contributed surplus and $76.4 million to the deficit. This business combination was accounted for using the continuity of interest method, and the results of operations of the acquired companies have been included in these consolidated financial statements as if this group of companies had always been subsidiaries of the Company.

On December 23, 2003, the Company acquired from its parent company all the issued and outstanding shares of Câblage QMI Inc. in consideration of the issuance of 1 Series F preferred share, retractable at an amount of $2.0 million.

On January 16, 2004 and September 30, 2004, Videotron Ltée issued 88,000 and 45,000 preferred shares Series G, respectively, to Groupe Divertissement SuperClub Inc., the wholly-owned subsidiary of Le Superclub Videotron Ltée, for a total cash consideration of $88.0 million and $45.0 million, respectively. Series G shares are eliminated upon consolidation.

On March 26, 2004, the Company redeemed the Series F preferred share, for an amount of $3.7 million. The excess of the consideration paid over the preferred share's retractable value, in the amount of $1.7 million, has been charged to deficit.

15.   STOCK OPTION PLAN:

Under a stock option plan established by the parent company, 6,185,714 Common Shares of the parent company were set aside for officers, senior employees and other key employees of the parent company and its subsidiaries. Each option may be exercised within a maximum period of ten years following the date of grant at an exercise price not lower than, as the case may be, the fair market value, at the date of grant, of the Common Shares of the parent company, as determined by the parent company's Board of Directors (if the Common Shares are not listed on a stock exchange at the time of the grant) or the trading price of the Common Shares of the parent company on the stock exchanges where such shares are listed at time of the grant. Unless authorized by the parent company's Compensation Committee for a change in control transaction, no options may be exercised by an optionee if the shares of the parent company have not been listed on a recognized stock exchange. At December 31, 2007, if the shares of the parent company have not been so listed, optionees will have between January 1 and January 31, each year to exercise their right to receive the difference between the fair market value and the exercise price of the options in cash. Except under specific circumstances and unless the Compensation Committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by the Compensation Committee at the date of grant: (i) equally over five years with the first 20% vesting on the first anniversary of the date of the grant, (ii) equally over four years with the first 25% vesting on the second anniversary of the date of the grant, and (iii) equally over three years with the first 33% vesting on the third anniversary of the date of the grant.

F-24

The following table gives summary information on outstanding options granted by the parent company to the employees of the Company as at December 31, 2003 and 2004:

	2003				2004
	Options		Weighted average exercise price		Options		Weighted average exercise price
Balance at beginning of year	268,532		$	17.69	545,639		$	18.25
Granted	339,271			18.69	48,756			22.25
Transferred and cancelled	(62,164	)		18.18	(32,328	)		16.70
Balance at end of year	545,639		$	18.25	562,067		$	18.69
Vested options at end of year	7,730		$	16.17	73,569		$	17.45

The following table gives summary information on outstanding options as at December 31, 2004:

	Outstanding options		Vested options
Exercise price	Number	Weighted average years to maturity	Number	Weighted average exercise price
$15.19	32,258	8.41 years	6,452	$	15.19
16.17	175,630	7.27 years	48,453		16.17
19.46	240,749	8.59 years	1,387		19.46
21.42	8,869	8.92 years	1,774		21.42
21.75	22,528	9.20 years	—		—
21.77	62,011	7.23 years	15,503		21.77
22.98	20,022	9.68 years	—		—
$15.19 to $22.98	562,067	8.09 years	73,569	$	17.45

For the year ended December 31, 2004, a charge of $2.2 million related to the plan was included in net income ($0.9 million for 2003).

16.   FINANCIAL INSTRUMENTS:

(a)

Fair value:

The carrying amount of cash and cash equivalents, marketable securities, accounts receivable, issued and outstanding cheques, accounts receivable from/payable to affiliated companies, and accounts payable and accrued liabilities approximates their fair value as these items will be realized or paid within one year.

F-25

As at December 31, the estimated fair values of long-term debt and derivative financial instruments are as follows:

			2003						2004
			Book value			Fair value			Book value			Fair value
			(in thousands of Canadian dollars)
Liabilities:
	Financial liabilities:
		Long-term debt	$	1,036,677		$	1,057,479		$	1,038,908		$	1,051,039
Derivative financial instruments:
	Interest rate swaps			—			(9,460	)		(4,579	) (i)		(4,579	)
Assets (liabilities):
	Cross currency interest rate swaps			(15,272	)		(24,588	)		(45,371	)		(72,298	)
	Forward exchange			—			—			(8,476	)		(8,414	)

(i)

Including an amount of $1.2 million classified with interest payable in the balance sheet.

The fair value estimates are based on market quotes, when available, or on rates that the Company could obtain for instruments having the same characteristics. These estimates are subjective in nature and involve uncertainties and matters of professional judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

(b)

Management of interest rate risk and foreign exchange risk:

The Company has entered into interest rate swaps to manage its interest rate exposure on its bank facility. The Company is committed to exchange, at specific intervals, the difference between the fixed and floating interest rate calculated by reference to the notional amounts. As at December 31, 2004, this bank facility was paid-off, but the Company is still committed to pay fixed interest rates ranging from 3.75% to 5.41% on a notional amount of $230.0 million, and will receive a floating interest rate based on Bankers' Acceptance having a three-month maturity. These swaps expire from 2005 to 2007.

During the year ended December 31, 2003, the Company has concluded cross currency interest swaps to hedge the foreign exchange fluctuations related to its US Senior Notes by fixing the US/Canadian dollar exchange rate at 1.3425 on a notional amount of US$335.0 million, and by fixing the interest rate at 7.66% on a notional amount of $181.2 million, and by opting for a floating interest rate based on bankers' acceptance rate plus 2.73% on a notional amount of $268.5 million.

During the year ended December 31, 2004, the Company has concluded cross-currency interest swaps to hedge the foreign exchange fluctuations relating to its US Senior Notes by fixing the US dollar/Canadian dollar exchange rate at 1.1950, and by fixing an interest rate at 7.45% on a notional amount of $149.4 million, and fixing the exchange rate at 1.2000 and by opting for a floating interest rate based on the bankers' acceptance rate plus 2.80% on a notional amount of $228.0 million. The Company also concluded a forward exchange contract to hedge the foreign exchange fluctuations relating to its CF Cable notes by fixing the US dollar/Canadian dollar exchange rate at 1.3573 on a notional amount of $53.5 million.

During the year ended December 31, 2004, the Company concluded forward exchange contracts to hedge the foreign exchange fluctuations relating to its 2005 customers equipment purchases by fixing the US dollar/Canadian dollar exchange rate at 1.1974 on an amount of $18.5 million. These contracts are marked to market with changes in fair value recorded in the statement of operations.

(c)

Other disclosures:



(i)

The credit risk of the financial instruments arises from the possibility that the counterparties to the agreements or contracts may default on their obligations under the agreements. In order to minimize this risk, the Company's general policy is to deal only with counterparties with a Standard & Poor's rating (or the equivalent) of at least A.

F-26

(ii)

The Company is exposed to a credit risk towards its customers. However, credit risk concentration is minimized because of the large number of customers.

17.   COMMITMENTS AND GUARANTEES:

(a)

Under the terms of operating leases, the Company is committed to make the following minimum annual lease payments over the next years:

(in thousands of Canadian dollars)
2005	$	9,784
2006		5,554
2007		4,282
2008		3,221
2009		1,894
2010 and thereafter		2,261

Furthermore, the Company is committed to buy in 2005 subscribers' equipment from a supplier for an estimated amount of $25.0 million.

The operating lease expense for the year amounted to $12.9 (2003 — $12.2; 2002 — $15.8).

(b)

Disclosure of guarantees:

                Operating leases:

The Company has guaranteed a portion of the residual values of certain assets under operating leases for the benefit of the lessor. If the fair value of the assets, at the end of their respective lease terms, is less than the residual value guaranteed, the Company must, under certain conditions, compensate the lessor for a portion of the shortfall. As at December 31, 2004, the maximum exposure in respect of these guarantees is $8.3 million and no amount has been recorded in the financial statements.

                Guarantees under lease agreements:

A subsidiary of the Company has provided guarantees to the lessor of certain of the franchisees for operating leases, with expiry dates through 2016. If the franchisee defaults under the agreement, the subsidiary must, under certain conditions, compensate the lessor for the default. The maximum exposure in respect of these guarantees is $6.6 million. As at December 31, 2004, the subsidiary has not provided for any liability associated with these guarantees, since it is its present estimation that no franchisee will default under the agreement. Recourse against the sub-lessee is also available, up to the total amount due.

                Guarantees related to the Senior Notes:

Under the terms of the indenture governing the Senior Notes, the Company is committed to pay any amount of withholding taxes that could eventually be levied by any Canadian Taxing Authority on payments made to the lenders, so that the amounts the lenders would receive are not less than amounts receivable if no taxes are levied. The amount of such guarantee is not limited and it is not possible for the Company to establish a maximum amount of the guarantee as it is dependent exclusively on future actions, if any, by the Taxation Authorities. Although no recourse exists for such liability, the Company has the right to redeem such long-term debt at their face value, if such taxes were levied by the Canadian Taxing Authorities, thereby terminating the guarantee.

F-27

18.   SUPPLEMENTAL CASH FLOW INFORMATION:

		2002		2003		2004
		(in thousands of Canadian dollars)
Non-cash financing and investing activities:
	(i)    Purchase of fixed assets financed by accounts payable and accrued liabilities	$	—	$	958	$	5,669
	(ii)   Issuance of share capital in consideration of the acquisition of a subsidiary		—		2,000		—
	(iii)  Issuance of share capital in consideration of the future tax asset related to the trademark acquired from the parent company		6,080		—		—
	(iv)  Spending in deferred charges financed by accounts payable and accrued liabilities and by affiliated companies		946		1,195		1,209

19.   RELATED PARTY TRANSACTIONS:

In addition to the transactions disclosed elsewhere in these financial statements, the Company entered into the following transactions with affiliated companies. These transactions have been recorded at the exchange value, which is the amount established and agreed to by the related parties:

		2002			2003			2004
		(in thousands of Canadian dollars)
Parent company:
	Operating and administrative expenses	$	16,060		$	8,492		$	10,329
	Operating and administrative expenses recovered		(456	)		(216	)		(159	)
	Acquisition of fixed and intangible assets		3,895			1,613			—
	Proceeds from disposal of fixed assets		(586	)		—			—
Companies under common control:
	Operating revenue		1,693			2,450			1,915
	Direct costs		26,939			18,271			15,846
	Operating and administrative expenses		35,877			34,087			29,769

The Company and a company under common control entered into a signal transmission services agreement until 2014, renewable for an additional 15-year period. The service charges arising from this agreement amounted to $8.4 million in 2002, $7.0 million in 2003 and $6.5 million in 2004.

The Company and a company under common control entered into internet bandwith services agreement until 2004, renewable for a 12-month period. Service charges arising from this agreement amounted to $21.2 million in 2002, $12.2 million in 2003 and $6.1 million in 2004.

20.   CONTINGENCIES:

In November 2001, the Company terminated a sale service agreement with a supplier who is suing for breach of contract for an amount of $4.7 million. It is not possible to determine the outcome of this claim.

On March 13, 2002, a legal action was initiated by the shareholders of a cable company against Vidéotron Ltée. They contend that Vidéotron Ltée did not honor its commitment related to a stock purchase agreement signed in August 2000. The plaintiffs are requesting compensations totalling $26.0 million. Management of the Company claims that the suit is not justified and intends to defend vigorously its case in Court.

In the normal course of business, the Company is a party to various claims and lawsuits. Even though the outcome of these various pending cases as at December 31, 2004 cannot be determined with certainty, the management of the Company believes that their outcome will not have a material adverse impact on its operating results or financial position.

21.   SUBSEQUENT EVENT:

On January 1, 2005, the subsidiary Videotron TVN ltée was wound-up in Videotron Ltée.

F-28

22.   SIGNIFICANT DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES:

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in Canada which are different in some respects from those in the United States ("US"), as described below. The following tables set forth the impact of significant differences between Canadian GAAP and US GAAP on the Company's consolidated financial statements, including disclosures, that are required under US GAAP.

Consolidated Statements of Operations

		2002			2003			2004
		(Restated — note 1(b))
		(in thousands of Canadian dollars)
Net income (loss) for the year based on Canadian GAAP		$	11,483		$	63,311		$	147,372
Adjustments:
	Push-down basis of accounting (i)		2,838			(7,954	)		(18,108	)
	Goodwill impairment (i) and (ii)		(2,004,000	)		—			—
	Development and pre-operating costs (iii)		2,744			2,485			(1,210	)
	Accounting for derivative instruments and hedging activities (iv)		3,338			1,607			12,266
	Income taxes (v)		(856	)		(774	)		375
Net income (loss) for the year based on US GAAP			(1,984,453	)		58,675			140,695
Other comprehensive loss (vi):
	Pension and postretirement benefits (vii)		—			(613	)		835
	Accounting for derivative instruments and hedging activities (iv)		—			(843	)		(14,473	)
Comprehensive income (loss) based on US GAAP		$	(1,984,453	)	$	57,219		$	127,057
Accumulated other comprehensive loss at beginning of year		$	(314	)	$	(314	)	$	(1,770	)
Changes in the year			—			(1,456	)		(13,638	)
Accumulated other comprehensive loss at end of year		$	(314	)	$	(1,770	)	$	(15,408	)

Consolidated Shareholder's Equity

		2003			2004
		(in thousands of Canadian dollars)
Shareholder's equity (deficit) based on Canadian GAAP		$	70,817		$	38,030
Cumulative adjustments:
	Push-down basis of accounting (i)		4,321,121			4,235,626
	Goodwill impairment (ii)		(2,004,000	)		(2,004,000	)
	Development and pre-operating costs (iii)		(446	)		(1,656	)
	Accounting for derivative instruments and hedging activities (iv)		(13,352	)		(15,559	)
	Income taxes (v)		139			514
	Pension and postretirement benefits (vii)		(927	)		(92	)
Shareholder's equity based on US GAAP		$	2,373,352		$	2,252,863

(i)

Push-down basis of accounting:

The basis of accounting used in the preparation of these financial statements under US GAAP reflects the push-down resulting from the acquisition on October 23, 2000 by Quebecor Media Inc. of the Company and its subsidiaries. Under Canadian GAAP, each entity has retained the historical carrying value basis of its assets and liabilities. The excess of the purchase price over the value assigned to the net assets of the Company at the date of acquisition has been allocated to goodwill and has been amortized, up to December 31, 2001, on the straight-line basis over 40 years.

F-29

The principal adjustments, taking into account the final allocation of the purchase price finalized in the fourth quarter of 2001, to the historical consolidated financial statements of the Company to reflect Parent's cost basis were:

(a)

The carrying values of fixed assets were increased by $114.6 million;



(b)

The deferred charges related to financing fees and exchange losses on long-term debt have been written off to reflect the fair value of the assumed long-term debt, and further reduction in deferred charges was recorded for a total amount of $22.6 million;



(c)

Accrued charges increased by $40.3 million;



(d)

Future income tax liability increased by $24.9 million; and



(e)

The $4,360.5 million excess of parent's cost over the value assigned to the net assets of the Company at the date of acquisition has been recorded as goodwill and $4,387.3 million was credited to contributed surplus. In 2004, the Company and its parent materialized income tax benefits in the amount of $84.3 million which had not been recognized at the date of acquisition. Therefore, the goodwill has been reduced by $84.3 million, contributed surplus has been reduced by $67.4 million and income tax expense for US GAAP purposes has been increased by $16.9 million.



(ii)

Goodwill impairment:

The accounting requirements for goodwill under Canadian GAAP and US GAAP are similar in all material respects. However, in accordance with the transitional provisions contained in Section 3062 of the CICA Handbook, an impairment loss recognized during the financial year, in which the new recommendations are initially applied, is recognized as the effect of a change in accounting policy and charged to opening retained earnings, without restatement of prior periods. Under US GAAP, an impairment loss recognized as a result of transitional goodwill impairment test is recognized as the effect of a change in accounting principles in the statement of operations above the caption "net income".

(iii)

Development and pre-operating costs:

Under Canadian GAAP, certain development and pre-operating costs, which satisfy specified criteria for recoverability, are deferred and amortized. Under US GAAP, these costs are expensed as incurred.

(iv)

Accounting for derivative instruments and hedging activities:

The Company adopted, at the beginning of 2001, Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" as amended (SFAS 133), which establishes accounting and reporting standards for derivative instruments and hedging activities and requires that all derivatives be recorded as either assets or liabilities in the balance sheet at fair value with changes in fair value recorded in the statement of operations unless the instrument is effective and qualifies for hedge accounting. Under Canadian GAAP, derivative financial instruments are accounted for on an accrual basis. Realized and unrealized gains and losses are deferred and recognized in income in the same period and in the same financial statement category as the income or expense arising from the corresponding hedged position. Furthermore, under Canadian GAAP, the change in foreign exchange rate on long-term foreign currency denominated instrument is recorded either as an asset or liability when hedge accounting is used. Under US GAAP, these changes are recorded in the statement of operations or other comprehensive income based on whether a hedging relationship has been established which qualifies as a hedging relationship under US GAAP.

(v)

Income taxes:

This adjustment represents the tax impact of the US GAAP adjustments. Furthermore, under Canadian GAAP, income taxes are measured using substantially enacted tax rates, while under US GAAP measurement is based on enacted tax rates.

F-30

(vi)

Comprehensive income (loss):

Comprehensive income is presented in accordance with FAS No. 130, "Reporting Comprehensive Income". This standard defines comprehensive income as all changes in equity other than those resulting from investments by owners and distributions to owners. Other comprehensive income consists of adjustments to shareholder's equity related to the accrued pension benefit liability, representing the excess of the accumulated pension benefit obligation as compared to the fair value of plan assets and to changes in the derivative fair values of contracts that are designated effective and qualify as cash flow hedges.

(vii)

Pension and postretirement benefits:

The accounting requirements for pension and postretirement benefits under Canadian GAAP and US GAAP are similar in all material respects. However, under US GAAP, if the accumulated benefit obligation exceeds the fair value of a pension plan's assets, the Company is required to recognize a minimum accrued liability equal to the unfunded accumulated benefit obligation, which is recorded as a separate component of shareholder's equity under the caption "other comprehensive income".

(viii)

Operating income before the undernoted:

US GAAP requires that depreciation and amortization and other items be included in the determination of operating income and does not permit the disclosure of subtotals of the amounts of operating income before these items. Canadian GAAP permits the subtotals of the amounts of operating income before these items.

(ix)

Consolidated statements of cash flows:

The disclosure of a subtotal of the amount of funds provided by operations before changes in non-cash operating working capital items in the consolidated statement of cash flows is allowed by Canadian GAAP while it is not allowed by US GAAP.

(x)

Guaranteed debt:

The combined information below has been presented in accordance with the requirements of the Securities and Exchange Commission for guarantor financial statements.

The Company's Senior Notes due 2014 described in note 13 are guaranteed by specific subsidiaries of the Company (the "Subsidiary Guarantors"). The accompanying condensed consolidated financial information as at December 31, 2003 and 2004 and for the years 2002, 2003 and 2004 has been prepared in accordance with US GAAP. The information under the column headed "Combined Guarantors" is for all the Subsidiary Guarantors. Investments in the Subsidiary Guarantors are accounted for by the equity method in the separate column headed "Vidéotron Ltée". Each Subsidiary Guarantor is wholly-owned by the Company. All guarantees are full and unconditional, and joint and several (to the extent permitted by applicable law).

The main subsidiaries included under the column "Subsidiary Guarantors" are Vidéotron TVN Inc. and Le SuperClub Vidéotron Ltée, and its subsidiary, Groupe de Divertissement SuperClub Inc.

The "Non-Subsidiary Guarantors" are CF Cable TV Inc., Vidéotron (Régional) Ltée and Société d'Édition et de Transcodage T.E. Ltée.

F-31

Consolidated Statement of Operations
In accordance with United States GAAP
For the year ended December 31, 2002

	Vidéotron Ltée			Subsidiary guarantors		Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
	(in thousands of Canadian dollars)
Revenues	$	432,111		$	211,569	$	165,482		$	(28,122	)	$	781,040
Direct cost		156,081			57,144		48,409			(2,590	)		259,044
Operating and administrative expenses		178,868			76,275		56,569			(25,760	)		285,952
Depreciation and amortization		83,901			36,393		17,721			(328	)		137,687
Financial expenses		57,588			6,262		10,556			(1,556	)		72,850
Impairment of goodwill		1,613,220			—		390,780			—			2,004,000
Other items		493			—		113			—			606
(Loss) income before the undernoted		(1,658,040	)		35,495		(358,666	)		2,112			(1,979,099	)
Income taxes		(16,414	)		10,153		11,427			—			5,166
		(1,641,626	)		25,342		(370,093	)		2,112			(1,984,265	)
Share in the results of a company subject to significant influence		(310	)		—		(666	)		976			—
Non-controlling interest		—			—		95			93			188
Net (loss) income	$	(1,641,316	)	$	25,342	$	(369,522	)	$	1,043		$	(1,984,453	)

F-32

Consolidated Statement of Cash Flows
In accordance with United States GAAP
For the year ended December 31, 2002

		Vidéotron Ltée			Subsidiary guarantors			Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
		(in thousands of Canadian dollars)
Cash flows from operating activities:
	Net income (loss)	$	(1,641,316	)	$	25,342		$	(369,522	)	$	1,043		$	(1,984,453	)
	Items not involving cash:
	Depreciation and amortization		88,242			41,755			17,987			(328	)		147,656
	Future income taxes		(17,829	)		7,309			10,612			—			92
	Write-off of goodwill		1,613,220			—			390,780			—			2,004,000
	Gain on foreign currency denominated debt		—			—			(1,628	)		(583	)		(2,211	)
	Other		(1,392	)		1,041			1,010			96			755
	Changes in non-cash operating working capital		106,998			(52,045	)		(30,689	)		(486	)		23,778
			147,923			23,402			18,550			(258	)		189,617
Cash flows from investing activities:
	Acquisition of fixed assets		(49,993	)		(29,568	)		(12,853	)		—			(92,414	)
	Net change in deferred charges		(923	)		9,566			(89	)		258			8,812
	Amounts receivable from parent company and from affiliated companies		—			(2,088	)		—			—			(2,088	)
	Other		1,677			142			(1,690	)		—			129
			(49,239	)		(21,948	)		(14,632	)		258			(85,561	)
Cash flows from financing activities:
	Repayment of long-term debt		(155,868	)		—			(3,409	)		—			(159,277	)
	Other		—			—			(95	)		—			(95	)
			(155,868	)		—			(3,504	)		—			(159,372	)
Net increase (decrease) in cash and cash equivalents			(57,184	)		1,454			414			—			(55,316	)
Cash and cash equivalents, beginning of year			71,039			(2,325	)		698			—			69,412
Cash and cash equivalents, end of year		$	13,855		$	(871	)	$	1,112		$	—		$	14,096

F-33

Consolidated Balance Sheet
In accordance with United States GAAP
As at December 31, 2003

		Vidéotron Ltée			Subsidiary guarantors		Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
		(in thousands of Canadian dollars)
Assets
Current assets:
	Cash and cash equivalents	$	27,772			89	$	468		$	—		$	28,329
	Marketable securities		22,100			—		1,030			—			23,130
	Accounts receivable		63,125			5,464		499			—			69,088
	Amounts receivable from affiliated companies		86,109			127,157		335,968			(549,129	)		105
	Income taxes receivable		—			4,950		1,585			—			6,535
	Inventories and prepaid expenses		14,615			14,881		640			—			30,136
	Future income taxes		7,451			1,999		1,312			—			10,762
			221,172			154,540		341,502			(549,129	)		168,085
Fixed assets			743,100			81,285		225,206			(489	)		1,049,102
Goodwill			1,399,533			631,239		396,844			233,711			2,661,327
Other assets			470,170			407		4,411			(458,963	)		16,025
Future income taxes			2,063			2,813		—			500			5,376
Total assets		$	2,836,038		$	870,284	$	967,963		$	(774,370	)	$	3,899,915
Liabilities and Shareholder's Equity
Current liabilities:
	Issued and outstanding cheques	$	2,584		$	416	$	51		$	—		$	3,051
	Accounts payable and accrued liabilities		127,805			32,847		31,084			(27	)		191,709
	Amounts payable to a company under common control		210,192			98,642		258,623			(549,102	)		18,355
	Deferred revenue and prepaid services		50,536			18,900		19,879			—			89,315
	Income taxes payable		310			7,784		45			—			8,139
	Current portion of long-term debt		50,000			—		—			—			50,000
			441,427			158,589		309,682			(549,129	)		360,569
Retractable preferred shares			2,000			—		—			—			2,000
Future income taxes			123,138			4,763		47,373			—			175,274
Long-term debt			887,401			—		123,984			(23,368	)		988,017
Non-controlling interest in a subsidiary			—			—		10			693			703
			1,453,966			163,352		481,049			(571,804	)		1,526,563
Shareholder's Equity:
	Capital shares		173,236			43,427		235,025			(278,452	)		173,236
	Contributed surplus		3,476,551			643,065		660,187			(25,369	)		4,754,434
	Deficit		(2,266,499	)		20,440		(407,744	)		101,255			(2,552,548	)
	Other comprehensive loss		(1,216	)		—		(554	)		—			(1,770	)
			1,382,072			706,932		486,914			(202,566	)		2,373,352
		$	2,836,038		$	870,284	$	967,963		$	(774,370	)	$	3,899,915

F-34

Consolidated Statement of Operations
In accordance with United States GAAP
For the year ended December 31, 2003

	Vidéotron Ltée			Subsidiary guarantors			Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
	(in thousands of Canadian dollars)
Revenues	$	424,904		$	245,920		$	159,945		$	(25,768	)	$	805,001
Direct cost		162,244			37,449			47,906			(1,632	)		245,967
Operating and administrative expenses		139,858			103,718			61,103			(23,875	)		280,804
Depreciation and amortization		82,468			33,048			17,794			(307	)		133,003
Financial expenses		79,425			(1,557	)		(13,555	)		(1,889	)		62,424
Other items		—			—			—			—			—
(Loss) income before the undernoted		(39,091	)		73,262			46,697			1,935			82,803
Income taxes		(14,811	)		25,656			11,908			1,326			24,079
		(24,280	)		47,606			34,789			609			58,724
Share in the results of a company subject to significant influence		6,470			—			77			(6,547	)		—
Non-controlling interest		—			—			—			(49	)		(49	)
Net (loss) income	$	(17,810	)	$	47,606		$	34,866		$	(5,987	)	$	58,675

F-35

Consolidated Statement of Cash Flows
In accordance with United States GAAP
For the year ended December 31, 2003

		Vidéotron Ltée			Subsidiary guarantors			Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
		(in thousands of Canadian dollars)
Cash flows from operating activities:
	Net income (loss)	$	(17,810	)	$	47,606		$	34,866		$	(5,987	)	$	58,675
	Items not involving cash:
	Depreciation and amortization		86,340			37,250			17,484			(307	)		140,767
	Net premium and write-off of financing cost upon early redemption of long-term debt		17,094			—			—			—			17,094
	Future income taxes		(16,361	)		14,592			10,459			1,326			10,016
	Adjustment of goodwill		2,012			—			488			—			2,500
	Loss on disposal of fixed assets		(110	)		18,507			50			—			18,447
	Gain on foreign currency denominated debt		(1,649	)		—			(21,251	)		(723	)		(23,623	)
	Share in the results of a company		(6,470	)		—			(77	)		6,547			—
	Other		102			(148	)		1,729			(811	)		872
	Changes in non-cash operating working capital		63,759			(71,359	)		(23,225	)		(45	)		(30,870	)
			126,907			46,448			20,523			—			193,878
Cash flows from investing activities:
	Acquisition of fixed assets		(54,598	)		(21,154	)		(19,879	)		5,347			(90,284	)
	Disbursements for deferred charges		—			(113	)		—			—			(113	)
	Acquisition of short-term investments		(22,100	)		—			(1,030	)		—			(23,130	)
	Proceeds from disposal of fixed assets		5,651			3,494			27			(5,347	)		3,825
	Proceeds from investment		7,231			(7,231	)		—			—			—
	Other		—			(900	)		—			—			(900	)
			(63,816	)		(25,904	)		(20,882	)		—			(110,602	)
Cash flows from financing activities:
	Repayment of long-term debt		(1,033,321	)		—			(24	)		—			(1,033,345	)
	Issuance of long-term debt		1,038,732			—			—			—			1,038,732
	Financing cost on long-term debt		(9,086	)		—			—			—			(9,086	)
	Recouping fees and termination swaps		(48,375	)		—			—			—			(48,375	)
	Dividends to parent company		(19,956	)		—			—			—			(19,956	)
	Other		20,248			(20,000	)		(312	)		—			(64	)
			(51,758	)		(20,000	)		(336	)		—			(72,094	)
Net increase (decrease) in cash and cash equivalents			11,333			544			(695	)		—			11,182
Cash and cash equivalents, beginning of year			13,855			(871	)		1,112			—			14,096
Cash and cash equivalents, end of year		$	25,188		$	(327	)	$	417		$	—		$	25,278

F-36

Consolidated Statement of Operations
In accordance with United States GAAP
For the year ended December 31, 2004

	Vidéotron Ltée			Subsidiary guarantors			Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
	(in thousands of Canadian dollars)
Revenues	$	439,463		$	282,872		$	168,315		$	(9,678	)	$	880,972
Direct cost		162,467			31,481			56,755			(261	)		250,442
Operating and administrative expenses		123,412			131,734			45,203			(9,417	)		290,932
Depreciation and amortization		85,157			37,111			20,317			—			142,585
Financial expenses		(13,857	)		153,145			27,364			(1,200	)		165,452
Dividend income from related companies		—			(121,824	)		(16,658	)		27,427			(111,055	)
Income (loss) before the undernoted		82,284			51,225			35,334			(26,227	)		142,616
Income taxes		20,620			(21,436	)		2,407			230			1,821
		61,664			72,661			32,927			(26,457	)		140,795
Share in the results of a company subject to significant influence		10,628			—			138			(10,766	)		—
Non-controlling interest		—			—			(1	)		(99	)		(100	)
Net income (loss)	$	72,292		$	72,661		$	33,064		$	(37,322	)	$	140,695

F-37

Consolidated Statement of Cash Flows
In accordance with United States GAAP
For the year ended December 31, 2004

		Vidéotron Ltée			Subsidiary guarantors			Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
		(in thousands of Canadian dollars)
Cash flows from operating activities:
	Net loss	$	72,292		$	72,661		$	33,064		$	(37,322	)	$	140,695
	Items not involving cash:
	Depreciation and amortization		86,290			40,451			20,314			—			147,055
	Future income taxes		19,607			(21,667	)		1,565			230			(265	)
	Loss on disposal of fixed assets		9,274			439			3,461			—			13,174
	Loss on foreign currency denominated debt		—			—			1,332			(34	)		1,298
	Shares in the results of a company subject to significant influence		(10,628	)		—			(138	)		10,766			—
	Other		(17,190	)		(83	)		1,553			(1,067	)		(16,787	)
	Changes in non-cash operating working capital		(13,859	)		4,045			33,740			—			23,926
			145,786			95,846			94,891			(27,427	)		309,096
Cash flows from investing activities:
	Acquisition of fixed assets		(70,842	)		(41,753	)		(24,098	)		13,663			(123,030	)
	Acquisition of other assets		—			(412	)		—			—			(412	)
	Proceeds on disposals of fixed assets		722			13,829			558			(13,663	)		1,446
	Acquisition of videos stores assets		—			(7,162	)		—			—			(7,162	)
	Proceeds on disposal (acquisition) of market securities		2,100			—			(220	)		—			1,880
	Acquisition of shares of affiliated company		—			(1,100,000	)		(165,000	)		165,000			(1,100,000	)
	Proceeds from disposal of shares of affiliated company		—			1,100,000			165,000			(165,000	)		1,100,000
	Other		70,000			—			(70,010	)		—			(10	)
			1,980			(35,498	)		(93,770	)		—			(127,288	)
Cash flows from financing activities:
	Repayment of long-term debt		(355,630	)		—			—			—			(355,630	)
	Issuance of long-term debt		396,244			—			—			—			396,244
	Financing cost on long-term debt		(6,401	)		—			—			—			(6,401	)
	Increase in long-term intercompany loan from affiliated company		—			935,000			165,000			—			1,100,000
	Repayment of long-term intercompany loan from affiliated company		—			(935,000	)		(165,000	)		—			(1,100,000	)
	Redemption of retractable preferred shares		(3,660	)		(165,000	)		—			165,000			(3,660	)
	Dividends to parent company		(171,002	)		(61,658	)		—			27,427			(205,233	)
	Issuance of preferred shares		—			165,000			—			(165,000	)		—
	Other		311			—			(390	)		—			(79	)
			(140,138	)		(61,658	)		(390	)		27,427			(174,759	)
Net increase (decrease) in cash			7,628			(1,310	)		731			—			7,049
Cash and cash equivalents, beginning of year			25,188			(327	)		417			—			25,278
Cash and cash equivalents, end of year		$	32,816		$	(1,637	)	$	1,148		$	—		$	32,327

F-38

Consolidated Balance Sheet
In accordance with United States GAAP
As at December 31, 2004

		Vidéotron Ltée			Subsidiary guarantors		Subsidiary non- guarantors			Adjustments and eliminations			Consolidated
		(in thousands of Canadian dollars)
Assets
Current assets:
	Cash and cash equivalents	$	34,810		$	108	$	1,312		$	—		$	36,230
	Marketable securities		20,000			—		1,250			—			21,250
	Accounts receivable		81,589			8,213		686			—			90,488
	Amounts receivable from affiliated companies		133,598			27,834		277,053			(438,480	)		5
	Income taxes receivable		8,526			79		19			—			8,624
	Inventories and prepaid expenses		11,488			23,461		601			—			35,550
	Future income taxes		49,589			184		8,455			—			58,228
			339,600			59,879		289,376			(438,480	)		250,375
Fixed assets			761,758			32,455		225,081			(489	)		1,018,805
Goodwill			1,903,756			67,940		376,844			233,711			2,582,251
Other assets			441,324			136,351		3,616			(558,433	)		22,858
Future income taxes			22,179			1,111		—			269			23,559
Total assets		$	3,468,617		$	297,736	$	894,917		$	(763,422	)	$	3,897,848
Liabilities and Shareholder's Equity
Current liabilities:
	Issued and outstanding cheques	$	1,994		$	1,745	$	164		$	—		$	3,903
	Accounts payable and accrued liabilities		214,309			32,402		25,881			(5	)		272,587
	Amounts payable to affiliated companies		102,426			138,350		249,417			(438,475	)		51,718
	Deferred revenue and prepaid services		83,105			—		22,305			—			105,410
	Income taxes payable		33			1,343		267			—			1,643
			401,867			173,840		298,034			(438,480	)		435,261
Deferred revenue			4,480			—		1,724			—			6,204
Future income taxes			129,310			3,054		36,268			—			168,632
Long-term debt			941,910			—		116,840			(24,568	)		1,034,182
Non-controlling interest in a subsidiary			—			—		—			706			706
			1,477,567			176,894		452,866			(462,342	)		1,644,985
Shareholder's Equity:
	Capital shares		306,235			31,559		165,025			(329,583	)		173,236
	Contributed surplus		3,983,147			81,725		652,298			(3,389	)		4,713,781
	(Deficit) retained earnings		(2,283,016	)		7,558		(375,180	)		31,892			(2,618,746	)
	Other comprehensive loss		(15,316	)		—		(92	)		—			(15,408	)
			1,991,050			120,842		442,051			(301,080	)		2,252,863
		$	3,468,617		$	297,736	$	894,917		$	(763,422	)	$	3,897,848

F-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS OF VIDÉOTRON TÉLÉCOM LTÉE

        We have audited the accompanying consolidated balance sheets of Vidéotron Télécom Ltée and its subsidiaries as at December 31, 2003 and 2004 and the related consolidated statements of operations, shareholder's equity and cash flows for each of the years in the two-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vidéotron Télécom Ltée and its subsidiaries at December 31, 2003 and 2004 and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2004 in conformity with Canadian generally accepted accounting principles.

        Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 19 to the financial statements.

Chartered Accountants

Montréal, Canada
January 21, 2005

F-40

VIDÉOTRON TÉLÉCOM LTÉE

STATEMENTS OF OPERATIONS AND DEFICIT

Years ended December 31, 2003 and 2004
(in thousands of Canadian dollars)

		2003			2004
Operating revenue		$	75,558		$	78,589
Direct costs			10,976			11,900
			64,582			66,689
Operating and administrative expenses (note 4)			47,261			44,435
Operating income before the undernoted			17,321			22,254
Depreciation and amortization (note 5)			35,866			33,647
Other (income) loss (note 6)			(1,423	)		110
Other items (note 7)			2,492			1,526
			36,935			35,283
Loss before income taxes			(19,614	)		(13,029	)
Income taxes (note 8):
	Current		612			428
	Future		(6,054	)		(3,935	)
			(5,442	)		(3,507	)
Net loss			(14,172	)		(9,522	)
Deficit at beginning of year			(78,038	)		(92,210	)
Acquisition and wind-up of a company under common control acquired in March 2004 (note 3)			—			(2,583	)
Deficit at end of year		$	(92,210	)	$	(104,315	)

See accompanying notes to financial statements.

F-41

VIDÉOTRON TÉLÉCOM LTÉE

BALANCE SHEETS

As at December 31, 2003 and 2004
(in thousands of Canadian dollars)

		2003			2004
Assets
Current assets:
	Accounts receivable (note 9)	$	14,113		$	15,523
	Amounts receivable from parent company		4,385			—
	Inventories		4,886			3,490
	Prepaid expenses		1,966			2,459
	Future tax assets (note 8)		1,665			353
			27,015			21,825
Fixed assets (note 10)			215,167			205,699
Future tax assets (note 8)			37,385			43,370
Other assets (note 11)			1,602			1,663
		$	281,169		$	272,557
Liabilities and Shareholder's Equity
Current liabilities:
	Bank indebtedness	$	920		$	747
	Accounts payable and accrued liabilities		18,546			18,755
	Accounts payable to affiliated companies (note 12)		1,067			4,228
	Deferred revenue		2,956			2,566
			23,489			26,296
Retractable preferred shares (note 13)			1,543			2,229
Shareholder's equity:
	Share capital (note 13)		344,212			160,357
	Contributed surplus (note 13)		4,135			187,990
	Deficit		(92,210	)		(104,315	)
			256,137			244,032
Commitments (note 15)
Contingencies (note 18)
		$	281,169		$	272,557

See accompanying notes to financial statements.

F-42

VIDÉOTRON TÉLÉCOM LTÉE

STATEMENTS OF CASH FLOWS

Years ended December 31, 2003 and 2004
(in thousands of Canadian dollars)

			2003			2004
Cash flows from operating activities:
	Net loss		$	(14,172	)	$	(9,522	)
	Adjustments for:
		Depreciation and amortization		35,866			33,647
		Future income taxes		(6,054	)		(3,935	)
		Write-down and write-off of assets (note 7)		2,492			—
		(Gain) loss on disposal and write-off of assets		(150	)		390
		Loss on exit of an operating lease at cease-use date (note 4 (b))		—			652
				17,982			21,232
	Net change in non-cash operating items (note 14 (a))			40			(178	)
				18,022			21,054
Cash flows from investing activities:
	Purchase of other assets			(80	)		(8	)
	Acquisition of fixed assets			(17,839	)		(21,423	)
	Proceeds from sale of fixed assets			295			1,544
	Acquisition of easements			—			(994	)
				(17,624	)		(20,881	)
Cash flows from financing activities:
	Repayment of obligations under capital lease			(161	)		—
Net decrease in bank indebtedness				237			173
Bank indebtedness, beginning of year				(1,157	)		(920	)
Bank indebtedness, end of year			$	(920	)	$	(747	)

See accompanying notes to financial statements.

F-43

VIDÉOTRON TÉLÉCOM LTÉE

NOTES TO FINANCIAL STATEMENTS

Years ended December 31, 2003 and 2004
(tabular amounts in thousands of Canadian dollars)

        The Company was incorporated under Part 1A of the Québec Companies Act and provides telecommunication services in the business sector.

1.     ACCOUNTING CHANGES:

(a)

Long-lived assets:

Effective January 1, 2004, the Company adopted the Canadian Institute of Chartered Accountants ("CICA ") Handbook Section 3063, "Impairment of Long-Lived Assets". Long-lived assets, including fixed assets and intangible assets with finite useful lives, are amortized over their useful lives. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. If the sum of undiscounted net cash flows expected to result from the use and eventual disposition of a group of assets is less than its carrying amount, it is considered to be impaired. An impairment loss is measured as the amount by which the carrying amount of the group of assets exceeds its fair value. During the year ended December 31, 2004, no such impairment had occurred.

(b)

Asset retirement obligation:

Effective January 1, 2004, the Company retroactively adopted CICA Handbook Section 3110 "Asset Retirement Obligation". The standard provides guidance for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of a tangible long-lived asset that result from their acquisition, construction, development or normal operations.

The standard requires the Company to record the fair value of a liability for an asset retirement obligation in the year in which it is incurred and when a reasonable estimate of fair value can be made. The asset retirement cost is capitalized as part of the related asset and is amortized to earnings over time. The standard describes the fair value of a liability for an asset retirement obligation as the amount at which that liability could be settled in a current transaction between willing parties, that is, other than in forced or liquidation transaction and is adjusted for any changes resulting from passage of time and any changes to the timing or the amount of the original estimate or undiscounted cash flows. The Company is subsequently required to allocate the asset retirement cost to expense using a systematic and rational method over the asset useful life.

The adoption of this standard had no impact on the Company's financial position, results of operations or cash flows.

2.     SIGNIFICANT ACCOUNTING POLICIES:

(a)

Cash and cash equivalents:

Cash and cash equivalents are comprised of cash and term deposits with initial maturities of less than three months, less outstanding cheques.

(b)

Inventories:

Inventories consist primarily of fiber optic cables and related electronics equipment and are valued at the lower of cost, determined essentially on a weighted average cost basis, or replacement value.

(c)

Fixed assets:

Fixed assets are recorded at cost, net of related grants and investment tax credits. Cost includes primarily equipment and direct labour, but also includes financial expenses relating to projects to construct and connect external and internal telecommunication networks for those projects that extend beyond a three-month period. Acquisition, improvement and replacement costs are capitalized, whereas expenses for maintenance and repairs are charged to operating and administrative expenses.

The Company reviews the recoverability of fixed assets whenever events or circumstances indicate that the carrying amount may not be recoverable. Recoverability and measurement of the decline in value are estimated by comparing the carrying amounts of an asset or of a group of assets to undiscounted net cash flows expected to be generated by asset or that group of assets.

F-44

Depreciation is calculated using the following depreciation methods and periods or rates:

Asset	Method	Rate/period
Telecommunication networks	Straight-line	20 years
Technical equipment	Mainly straight-line	3 to 20 years
Furniture and fixtures	Declining balance	20% to 30%
	and straight-line	3 to 7 years
Buildings	Declining balance	5%
Leasehold improvements	Straight-line	Over the lease term

Equipment under capital leases is depreciated using the same method, rate or period than the purchased equipment.

(d)

Intangible assets:

Easements have indefinite useful lives and are not amortized.

Intangible assets that have an indefinite useful life are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value and an impairment loss is recognized in the statement of operations, if any.

(e)

Other assets:

Deferred charges are recorded at cost and include primarily expenses relating to the pre-operating period of certain telecommunication operations. These charges are amortized on a straight-line basis over a period of three to five years. Licenses are amortized using the straight-line method over a period of eight years.

(f)

Future taxes:

Future income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Future income tax assets and liabilities resulting from a change in tax rates are recognized in income in the period that includes the enactment date. Future income tax assets are recognized and, if realization is not considered "more likely than not", a valuation allowance is provided.

(g)

Revenue recognition and deferred revenue:

Operating revenue related to service contracts is recognized in income over the life of the specific contracts on a straight-line basis representing the period over which the services are provided. Operating revenue from telecommunication services, network access fees and point-to-point telephony is recorded when services are provided. When customers are invoiced, the portion of unearned revenue is recorded as deferred revenue.

(h)

Currency translation:

Revenue and expense items arising from transactions in foreign currency are converted into Canadian dollars at the rate in effect on the transaction date. Monetary assets and liabilities are converted into Canadian dollars at the rates in effect at the balance sheet date, non-monetary items are translated at the rates in effect on the transaction date. Exchange gains or losses are recognized in income.

F-45

(i)

Pensions:

Certain employees of the Company participate in a multi-employer defined benefits pension plan sponsored by affiliated companies. This plan provides for the payment of benefits based on the number of years of service and career average earnings of the employees covered by the plans. Accordingly, pension costs are recorded as if the plan is a defined contribution plan.

Also, other employees of the Company participate in defined contribution pension plans sponsored by affiliated companies. The Company also contributes to its unionized and administrative employees personal registered retirement savings plans. The Company accounts for the cost of its share of the defined contribution pension plans and to the retirement savings plan on the accrual basis of accounting.

(j)

Use of estimates:

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3.     CORPORATE REORGANIZATION:

On March 1, 2004, the Company has acquired from its parent company all the outstanding shares of Mensys Business Solutions Centre Inc. ("Mensys"), at an agreed value of $686,000. On December 19, 2003, Mensys sold its entire business to a third party and, since then, Mensys is an inoperative company. As consideration, the Company issued one Class C share, with a stated capital of $686,000. The Company wound up Mensys on the same date. As this transaction is between companies under common control, the net assets acquired were recorded by the Company at the carrying amount in the books of Mensys. The impact of the acquisition and wind-up is summarized as follows:

Net liabilities acquired:
	Future tax assets	$	686
	Taxes receivable		47
	Assumption of amounts payable to affiliated companies		(2,630	)
Net liabilities assumed		$	(1,897	)
Consideration:
	Issuance of 1 Class C retractable preferred share	$	686
	Deficit assumed upon acquisition and wind-up of Mensys		(2,583	)
		$	(1,897	)

4.     OPERATING AND ADMINISTRATIVE EXPENSES:

(a)

Pension plans:

Pension plan costs recorded for the pension plans and the retirement savings plan amounted to $1,290,000 for the year ended December 31, 2003 and to $810,000 for the year ended December 31, 2004 and were charged to operating and administrative expenses.

(b)

Operating and administrative expenses:

During the year, the Company has put in place a restructuring plan of its activities in Ontario which has resulted in the abandonment of an operating lease, for which the fair value of the remaining lease payments, net of the expected lease rental revenue from the cease-use date to the end of the lease, amounting to $652,000, has been recorded in the operating expenses.

F-46

5.     DEPRECIATION AND AMORTIZATION:

	2003		2004
Fixed assets	$	32,928	$	32,706
Deferred charges		2,753		872
Licenses		69		69
Other		116		—
	$	35,866	$	33,647

6.     OTHER (INCOME) LOSS:

	2003			2004
Interest on advances to an affiliated company	$	(248	)	$	(152	)
Other interest expenses		23			211
Foreign exchange (gain) loss		(1,198	)		51
	$	(1,423	)	$	110

7.     OTHER ITEMS:

	2003		2004
Network outages recovery	$	—	$	(479	)
Loss on write-down of fiber optic (i)		1,704		—
Write-off of fixed assets (ii)		788		—
Severance pay and other charges (iii)		—		2,005
	$	2,492	$	1,526

(i)

In November 2003, the Company concluded an agreement with a supplier to settle a claim for breach of contract related to the purchase of fiber optic cables. Under this agreement and to meet the conditions of its purchase commitments, the Company paid $2.9 million for fiber optic having a fair value of $1.2 million. Accordingly, a write-down of $1.7 million has been recorded.



(ii)

In June 2003, the Company reduced its administration office space which resulted in a net write-off of fixed assets of $788,000.



(iii)

In September 2004, the Company settled outstanding claims with former management employees, for a total amount of $3.5 million, of which $1.5 million was already recorded in the books.

F-47

8.     INCOME TAXES:

The following schedule reconciles income taxes computed on the loss before income taxes using the combined basic income tax rate and the effective income tax rate:

		2003			2004
Income taxes based on the combined:
	Federal and provincial basic income tax rate of 31.02% (2003 — 33.12%)	$	(6,492	)	$	(4,041	)
Change due to the following items:
	Non-deductible charges		45			12
	Federal large corporation tax		490			405
	Other		515			117
Effective income tax		$	(5,442	)	$	(3,507	)

The tax effects of significant items comprising the Company's net future tax assets are as follows:

		2003			2004
Future tax assets:
	Operating loss carryforwards	$	22,544		$	30,129
	Fixed assets and other assets		14,841			13,241
	Provisions		1,665			353
	Net future tax assets		39,050			43,723
Less current future tax asset			(1,665	)		(353	)
Net long-term future tax asset		$	37,385		$	43,370

As at December 31, 2004, the Company had net operating loss carryforwards for income tax purposes available to reduce future federal and provincial taxable income of approximately $106,379,000 and $81,631,000 as follows:

	Federal		Provincial
2005	$	13,476	$	10,569
2006		4,705		4,331
2007		17,588		17,588
2008		6,419		2,910
2009		195		98
2010		34,978		24,567
2011		29,018		21,568
	$	106,379	$	81,631

F-48

9.     ACCOUNTS RECEIVABLE:

		2003		2004
Trade:
	Third parties	$	5,924	$	7,725
	Companies under common control		7,892		7,798
	Parent company		291		—
Current portion of loans to employees			6		—
		$	14,113	$	15,523

10.   FIXED ASSETS:

	2003
	Cost		Accumulated depreciation		Net book value
Telecommunication networks	$	137,702	$	38,020	$	99,682
Technical equipment		163,253		90,514		72,739
Furniture and equipment		75,220		46,779		28,441
Buildings		14,463		3,858		10,605
Leasehold improvements		5,132		2,582		2,550
Land		1,150		—		1,150
	$	396,920	$	181,753	$	215,167

	2004
	Cost		Accumulated depreciation		Net book value
Telecommunication networks	$	140,957	$	44,937	$	96,020
Technical equipment		178,885		108,290		70,595
Furniture and equipment		80,131		55,381		24,750
Buildings		15,423		4,407		11,016
Leasehold improvements		4,902		2,734		2,168
Land		1,150		—		1,150
	$	421,448	$	215,749	$	205,699

Included in technical equipment is equipment under capital lease having a cost of $1,040,000 and accumulated depreciation of $728,000 and $876,000 as at December 31, 2003 and 2004, respectively.

11.   OTHER ASSETS:

	2003		2004
Deferred charges (including $14,281 of accumulated depreciation) (2003 — $13,409)	$	1,180	$	316
Licenses (including $190 of accumulated depreciation) (2003 — $121)		422		353
Easements at cost (with indefinite life)		—		994
	$	1,602	$	1,663

F-49

12.   ACCOUNTS PAYABLE TO AFFILIATED COMPANIES:

	2003		2004
Companies under common control	$	203	$	242
Parent company		—		3,153
Ultimate parent company		864		833
	$	1,067	$	4,228

13.   SHARE CAPITAL:

Authorized:

An unlimited number, without par value:

Class A shares, voting and participating

Class B shares, non-voting, participating, retractable at the amount of paid-up capital

Class C shares, non-voting, non-participating, fixed monthly non-cumulative preferred dividend of 1% computed on the redemption price of the preferred shares, retractable and redeemable

		2003			2004
Issued and paid:
	2,515,276 Class A shares (1,171,772 in 2003)	$	160,357		$	160,357
	Nil Class B non-voting shares (183,855 in 2003)		183,855			—
	2 Class C shares (1 in 2003)		1,543			2,229
			345,755			162,586
Less retractable preferred shares classified as liabilities:
	2 Class C shares (c) (1 in 2003)		(1,543	)		(2,229	)
		$	344,212		$	160,357

(a)

In June 2004, the Company converted the 183,855 Class B shares into 1,343,504 Class A shares. Furthermore, the Company has reduced the paid-up capital of the Class A shares by $183,855,000 and has credited this amount to contributed surplus.



(b)

On March 1, 2004, the Company issued 1 Class C share in consideration of the acquisition of all outstanding shares of Mensys, an inactive subsidiary of the parent company (see note 3), in the amount of $686,000.

F-50

14.   ADDITIONAL CASH FLOW INFORMATION:

		2003			2004
(a)    Net change in non-cash operating items:
	Accounts receivable	$	13,310		$	(1,415	)
	Inventories		(390	)		1,396
	Prepaid expenses		544			(493	)
	Accounts payable and accrued liabilities		(2,473	)		(1,221	)
	Amounts payable to affiliated companies		(10,719	)		1,945
	Current income taxes		(109	)		—
	Deferred revenue		(123	)		(390	)
		$	40		$	(178	)
(b)   Other items:
	Income taxes paid	$	596		$	510
	Interest paid		98			226
	Interest received		(117	)		(119	)
(c)    Purchase of fixed assets financed by accounts payable			156			3,905

15.   COMMITMENTS:

Under the terms of various operating leases, the Company is committed to make the following minimum annual rental payments:

2005	$	5,449
2006		5,417
2007		3,468
2008		1,531
2009		1,450
2010 and subsequent years		10,729

The Company has guaranteed a portion of the residual values of certain assets under operating leases for the benefit of the lessor. If the fair value of the assets, at the end of their respective lease terms is less than the residual value guaranteed, then the Company must, under certain conditions, compensate the lessor for a portion of the shortfall. The maximum exposure in respect of these guarantees is $79,000 ($254,000 in 2003).

16.   FINANCIAL INSTRUMENTS:

(a)

Fair value:

The carrying value of accounts receivable, amounts receivable from parent company, bank indebtedness, accounts payable and accrued expenses and amounts payable to affiliated companies and to parent company approximates their fair value, as these items are short-term in nature.

(b)

Credit risks:

In the normal course of business, the Company assesses regularly the financial position of its clients and reviews the credit history of all new clients. The Company records an allowance for doubtful accounts to cover its exposure to specific customers' credit risks and historical trends.

F-51

17.   RELATED PARTY TRANSACTIONS:

In addition to transactions disclosed elsewhere in the financial statements, the Company has entered into the following related party transactions, in the normal course of business. These transactions have been recorded at the exchange value, which is the amount established and agreed to by the related parties:

		2003		2004
Ultimate parent company:
	Operating revenue	$	80	$	70
	Operating and administrative expenses		900		1,101
Parent company:
	Interest revenues		248		152
Companies under common control:
	Operating revenue		24,725		27,479
	Operating and administrative expenses		884		5,019
	Acquisition of fixed assets		26		3,268

18.   CONTINGENCIES:

In the normal course of business, the Company is involved in various claims and litigations. The Company is also being sued by former management employees for wrongful dismissal and other reasons following the reorganization plan established in February 2001. Even if the outcome of these various pending cases as at December 31, 2004 cannot be determined with certainty, the Company believes that they will not have a material adverse impact on its financial position or operating results.

19.   SIGNIFICANT DIFFERENCES BETWEEN CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) AND THE UNITED STATES:

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") which are different in some respects from those in the United States ("US"), as described below. The following tables set forth the impact of significant differences between Canadian GAAP and US GAAP on the Company's financial statements.

Consolidated Statements of Operations

		2003			2004
Net loss for the year based on Canadian GAAP		$	(14,172	)	$	(9,522	)
Adjustments:
	Reversal of amortization expense on development and pre-operating costs (ii)		493			489
	Income taxes (iii)		(163	)		(192	)
Net loss and comprehensive loss for the year based on US GAAP		$	(13,842	)	$	(9,225	)

F-52

Consolidated Shareholder's Equity

		2003			2004
Shareholder's equity based on Canadian GAAP		$	256,137		$	244,032
Cumulative adjustments:
	Push-down basis of accounting (i)		270,627			270,627
	Goodwill impairment (i)		(270,627	)		(270,627	)
	Development and pre-operating costs (ii)		(730	)		(241	)
	Income taxes (iii)		267			75
Shareholder's equity based on US GAAP		$	255,674		$	243,866

(i)

Push-down basis of accounting:

The reconciliation of net income and shareholder's equity from Canadian GAAP to US GAAP reflects the push-down of the purchase price in connection with the acquisition on October 23, 2000, by Quebecor Media Inc., the ultimate parent company of Vidéotron Télécom Ltée. Under Canadian GAAP, each entity has retained the historical carrying value basis of its assets and liabilities. The excess of the purchase price over the fair value assigned to the net assets of the Company at the date of acquisition has been allocated to goodwill and has been amortized, up to December 31, 2001, on the straight-line basis over 40 years.

The principal adjustment, taking into account the final allocation of the purchase price finalized in the fourth quarter of 2001, to the historical consolidated financial statements of the Company to reflect Parent's cost basis consisted in the recording of goodwill in the amount of $270.6 million with a corresponding amount in the contribution surplus. This goodwill has been completely written off following the implementation of the CICA Handbook Section 3062 and the US equivalent standard.

(ii)

Development and pre-operating costs:

Under Canadian GAAP, certain development and pre-operating costs, which satisfy specified criteria for recoverability, are deferred and amortized. Under US GAAP, these costs are expensed as incurred.

(iii)

Income taxes:

This adjustment represents the tax impact of the US GAAP adjustments.

F-53

QuickLinks

TABLE OF CONTENTS
EXPLANATORY NOTES
FORWARD-LOOKING STATEMENTS
EXCHANGE RATES
SIGNATURE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
VIDÉOTRON LTÉE CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2002, 2003 and 2004 (in thousands of Canadian dollars)
VIDÉOTRON LTÉE CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY Years ended December 31, 2002, 2003 and 2004 (in thousands of Canadian dollars)
VIDÉOTRON LTÉE CONSOLIDATED BALANCE SHEETS As at December 31 (in thousands of Canadian dollars)
VIDÉOTRON LTÉE CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2002, 2003 and 2004 (in thousands of Canadian dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
VIDÉOTRON TÉLÉCOM LTÉE STATEMENTS OF OPERATIONS AND DEFICIT Years ended December 31, 2003 and 2004 (in thousands of Canadian dollars)
VIDÉOTRON TÉLÉCOM LTÉE BALANCE SHEETS As at December 31, 2003 and 2004 (in thousands of Canadian dollars)
VIDÉOTRON TÉLÉCOM LTÉE STATEMENTS OF CASH FLOWS Years ended December 31, 2003 and 2004 (in thousands of Canadian dollars)
VIDÉOTRON TÉLÉCOM LTÉE NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2003 and 2004 (tabular amounts in thousands of Canadian dollars)

EX-7.1

                                                                    Exhibit 7.1


                                VIDEOTRON LTEE

                         FINANCIAL STATEMENT SCHEDULE

                 SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
                   (Amounts in thousands of Canadian dollars)




                          Balance,     Charged to
                        beginning of   costs and                      Balance
                            year       expenses(1)  Deductions(2)   end of year
                      ----------------------------------------------------------
                                                       
Allowance for doubtful accounts receivable
 year ended December 31:
          2002              8,341        11,084         8,210          11,215
          2003             11,215        10,542        14,562           7,220
          2004              7,220         6,866         7,952           6,134



- -------------
Notes:

(1)   Represents increase in allowance for doubtful accounts receivable charged
      to expenses.

(2)   Represents the accounts receivable written-off against the allowance for
      doubtful accounts receivable.

EX-12.1

                                                                    Exhibit 12.1

                                  CERTIFICATION

I, Robert Depatie, President and Chief Executive Officer of Videotron Ltee,
certify that:

1.   I have reviewed this annual report on Form 20-F of Videotron Ltee;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the company as of, and for, the periods represented in this report;

4.   The company's other certifying officer(s) and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          company, including its consolidated subsidiaries, is made known to us
          by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  [omitted pursuant to the guidance of Release No. 33-8283 (June 5,
          2003)]

     (c)  Evaluated the effectiveness of the company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the company's internal control
          over financial reporting that occurred during the period covered by
          the annual report that has materially affected, or is reasonable
          likely to materially affect, the company's internal control over
          financial reporting; and

5.   The company's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the company's auditors and the audit committee of company's board of
     directors (or persons performing the equivalent functions):

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably



          likely to adversely affect the company's ability to record, process,
          summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the company's internal
          control over financial reporting.


Date: March 24, 2005
                                                  /s/ Robert Depatie
                                           -------------------------------------
                                                      Robert Depatie
                                           President and Chief Executive Officer

EX-12.2

                                                                    Exhibit 12.2

                                  CERTIFICATION

I, Yvan Gingras, Executive Vice President, Finance and Operations and
Chief Financial Officer of Videotron Ltee, certify that:

1.   I have reviewed this annual report on Form 20-F of Videotron Ltee;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the company as of, and for, the periods represented in this report;

4.   The company's other certifying officer(s) and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          company, including its consolidated subsidiaries, is made known to us
          by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  [omitted pursuant to the guidance of Release No. 33-8283 (June 5,
          2003)]

     (c)  Evaluated the effectiveness of the company's disclosure controls and
          procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the company's internal control
          over financial reporting that occurred during the period covered by
          the annual report that has materially affected, or is reasonable
          likely to materially affect, the company's internal control over
          financial reporting; and

5.   The company's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the company's auditors and the audit committee of company's board of
     directors (or persons performing the equivalent functions):





     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the company's ability to record,
          process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the company's internal
          control over financial reporting.


Date: March 24, 2005

                                           /s/ Yvan Gingras
                            ----------------------------------------------------
                                               Yvan Gingras
                            Executive Vice President, Finance and Operations and
                                           Chief Financial Officer

EX-13.1

                                                                    Exhibit 13.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Annual Report of Videotron Ltee (the "Company")
on Form 20-F for the year ended December 31, 2004, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Robert Depatie,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.


Date: March 24, 2005

                                                  /s/ Robert Depatie
                                          --------------------------------------
                                                      Robert Depatie
                                           President and Chief Executive Officer

EX-13.2

                                                                    Exhibit 13.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Annual Report of Videotron Ltee (the "Company")
on Form 20-F for the year ended December 31, 2004, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Yvan Gingras,
Executive Vice President, Finance and Operations and Chief Financial Officer of
the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.


Date: March 24, 2005
                                           /s/ Yvan Gingras
                            ----------------------------------------------------
                                               Yvan Gingras
                            Executive Vice President, Finance and Operations and
                                          Chief Financial Officer