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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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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, 2003                 
|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 EastMontréal, 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 registeredNone

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 Shares1 Series F Preferred Share

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



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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                                                    |  | 14  
|Item 5  Operating and Financial Review and Prospects                                  |  | 35  
|Item 6  Directors, Senior Management and Employees                                    |  | 48  
|Item 7  Major Shareholders and Related Party Transactions                             |  | 55  
|Item 8  Financial Information                                                         |  | 58  
|Item 9  The Offer and Listing                                                         |  | 59  
|Item 10  Additional Information                                                       |  | 59  
|Item 11  Quantitative and Qualitative Disclosures About Market Risk                   |  | 80  
|Item 12  Description of Securities Other than Equity Securities                       |  | 82  
|PART II                                                                               
|Item 13  Defaults, Dividend Arrearages and Delinquencies                              |  | 83  
|Item 14  Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 83  
|Item 15  Controls and Procedures                                                      |  | 83  
|Item 16 [Reserved]                                                                    |  | 83  
|Item 16A  Audit Committee Financial Expert                                            |  | 83  
|Item 16B  Code of Ethics                                                              |  | 83  
|Item 16C  Principal Accountant Fees and Services                                      |  | 83  
|Item 16D  Exemptions from the Listing Standards for Audit Committees                  |  | 84  
|Item 16E  Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  | 84  
|PART III                                                                              
|Item 17  Financial Statements                                                         |  | 84  
|Item 18  Financial Statements                                                         |  | 84  
|Item 19  Exhibits                                                                     |  | 84  

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i

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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.

On
July 5, 2001, we acquired from Quebecor Media Inc., or Quebecor Media or QMI, our sole shareholder, its wholly-owned subsidiary Vidéotron (1998)
ltée in exchange for one Series E preferred share and a promissory note. On October 7, 2003, Quebecor Media, our sole shareholder, transferred its wholly-owned
subsidiaries Le SuperClub Vidéotron ltée, or SuperClub Vidéotron, and Vidéotron TVN inc., or 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
consolidated financial statements 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
included elsewhere in this annual report. We 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 6 and 7 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, 2003.

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.

ii

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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. Important
factors that could cause actual results to differ materially from our expectations 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 April 28, 2004, the inverse of the noon buying rate was Cdn$1.00 equals
US$0.7314.

|Year Ended:       |  | Average(1) |  | High   |  | Low    |  | Period End
|----------------- |  | ---------- |  | ------ |  | ------ |  | ----------
|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    
|December 31, 1999 |  | 0.6746     |  | 0.6925 |  | 0.6535 |  | 0.6925    

|Month Ended:       |  | Average(2) |  | High   |  | Low    |  | Period End
|------------------ |  | ---------- |  | ------ |  | ------ |  | ----------
|March 31, 2004     |  | 0.7527     |  | 0.7645 |  | 0.7418 |  | 0.7634    
|February 29, 2004  |  | 0.7520     |  | 0.7629 |  | 0.7439 |  | 0.7460    
|January 31, 2004   |  | 0.7719     |  | 0.7880 |  | 0.7496 |  | 0.7539    
|December 31, 2003  |  | 0.7612     |  | 0.7738 |  | 0.7460 |  | 0.7738    
|November 30, 2003  |  | 0.7616     |  | 0.7708 |  | 0.7484 |  | 0.7708    
|October 31, 2003   |  | 0.7564     |  | 0.7667 |  | 0.7418 |  | 0.7579    
|September 30, 2003 |  | 0.7335     |  | 0.7424 |  | 0.7207 |  | 0.7404    

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iii

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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

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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, 2002 and 2003 and the statements of operations, shareholder's equity and cash flows for each of the years in the three-year period ended December 31,
2003. The consolidated financial statements have been audited by KPMGLLP, independent chartered accountants. KPMG LLP's report on the audited consolidated financial
statements is included in this annual report. The financial information for the years ended
August 31, 1999 and December 31, 2000 and for the four months ended December 31, 1999 have been derived from our unaudited consolidated financial statements not included in this
annual report. In 1999, we changed our financial year end from August 31 to December 31. 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 and 2003. 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, 2001, 2002 and 2003 included elsewhere in this annual report.

|                                                                   |                  | Year Ended August 31,    |         | Four Months Ended December 31, |         | Year Ended December 31, |        
|------------------------------------------------------------------ | ---------------- | ------------------------ | ------- | ------------------------------ | ------- | ----------------------- | -------
|
|
|
|Statement of Operations Data:                                      |                  |                          |         |                                |         |                         |        
|Operating revenues:                                                |                  |                          |         |                                |         |                         |        
|                                                                   | Cable television |                          | $       | 580,146                        |         | $                       | 199,750
|                                                                   | Internet access  |                          |         | 24,538                         |         |                         | 13,182 
|                                                                   | Video stores     |                          |         | 21,073                         |         |                         | 9,879  
|                                                                   | Other(1)         |                          |         | 11,894                         |         |                         | 4,543  
|                                                                   |                  |                          |         |                                |         |                         |        
|                                                                   |                  | Total operating revenues |         |                                | 637,651 |                         |        
|                                                                   |                  |                          |         |                                |         |                         |        
|Direct costs(1)                                                    |                  |                          | 172,268 |                                |         | 63,414                  |        
|Operating, general and administrative expenses                     |                  |                          | 251,717 |                                |         | 88,962                  |        
|Depreciation and amortization(1)                                   |                  |                          | 100,146 |                                |         | 37,981                  |        
|Financial expenses                                                 |                  |                          | 26,572  |                                |         | 6,093                   |        
|Other items(2)                                                     |                  |                          | 17,040  |                                |         | (8,595                  | )      
|Income taxes(1)                                                    |                  |                          | 23,140  |                                |         | 11,537                  |        
|Share in the results of a company subject to significant influence |                  |                          | (489    | )                              |         | (136                    | )      
|Non-controlling interest in a subsidiary                           |                  |                          | 100     |                                |         | 57                      |        
|Amortization of goodwill(3)                                        |                  |                          | 13,486  |                                |         | 108                     |        
|                                                                   |                  |                          |         |                                |         |                         |        
|Net income (loss)(1)(3)                                            |                  | $                        | 33,671  |                                | $       | 27,933                  |        
|                                                                   |                  |                          |         |                                |         |                         |        

2

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|                                                         |                                     | Year Ended August 31,    |           | Four Months Ended December 31, |         | Year Ended December 31, |        
|-------------------------------------------------------- | ----------------------------------- | ------------------------ | --------- | ------------------------------ | ------- | ----------------------- | -------
|
|
|
|Balance Sheet Data (at period end):                      |                                     |                          |           |                                |         |                         |        
|Cash and cash equivalents                                |                                     | $                        | 1,012     |                                | $       | 1,498                   |        
|Total assets(1)                                          |                                     |                          | 1,624,591 |                                |         | 1,623,552               |        
|Long-term debt, excluding QMI subordinated loan(4)(5)(6) |                                     |                          | 840,610   |                                |         | 801,521                 |        
|QMI subordinated loan(5)                                 |                                     |                          |          |                                |         |                        |        
|Capital shares(4)                                        |                                     |                          | 57,658    |                                |         | 57,658                  |        
|Shareholder's equity(4)                                  |                                     |                          | 393,664   |                                |         | 394,768                 |        
|Other Financial Data:                                    |                                     |                          |           |                                |         |                         |        
|Operating income(1)(7)                                   |                                     | $                        | 213,666   |                                | $       | 74,978                  |        
|                                                         | Operating income margin(1)(7)       |                          |           | 33.5                           | %       |                         | 33.0   
|Cash flows from operating activities                     |                                     | $                        | 233,012   |                                | $       | 72,403                  |        
|Cash flows used in investing activities                  |                                     |                          | (281,548  | )                              |         | (29,577                 | )      
|Cash flows from (used in) financing activities           |                                     |                          | 53,084    |                                |         | (41,553                 | )      
|Capital expenditures(8)                                  |                                     |                          | 238,628   |                                |         | 82,058                  |        
|Operating Data (unaudited):                              |                                     |                          |           |                                |         |                         |        
|Homes passed(9)                                          |                                     |                          | 2,304,460 |                                |         | 2,309,850               |        
|Basic customers(10)                                      |                                     |                          | 1,542,364 |                                |         | 1,565,321               |        
|                                                         | Basic penetration(11)               |                          |           | 66.9                           | %       |                         | 67.8   
|Digital customers                                        |                                     |                          | 14,378    |                                |         | 31,727                  |        
|                                                         | Digital penetration(12)             |                          |           | 0.9                            | %       |                         | 2.0    
|High-speed Internet customers                            |                                     |                          | 32,924    |                                |         | 52,996                  |        
|                                                         | High-speed Internet penetration(11) |                          |           | 1.4                            | %       |                         | 2.3    
|ARPU(13)                                                 |                                     | $                        | 33.55     |                                | $       | 34.18                   |        
|AMOUNTS UNDER U.S. GAAP                                  |                                     |                          |           |                                |         |                         |        
|Statement of Operations Data:                            |                                     |                          |           |                                |         |                         |        
|Operating revenues:                                      |                                     |                          |           |                                |         |                         |        
|                                                         | Cable television                    |                          | $         | 607,942                        |         | $                       | 579,200
|                                                         | Internet access                     |                          |           | 99,629                         |         |                         | 135,514
|                                                         | Video stores                        |                          |           | 35,155                         |         |                         | 35,344 
|                                                         | Other(1)                            |                          |           | 22,728                         |         |                         | 30,982 
|                                                         |                                     |                          |           |                                |         |                         |        
|                                                         |                                     | Total operating revenues |           |                                | 765,454 |                         |        
|                                                         |                                     |                          |           |                                |         |                         |        
|Direct costs(1)                                          |                                     |                          | 227,800   |                                |         | 259,044                 |        
|Operating, general and administrative expenses           |                                     |                          | 281,833   |                                |         | 285,952                 |        
|Depreciation and amortization(1)                         |                                     |                          | 260,352   |                                |         | 137,687                 |        
|Financial expenses                                       |                                     |                          | 128,504   |                                |         | 72,850                  |        
|Other items(2)                                           |                                     |                          | 3,807     |                                |         | 606                     |        
|Income taxes(1)                                          |                                     |                          | (2,827    | )                              |         | 5,166                   |        
|Non-controlling interest in a subsidiary                 |                                     |                          | 145       |                                |         | 188                     |        
|Impairment of goodwill(3)                                |                                     |                          |          |                                |         | 2,004,000               |        
|                                                         |                                     |                          |           |                                |         |                         |        
|Net income (loss)(1)(3)                                  |                                     | $                        | (134,160  | )                              | $       | (1,984,453              | )      
|                                                         |                                     |                          |           |                                |         |                         |        

3

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|                                                         |                               | Year Ended December 31, |          
|-------------------------------------------------------- | ----------------------------- | ----------------------- | ---------
|
|
|
|Balance Sheet Data (at period end):                      |                               |                         |          
|Cash and cash equivalents                                |                               | $                       | 80,935   
|Total assets(1)                                          |                               |                         | 6,137,269
|Long-term debt, excluding QMI subordinated loan(4)(5)(6) |                               |                         | 1,310,179
|QMI subordinated loan(5)                                 |                               |                         |         
|Capital shares(4)                                        |                               |                         | 1        
|Shareholder's equity(4)                                  |                               |                         | 3,975,890
|Other Financial Data:                                    |                               |                         |          
|Operating income(1)(7)                                   |                               | $                       | 255,821  
|                                                         | Operating income margin(1)(7) |                         |          
|Cash flows from operating activities                     |                               | $                       | 203,056  
|Cash flows used in investing activities                  |                               |                         | (130,356 
|Cash flows from (used in) financing activities           |                               |                         | 5,327    
|Capital expenditures(8)                                  |                               |                         | 115,577  

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|                                      |  | Year Ended December 31, |         
|------------------------------------- |  | ----------------------- | --------
|
|
|
|Net loss                              |  | $                       | (29,651 
|Goodwill amortization                 |  |                         | 13,397  
|                                      |  |                         |         
|Net loss before goodwill amortization |  | $                       | (16,254 
|                                      |  |                         |         
|AMOUNTS UNDER U.S. GAAP               |  |                         |         
|Net loss                              |  | $                       | (134,160
|Goodwill amortization                 |  |                         | 119,142 
|                                      |  |                         |         
|Net loss before goodwill amortization |  | $                       | (15,018 
|                                      |  |                         |         

4

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|                                                           |  | As at August 31, |         | As at December 31, |   | As at December 31, | 
|---------------------------------------------------------- |  | ---------------- | ------- | ------------------ | - | ------------------ | 
|
|
|
|                                                           |  |                  |         |                    |   |                    | 
|Long-term debt                                             |  | $                | 840.6   |                    | $ | 801.5              | 
|Promissory note to a company under common control          |  |                  |        |                    |   |                   | 
|QMI subordinated loan                                      |  |                  |        |                    |   |                   | 
|                                                           |  |                  |         |                    |   |                    | 
|Long-term debt, excluding QMI subordinated loan as defined |  | $                | 840.6   |                    | $ | 801.5              | 
|                                                           |  |                  |         |                    |   |                    | 
|AMOUNTS UNDER U.S. GAAP                                    |  |                  |         |                    |   |                    | 
|Long-term debt                                             |  | $                | 1,287.7 |                    | $ | 1,119.6            | 
|Promissory note to a company under common control          |  |                  | 22.5    |                    |   |                   | 
|QMI subordinated loan                                      |  |                  |        |                    |   |                   | 
|                                                           |  |                  |         |                    |   |                    | 
|Long-term debt, excluding QMI subordinated loan as defined |  | $                | 1,310.2 |                    | $ | 1,119.6            | 
|                                                           |  |                  |         |                    |   |                    | 

5

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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:



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:



6

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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, which 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, 2003,
we had $100.0 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, 2003, our subsidiaries generated approximately 49% of our revenues (before inter-company eliminations) and held
approximately 48% 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

7

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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.

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 theBankruptcy and
Insolvency Act(Canada) and theCompanies' 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 theBankruptcy and Insolvency Act(Canada), and particularly under theCompanies'
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.

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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:



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

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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. We also face competition from illegal providers of cable television services or 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. Competitors in the video rental industry include other video stores, video-on-demand services, television and other alternative entertainment media.
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,
or DTH, microwave 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. While we have substantially completed our network modernization program, if there is accelerated growth in our digital cable and data customers, or if we decide to introduce new advanced
services, such as high definition television, or HDTV, or if the cost of providing these services increases, 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.

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

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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, 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 suppliers 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 Internet access service operations are regulated respectively by theBroadcasting Act(Canada) and the Telecommunications Act(Canada) and regulations thereunder. The Canadian Radio-television and Telecommunications Commission, or the CRTC, which
administers theBroadcasting Act(Canada) and theTelecommunications 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 theRadiocommunication 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 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 years.

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.

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

We have been required by the CRTC to provide third-party Internet service providers with access to our cable systems at mandated wholesale rates. The CRTC has
approved certain of the cost-based rates for our third-party Internet access service. As of the date of this annual report, no third parties have been provided with access through
interconnection as technical interconnection procedures and conditions remain to be determined by the CRTC. Until access through interconnection is provided to third-party Internet service providers
to the underlying telecommunications facilities used to provide Internet service, the CRTC is requiring us and other incumbent cable carriers to allow third-party retail Internet service providers to
resell their 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 this requirement, 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.

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 theTelecommunications 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.

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 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.

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 quarterly 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

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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 79% 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 1,825 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, 2003, 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 we may enter into similar transactions with respect to 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. 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."

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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 300 Viger Avenue East, Montréal, Québec, Canada H2X 3W4, and our telephone number is
(514) 380-1999. Our corporate website can be accessed throughwww.videotron.ca. 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.

For
a description, including the amount invested, of our principal capital expenditures since January 1, 2001, 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. We hold cable licenses that cover approximately 80% of Québec's 3.0 million homes passed by cable (as per 2002 CRTC data), including
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, 2003, we had approximately 1.4 million basic cable customers, representing a basic penetration rate of 61.0%. 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, 2003, we had 239,673 digital customers, representing 16.7% of our basic customers and 10.2% of our total homes passed. We have also rapidly grown our high-speed
Internet access customer base, and at December 31, 2003, we had 406,277 high-speed Internet access customers, representing 28.4% of our basic customers and 17.3% 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.

Through
SuperClub Vidéotron, we also own the largest chain of video stores in Québec, with 180 retail locations (of which 137 are franchised) and more than
1.3 million video club rental members. With approximately 80% of its 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.

For
the year ended December 31, 2003, we generated revenues of $805.0 million and operating income of $275.3 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 have become the largest provider of such service in the areas we serve based on internal estimates. In addition, we operate the
largest chain of video stores in Québec through our

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SuperClub
Vidéotron subsidiary. We believe that our retail distribution network of over 550 stores, including theLe SuperClub
Vidéotronvideo 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 in 2001, 2002 and 2003.

Single, Highly Contiguous Cluster.We serve our customer base through a single clustered network that covers approximately
80% of Québec's total addressable market (as per 2002 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:



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. 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 approximately twice the speed of 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.

Strong, Market-Focused Management Team.Our senior management team is led by Robert Dépatie, who was named
President and Chief Executive Officer in June 2003. Mr. Dépatie has extensive experience in launching and deploying new products and services. Prior to his appointment as
President and Chief Executive Officer, he served as our Senior Vice President of Sales, Marketing and Customer Service. Under his leadership, we have successfully increased sales of our digital
television products and improved penetration of our high-speed Internet access product. Our focused and results-oriented senior management team has extensive experience and expertise in a
range of areas and sectors, including marketing, finance and cable television.

Broadcast Distribution Industry Overview

Cable Television Industry Overview

Cable television has been available in Canada for almost 50 years and is a well developed market. Competition in the cable industry was first introduced in
Canada in 1997. As of August 31, 2002, there were approximately 7.0 million cable television customers in Canada, representing a basic cable penetration rate of

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68.6%
of homes passed. The Canadian cable television market is fairly concentrated with the four largest cable service providers serving 6.7 million customers, or approximately 96% of total
basic cable customers. For the twelve months ended August 31, 2002, total industry revenue was estimated to be over $3.9 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, |  
|--------------------- |  | ------------------------------ | -
|
|
|Canada                |  |                                |  
|Industry Revenue      |  | $2.7                           |  
|Homes Passed          |  | 9.5                            |  
|Basic Cable Customers |  | 7.2                            |  
|Basic Penetration     |  | 75.7                           | %

|                      |  | Twelve Months Ended December 31,
|--------------------- |  | --------------------------------
|
|
|U.S.                  |  |                                 
|Industry Revenue      |  | US$                             
|Homes Passed          |  |                                 
|Basic Cable Customers |  |                                 
|Basic Penetration     |  |                                 

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Source of Canadian data: CRTC. Source of U.S. data: Paul Kagan Associates, Inc., Kagan World Media, a Media Central/Primedia Company, and Nielson
Media Research and NCTA.

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, 2002, Québec was home to approximately 24% of
Canada's population and approximately 23.5% of its basic cable customers. Basic cable penetration in Québec, which was approximately 60.4% as of August 31, 2002, 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.

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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 three 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. 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.

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. Since September 2001, 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 April 2004, we have launched 15 new English-language channels and one ethnic channel. We also expect to launch additional
French and English-language channels in 2004. We believe the launch of these digital channels and the future increase in French-language programming 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. In addition, in the third quarter of 2001, we launched additional interactive services providing
e-mail, Internet access and other functionality through the television. 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.

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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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.





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

|                            |  | As of December 31, |  
|--------------------------- |  | ------------------ | -
|
|Video services              |  |                    |  
|Basic analog cable          |  |                    |  
|Homes passed(1)             |  | 2,309,850          |  
|Basic customers(2)          |  | 1,565,321          |  
|Penetration(3)              |  | 67.8               | %
|Digital cable               |  |                    |  
|Digital customers           |  | 31,727             |  
|Penetration(4)              |  | 2.0                | %
|Number of digital terminals |  | 33,888             |  
|Data services               |  |                    |  
|Dial-up Internet access     |  |                    |  
|Dial-up customers           |  | 72,720             |  
|High-speed Internet access  |  |                    |  
|Cable modem customers       |  | 52,996             |  
|Penetration(3)              |  | 2.3                | %

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In the quarter ended December 31, 2003, we recorded a net increase of 10,295 basic cable customers. During the same period, we also
recorded net growth of 27,752 customers of our high-speed Internet access service and 26,470 customers of our digital television service, the latter of which includes
customers who have upgraded from our analog cable service.

Video Stores

Through SuperClub Vidéotron, we also own the largest chain of video stores in Québec, with 180 retail locations (of which 137 are
franchised) and more than 1.3 million video club rental members. With approximately 80% of its 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.

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. As of December 31, 2003, the average monthly fees for basic and extended basic service were $21.89 and $34.72, respectively, and the
average monthly fees for basic and extended basic digital service were $11.08 and $38.44, 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.

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 as follows:

Service

Price RangeBasic analog cable

$15.07  $26.85Extended basic analog cable

$24.88  $37.91Basic digital cable

$  9.99  $11.99Extended basic digital cable

$27.99  $64.94Pay-television

$  6.00  $19.95Pay-per-view (per movie or event)

$  3.99  $79.95Video-on-demand (per movie or event)

$  0.99  $  9.99Dial-up Internet access

$  9.95  $22.95High-speed Internet access

$24.95  $69.95


Our Network Technology

As of December 31, 2003, our cable systems consisted of approximately 7,500 km of fiber optic cable and 25,000 km of coaxial cable, passing approximately
2.4 million homes and serving approximately

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1.4 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:

|                  |  | Under 450 MHz |  | 480 to 625 MHz |  | 750 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%               

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 VTL 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.

Since
1995, we have invested over $294 million in a modernization program to upgrade our network to enable us to develop and deploy new advanced products and services. Our
modernization program was substantially completed as of December 31, 2001. As a result, we are now able to deliver simultaneously up to 75 analog channels and over 200 digital channels in the
greater Montréal area and in western Québec, and up to 49 analog channels and over 70 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 $29.1 million of capital expenditures over 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.

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

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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.

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:



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, on December 1, 2003, we interconnected all of our call centers to enhance our call handling capabilities and efficiency. 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.

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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 30 English-language and four French-language digital
channels in digital format. Furthermore, we believe the recent launch of these digital channels, the continued launch of digital channels in the future and the increase in French-language programming
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 subscriber
line, private cable, other cable distribution and wireless distribution. We also face
competition from illegal providers of cable television services or 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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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 662/3% of the issued and outstanding voting shares and not less than 662/3% 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 theBroadcasting 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

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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.

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 and pledged to be in a position to
consider potential solutions by the spring of 2004. We cannot predict, what, if any, changes will result from these reports.

Jurisdiction Over Canadian Broadcasting Undertakings

Our cable distribution undertakings are subject to theBroadcasting 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 theRadiocommunication 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 theBroadcasting 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.

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
theTelecommunications 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.

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

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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.

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. It is expected that the CRTC will issue a proposed exemption order in 2004. We operate ten 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 will
establish a licensing framework governing the transition of pay and specialty services to high definition, or HD, signals. It will also establish a framework to govern the distribution of such
services by broadcasting distribution undertakings. 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 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 hold a separate license for each of our 35 cable systems with greater than 2,000 customers and have never
failed to obtain a license renewal for those cable systems.

Canadian Broadcast Distribution (Cable Television)

Distribution of Canadian Content

The Broadcasting Distribution Regulations made by the CRTC pursuant to theBroadcasting 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,

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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 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 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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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, 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.

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:



For
most 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

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CRTC
may approve an increase if the distributor satisfies the criteria then in effect for establishing economic need.

Copyright Board Proceedings

Certain copyrights in 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

Further to the implementation in 1989 of the Canada-U.S. Free Trade Agreement, theCopyright
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, theCopyright 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 2003 to 2008. A public hearing relating to such request has been scheduled for 2005.

Royalties for the Transmission of Pay and Specialty Services

In addition, theCopyright 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. However,
at the request of the Society of Composers, Authors and Music Publishers of Canada, or SOCAN, the Copyright Board approved Tariff 17A in 1996 in order to obtain the payment of royalties from
transmitters, including members of the Canadian Cable Television Association, or the CCTA, that transmit musical works to the customers when transmitting television services on a subscription basis.

Tariff
17A fixed the monthly rate per customer, in the case of cable systems serving 6,001 or more customers, at $0.047, $0.055, $0.058, $0.064, $0.070 and $0.076, respectively, for each
of the 1990 to 1995 calendar years. However, the Copyright Board of Canada did not establish the allocation of the payable royalties between cable television operators, pay television and specialty
programming service providers. The CCTA and the programming service providers have signed agreements that establish the split with the Canadian specialty programming service providers and set up a
royalty payment mechanism. We are no longer a member of the CCTA, but we have renewed our agreement with the appropriate collective society. A project tariff has been filed by SOCAN for a rate in 2004
that is approximately ten times the current rate.

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These
agreements do not cover royalties payable for American specialty programming and the Canadian pay-television services, which correspond, according to Tariff 17A, to 2.1% of affiliation payments
during 1996 and 1.8% of 1996 monthly affiliation payments for the remainder of the tariff (i.e. 1997-2000). The royalties payable with respect to these services, and the
split with the programming service providers, are covered by another agreement. A project tariff has been filed by SOCAN for 2.6% of affiliation payments in 2004. Further to Tariff 17A, neighboring
rights for music transmission will also need to be paid under Tariff 17A. The claimants are asking for 20% of the programming payments. The rate fixed by the Copyright Board will be split between the
pay audio services and the transmitters.

The
Copyright Board of Canada rendered a decision on February 16, 2001 regarding the rates that will apply under SOCAN's Tariff 17A for the calendar years 1996 to 2000. The
royalty payable by small transmission systems is $10 per year. The monthly royalty payable by transmission systems (other than small transmission systems) for the signals of Canadian and American pay
services is 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.

In
April and May 2003, the Copyright Board held a hearing to determine pay and specialty royalty rates for 2001 through 2004. No decision has yet been rendered.

Royalties for Pay Audio Services

The Copyright Board of Canada also 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 focusing on pay audio services. It fixes the royalties payable to SOCAN and to the Neighbouring Rights Collective of
Canada, or NRCC, respectively, 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 are 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 are calculated at a rate equal to 85%
of the rate otherwise payable. Further to Tariff 17A, neighboring rights for music transmission will also need to be paid under Tariff 17A. The claimants are asking for 20% of the programming
payments. The rate fixed by the Copyright Board will be split between the pay audio services and the transmitters.

Tariff in Respect of Internet Service Provider Activities

In 1996, SOCAN proposed a tariff (Tariff 22) to be applied against Internet service providers, or ISPs, in respect of composer/publishers rights in musical
works communicated over the Internet to ISPs' customers.

SOCAN's
proposed tariff was challenged by a number of industry groups and companies, including the CCTA. In 1999, the Copyright Board decided that ISPs 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 2002, the Canadian Federal Court of Appeal partially overturned the
Copyright Board and held that ISPs could be liable where they cached musical works. An appeal from the decision of the Federal Court of Appeal was launched by both SOCAN and by the ISP group
that includes the CCTA. The appeal was heard by the Supreme Court of Canada in December 2003, and a ruling is expected in 2004. If the Supreme Court of Canada were to uphold the decision of the
Federal Court of Appeal or allow the appeal by SOCAN and extend liability to ISPs, then the dispute would return to the Copyright Board for a determination of the royalties to be paid retroactively
back to 1996.

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Other
collectives have since 1999 also proposed tariffs to be applied against ISPs in respect of communications of sound recordings and performers' performances as well as reproductions
of copyright works made in the course of providing Internet services. All such tariffs have been on hold pending the resolution of the Tariff 22 proceedings. If these tariffs proceed to a hearing, it
is possible that additional royalties will be required to be paid by ISPs retroactive to when the tariffs were first proposed.

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 and service)
bases, Internet access for third parties 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 ISPs to offer such services over a cable infrastructure. Our proposal was approved in part by the CRTC
in August 2000. This decision approves the terms and per end-user rates to charge to ISPs for access to cable company facilities used to provide cable modem Internet services. Other
technical, operational and business policies to implement access services are being addressed by the CRTC Interconnection Steering Committee, or CISC.

We
took part in technical tests intended to interconnect the networks of the cable television operators with certain competing ISPs. These tests were successfully concluded in the third
quarter of 2000. Once the conditions of facilities-based interconnection are approved by the CRTC, which could occur later this year, actual access to the headend of our HFC network will be ordered by
the CRTC and provided by us at a regulated tariff.

Until
facilities-based access to the cable network headend is provided, the CRTC is requiring cable distributors to allow third-party retail ISPs to resell their 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. The resale
obligation will cease to be mandated once facilities-based access is available to ISPs.

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 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 is currently reviewing these winback
rules and has issued a call for comments on whether it should maintain its current rules prohibiting the targeted marketing by incumbent cable companies of customers who have cancelled basic cable
service and whether the rules should be changed.

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.

Right to Access to Telecommunications Support Structures

The CRTC has concluded that some provisions of theTelecommunications 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

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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 will need to be negotiated with those utilities.

Organizational Structure

On October 7, 2003, Quebecor Media, our sole shareholder, transferred its wholly-owned subsidiaries SuperClub Vidéotron and
Vidéotron TVN to us in exchange for additional shares of our capital stock. After this reorganization, our corporate structure is (certain immaterial subsidiaries have been omitted):

GRAPHIC

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.

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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 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. 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.

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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
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 amounts from both our high-speed Internet access and dial-up customers. As of December 31, 2003, we had
406,277 high-speed Internet access customers and 28,821 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 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 costs consist of television programming costs, Internet bandwidth and transportation costs and purchasing costs for video cassettes and DVDs. These costs vary with the number
of customers and price increases from our suppliers. Major components of operating expenses include salaries and benefits, subcontracting costs, advertising and regulatory contributions.

We
have experienced a decline in the number of our basic cable customers since 2000 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. During the last two quarters of 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."

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During
the three months ended December 31, 2003, we recorded a net increase of 10,295 basic cable customers. During the same period, we also recorded net growth of
27,752 customers of our high-speed Internet access service and 26,470 customers of our digital television service, the latter of which includes customers who have upgraded from our
analog cable service.

As
calculated in our audited consolidated financial statements included in this annual report, operating income for us means earnings before depreciation and amortization, financial
expenses, other items (consisting primarily of restructuring charges), income taxes, share in the results of a company subject to significant influence, non-controlling interest in a
subsidiary and goodwill amortization. Operating income is not a measure of results that is consistent with generally accepted accounting principles. 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 it is a meaningful
measure of performance. Operating income is commonly used in the sectors in which we are engaged 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. Our operating income
for each of the years ended December 31, 2001, 2002 and 2003 is presented on page F-3 of our audited consolidated financial statements included in this annual report.

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 twelve-month 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, 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 $43.40 in the year ended December 31, 2003 from $40.45 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 a 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 6,924 basic cable customers for the year ended
December 31, 2003, as compared to a reduction of 78,988 basic cable customers in 2002. However, during the last two quarters of 2003, we recorded net additions to our basic cable customers of
21,150, as compared to a loss of 23,637 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 68,944, or 40.4%, from December 31, 2002 to
December 31, 2003, for a total of 239,673 digital customers as of December 31, 2003. Digital penetration of our customer base increased from 11.9% as at December 31, 2002 to 16.7%
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

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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 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 $39.7 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.

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-

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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 452.3%.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Revenues

Consolidated revenues for the year ended December 31, 2002 were $781.0 million, as compared to $765.5 million for the year ended
December 31, 2001, an increase of $15.5 million or 2.0%. ARPU increased to $40.45 in the year ended December 31, 2002 from $38.33 in 2001, representing a 5.5% increase.

Cable
television revenues for the year ended December 31, 2002 decreased $28.7 million, or 4.7%, as compared to 2001. This decrease was primarily a result of the decline in
the number of our basic cable customers, which was partially offset by price increases. We recorded a decline of 5.2% in the number of our basic cable customers from 1,519,172 at December 31,
2001 to 1,440,184 at December 31, 2002. This decline was partially due to the negative impact of a labor dispute from May 2002 until April 2003. The number of our digital
customers increased by 56,551, or 49.5%, from December 31, 2001 to December 31, 2002. Digital penetration of our customer base increased from 7.5% at December 31, 2001 to 11.9% at
December 31, 2002.

Internet
revenues for the year ended December 31, 2002 increased $35.9 million, or 36.0%, as compared to 2001. This growth was due to an increase of 76,726
high-speed Internet access customers 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 9.8% at December 31, 2001 to 13.1% at December 31, 2002.

Revenues
from video stores for the year ended December 31, 2002 were $35.3 million, as compared to $35.2 million for 2001. This growth was due to higher revenues
from our franchised video stores and higher sales of video cassettes and DVDs, which was partially offset by a decrease in rental revenues and the closing of two of our corporate video stores
in 2001.

Other
revenues for the year ended December 31, 2002 were $8.3 million higher than during the year ended December 31, 2001. This variation was due to an increase in
the buying rate of digital set-top boxes and modem subsidies.

Direct Costs and Operating, General and Administrative Expenses

Direct costs increased $32.4 million, or 14.2%, to $259.7 million for the year ended December 31, 2002 from $227.3 million for 2001.
As a percentage of total revenues, direct costs increased to 33.2% for the year ended December 31, 2002 from 29.7% for 2001. Direct costs for cable television services for the year ended
December 31, 2002 were higher than for the year ended December 31, 2001. This increase was due to higher fees paid for programming services and the introduction of new services. Direct
costs for Internet access for the year ended December 31, 2002 were also higher than for the previous year. This increase was due to a higher number of high-speed Internet access
customers, which was offset partially by a decline in bandwidth costs.

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Operating,
general and administrative expenses increased $11.6 million, or 4.2%, to $285.8 million for the year ended December 31, 2002 from $274.2 million
for 2001. As a percentage of total revenues, operating, general and administrative expenses increased to 36.6% in the year ended December 31, 2002 from 35.8% for 2001. A net amount of
$10.1 million of this increase was attributable to non-recurring items during the year ended December 31, 2002 due to the labor dispute that was resolved in
April 2003, which were partially offset by an $8.3 million recovery of network taxes. In addition, because our network modernization program was substantially completed in 2001,
operating, general and administrative expenses increased by $15.7 million for the year ended December 31, 2002, as such indirect costs were capitalized in 2001. Other operating, general
and administrative expenses were $5.9 million lower than for the same period in 2001 due to a review of all cost components and the implementation of cost reduction initiatives.

Operating Income

Operating income for the year ended December 31, 2002 was $235.5 million, as compared to $263.9 million for 2001, representing a decrease of
$28.4 million or 10.8%. This decline in operating income was a result of the increase in direct costs and non-recurring items, which was greater than the increase in combined revenues.

Depreciation and Amortization

Depreciation and amortization expenses for the year ended December 31, 2002 were $120.0 million, an increase of $3.3 million, or 2.8%, as
compared to 2001. This growth was attributable to ongoing capital expenditures required to maintain our network and deploy value-added products.

Financial Expenses and Other Items

Financial expenses for the year ended December 31, 2002 were $76.2 million, as compared to $101.3 million in 2001, a decline of
$25.1 million or 24.8%. This decline in financial expenses was mainly due to foreign exchange gains on our U.S. dollar-denominated long-term debt, which amounted to
$2.2 million for the year ended December 31, 2002, as compared to a foreign exchange loss of $12.1 million in 2001. Interest expenses on long-term debt were
$8.4 million, or 10.1%, lower in the year ended December 31, 2002, as compared to the year ended December 31, 2001. This decrease was due to lower interest rates and partial
repayment of long-term debt.

Other
items for the year ended December 31, 2002 consisted of a $25.0 million restructuring provision to cover a workforce reduction program. For the year ended
December 31, 2001, other items totaled $95.6 million and consisted primarily of the write-off of fixed assets and deferred charges relating to our residential Internet
protocol telephony project, which was suspended in 2001 due to market and technological uncertainties.

Net Income

We reported net income of $11.5 million in the year ended December 31, 2002, as compared to a net loss of $53.0 million in 2001, an increase
of $64.5 million. This increase resulted from the write-off of fixed assets and deferred charges relating to our residential Internet protocol telephony project in 2001 and the fact
that we had no such corresponding write-off in 2002.

Effective
January 1, 2002, we implemented the Canadian Institute of Chartered Accountants Handbook Section 3062,Goodwill and Other Intangible
Assets. In accordance with this standard, we will not amortize goodwill and intangible assets with indefinite useful lives. Prior to January 1, 2002, we amortized
goodwill using the straight-line method over a period of up to 40 years.

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Liquidity and Capital Resources

Our principal liquidity and capital resource requirements consist of:



Capital Expenditures

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. We continued to focus on success-driven capital spending and maintaining our network so that it remains in very good
condition.

Capital
expenditures for the year ended December 31, 2002 were $93.0 million, as compared to $133.3 million for the year ended December 31, 2001, representing
a decline of $40.3 million, or 30.2%. This reduction resulted from the expensing of $15.7 million of indirect costs in 2002 that were capitalized in 2001 and the
suspension of our Internet protocol telephony project, in which we invested $25.7 million before this suspension in 2001.

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 Quebec. We
estimate that $29.1 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 Quebec, 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, 2003, we made cash interest payments of $65.1 million, as compared to $77.0 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. The mandatory principal repayments on our credit facilities were $70.7 million during the year ended
December 31, 2003. 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. During the year ended December 31, 2001, we acquired the shares of
Vidéotron (1998) ltée from our parent company, Quebecor Media, and issued to it a $300.0 million promissory note and a $300.0 million
Series E preferred share, as described in note 2 to our audited consolidated financial statements. This promissory note was repaid on the same date with the funds we received from
additions to our credit facilities.

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Payment of Dividends

During the quarter ended December 31, 2003, we paid a dividend of $20.0 million to our sole shareholder Quebecor Media. No dividends were
paid during the years ended December 31, 2001 and 2002. We expect to pay quarterly dividends to Quebecor Media in the future, subject to the terms of our indebtedness and applicable law.

Retractable Preferred Shares

In 2001 and 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.

During
the year ended December 31, 2003, we issued one retractable Series F preferred share to Quebecor Media, which is presented as a liability in our consolidated
financial statements at a retraction price of $2.0 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, 2003, are summarized below and are disclosed in notes 13, 16
and 17 to our audited consolidated financial statements.

|                         |                                    |  |   | Payments Due By Period
|------------------------ | ---------------------------------- |  | - | ----------------------
|
|
|Contractual obligations: |                                    |  |   |                       
|                         | Credit facilities                  |  | $ | 355.6                 
|                         | Notes                              |  |   | 430.4                 
|                         | CF Cable notes                     |  |   | 100.6                 
|                         | Operating leases and other debt    |  |   | 23.0                  
|                         |                                    |  |   |                       
|                         | Total contractual cash obligations |  | $ | 909.6                 
|                         |                                    |  |   |                       

As
of December 31, 2003, the outstanding balance on our credit facilities was $355.6 million. We made mandatory principal repayments on these facilities of
$70.7 million during the year ended December 31, 2003
and repaid $150.0 million from the proceeds of the subordinated loan we entered into with Quebecor Media. On October 8, 2003, concurrently with the issuance of our notes, we
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 a result of this transaction, repayment under our remaining credit facilities are reduced to
$50.0 million per year, with the remainder in 2008. 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, 2003, we estimated that the minimum aggregate payments under these leases over the next five
years will be approximately $23 million. During the year ended December 31, 2003, we renewed or extended several leases and entered into new operating leases. As of December 31,
2003, we believe that the minimum payments under these leases over the next five years will not be materially different than they were as of December 31, 2003.

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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 $5.3 million for the year ended December 31, 2003 and amounts to be agreed upon for the years 2004, 2005 and 2006. Management fees payable to
Quebecor Media will amount to $6.5 million for the year ended December 31, 2004. See "Item 7  Major Shareholders and Related Party
Transactions  Related Party Transactions  Management Services and Others."

Other Commercial Commitments.We have contractual arrangements with Vidéotron
Télécom ltée, or VTL, for bandwidth and transportation of Internet services that will expire on August 31, 2004. We have numerous agreements
with VTL for broadband services maturing up to 15 years. These commitments are in accordance with current market prices. See "Item 7  Major
Shareholders and Related Party Transactions  Related Party Transactions  Telecommunications Services."

As
of December 31, 2003, there were no material commitments for capital expenditures.

Sources of Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are:



Funds from Operations.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.

For
the year ended December 31, 2002, cash provided by operating activities was $195.9 million, as compared to $208.0 million in 2001.

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 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."

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 "Item 11  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 quarterly 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 life insurance programs and cable service.

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Employee
future benefits accounting policy is explained at note 1(j) 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 2004 and 2008, 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 $6.4 million. As at December 31, 2003, 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 2008. 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 $5.9 million. As at
December 31, 2003, 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 notes, we are committed to pay any amount of withholding taxes that could eventually be levied by any Canadian
Taxing Authority (as defined in this 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 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, 2003, we were using derivative financial instruments to reduce our exchange rate and interest rate exposure.

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. We do not hold or issue any derivative financial instruments for trading purposes. A description of the financial

44

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derivatives
used by us as at December 31, 2003 is provided in note 1(h) to our consolidated financial statements and in
"Item 11  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,
2003, we had no significant concentration of credit risk.

Regulation

We are subject to extensive government regulation mainly through theBroadcasting 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, speciality channels and program distribution through cable and direct broadcast satellite 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.

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 included elsewhere in this annual report. 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

$
114,608Deferred charges


(22,585
)Goodwill


4,360,512Change in assets


4,452,535Accrued charges


40,445Future income taxes


24,930Change in liabilities


65,375Change in contributed surplus

$
4,387,160


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Recent Canadian GAAP Accounting Pronouncements

In November 2001, the Canadian Institute of Chartered Accountants, or 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
will apply to all hedging relationships in effect on or after January 1, 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 hedge accounting are
consistent with existing U.S. criteria for qualifying for hedge accounting, with which we comply, we do not anticipate any material impact from adopting this accounting guideline.

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 what 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 the new accounting principles, equipment subsidies are to be accounted for as revenues for the product of sales and cost of
sales for the cost of equipment and recognized in earnings at the time of the sale and customer reconnection costs will be accounted for as operating expenses when incurred.

During
the fourth quarter 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 three fiscal years ended December 31, 2001, 2002 and 2003:



As
at December 31, 2002, deferred charges decreased by $35.2 million, our fixed assets decreased by $10.7 million, our future income tax assets increased by $16.1 million
and our deficit as at January 1, 2001 increased by $17.7 million. Although the retroactive application of these changes affected amounts presented
for prior periods under Canadian GAAP, it will 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.

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 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

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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
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 did not have a material impact on our consolidated financial statements for the first quarter ended
March 31, 2004.

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 do not intend to apply these new standards prior to that date.

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 recognised 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 did
not have a material impact on our consolidated financial statements for the first quarter ended March 31, 2004.

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 has 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. We do not expect that this statement will have a material impact on our consolidated 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 April 28, 2004:

|Name and Municipality of Residence       |  | Age |  | Position                                                         
|---------------------------------------- |  | --- |  | -----------------------------------------------------------------
|ANDRÉ BOURBONNAIS(1)
Longueuil, Québec   |  | 42  |  | Director                                                         
|ROBERT DÉPATIERosemère, Québec           |  | 45  |  | Director and President and Chief Executive Officer               
|SERGE GOUINMontréal, Québec              |  | 61  |  | Director and Chairman of the Board                               
|JEAN LA COUTURE, FCA(1)
Montréal, Québec |  | 57  |  | Director                                                         
|JACQUES MALLETTELongueuil, Québec        |  | 46  |  | Director and Executive Vice President and Chief Financial Officer
|JEAN-LOUIS MONGRAIN(1)
Longueuil, Québec |  | 60  |  | Director                                                         
|PIERRE KARL PÉLADEAUMontréal, Québec     |  | 42  |  | Director                                                         
|YVAN GINGRASMontréal, Québec             |  | 47  |  | Executive Vice President, Finance and Operations                 
|BERNARD BRICAULTQuebec City, Québec      |  | 51  |  | Vice President, Technical Quality                                
|SYLVAIN BROSSEAUVarennes, Québec         |  | 37  |  | Vice President, Customer Service                                 
|MARK D'SOUZAMontréal, Québec             |  | 43  |  | Vice President and Treasurer                                     
|ANDRÉ GASCONLongueuil, Québec            |  | 42  |  | Vice President, Information Technologies                         
|DANIEL PROULXMontréal, Québec            |  | 46  |  | Vice President, Engineering                                      
|SERGE REYNAUDLorraine, Québec            |  | 48  |  | Vice President, Human Resources and Communications               
|J. SERGE SASSEVILLEMontréal, Québec      |  | 45  |  | Vice President, Legal Affairs and Secretary                      
|ÉDOUARD G. TRÉPANIERLongueuil, Québec    |  | 53  |  | Vice President, Public and Regulatory Affairs                    
|CLAUDINE TREMBLAYMontréal, Québec        |  | 50  |  | Assistant Secretary                                              

---

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André Bourbonnais, Director. Mr. Bourbonnais has served as a director of our
company since April 2003, and he has also been a director of Quebecor Media since December 2002. He serves as a member of the audit committee and the compensation and human
resources committee of Quebecor Media. After working at the Montréal office of the law firm of Stikeman Elliott, he became an Associate and later a Partner at Transact
International, a mergers and acquisitions consultancy company in Monaco. He returned to Montréal in 1993 and joined Teleglobe Inc., where he was successively Senior Legal
Counsel, Executive Vice President, and Chief Legal Officer and Secretary. He then became Senior Vice President and Chief Legal Officer of Cirque
du Soleil Inc. Mr. Bourbonnais joined Capital Communications CDPQ in 2001 as President of CDP Capital, Financial Services and in December 2002 was named President of CDP Capital
Communications. Mr. Bourbonnais is a member of the Québec Bar and a graduate of the London School of Economics and Political Science.

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 Senior Vice President, Sales, Marketing and Customer Service.
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 and chairs its compensation and human resources committee. Mr. Gouin is Advisory Director of Citigroup
Global Markets Canada Inc. 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 Astral Media Inc., 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 Mediation and Arbitration Institute of Quebec and the
"Regroupement des assureurs de personnes à charte du Québec (RACQ)." From 1972 to 1994, he was President and Chief Executive Officer of three organisations, including La
Garantie, Compagnie d'assurance de l'Amérique du Nord, a Canadian specialty line insurance company from 1990 to 1994. Mr. La Couture also serves as Director on the Board
of Directors of several corporations, including Quebecor Inc., Quebecor Media, Groupe Pomerleau (a Quebec-based construction company), Innergex Power Income Fund, and
Hydro-Québec CapiTech inc.

Jacques Mallette, Director and Executive Vice President and Chief Financial Officer. Mr. Mallette has served as a director
of our company and our Executive Vice President and Chief Financial Officer since April 2003. Mr. Mallette has also served as Executive Vice President and Chief Financial Officer
of Quebecor Inc., Quebecor Media and Sun Media Corporation since March 2003. 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. He also serves as director of a number of subsidiaries of
Quebecor Media. Mr. Mallette has been a member of the Canadian Institute of Chartered Accountants since 1982.

49

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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 13, 2002. 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 credit policies and was also involved in several due diligence investigations in connection with various acquisitions.

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. 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. 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.

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 mangement 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.

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 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

50

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Larochelle
Gratton inc. and Société de Transport de Laval. Mr. Gascon holds a master degree in business administration from the Sherbrooke University.

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.

Serge Reynaud, Vice President, Human Resources and Communications. Mr. Reynaud joined us in January 2003 as our
Vice President, Human Resources and Communications. From October 1999 to December 2002, he was Chief Administration Officer of Quebecor World Europe, a division of Quebecor
World Inc. He also was Vice President, Human Resources of Quebecor Printing Inc. (which has since become Quebecor World Inc.) from 1997 to 1999. From 1993 to 1997,
Mr. Reynaud was Director of Human Resources, Europe and Canada of Abbott Laboratories and Director, Organizational Development of Domtar Inc.

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 Netgraphe 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.

Edouard G. Trépanier, Vice President, Public and Regulatory Affairs. Mr. Trépanier has served
as our Vice President, Public and 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.

Claudine Tremblay, Assistant Secretary. Ms. Tremblay has served as our Assistant Secretary since November 2001. In addition,
Ms. Tremblay is currently Director, Corporate Services and has been Assistant Secretary of Quebecor Media since its inception. Since August 1998, Ms. Tremblay has been
Assistant Secretary of Quebecor Inc. She also serves as either Secretary or Assistant Secretary of various subsidiaries of Quebecor Media. Ms. Tremblay was Assistant Secretary and
Administrative Assistant at the National Bank of Canada from 1979 to 1988. 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 and Chief Financial Officer,
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 $1,200 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 $8,075 aggregate amount of cash compensation to the members of our audit committee as a group in annual fees and attendance
fees for the period from the formation of our audit committee in October 2003 to December 31, 2003.

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The
aggregate amount of compensation we paid for the year ended December 31, 2003 to our executive officers as a group, excluding those who are also executive officers of, and
compensated by, Quebecor Media, was $1.9 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 provide incentives to directors, executive officers and
key contributors to the success of Quebecor Media and its subsidiaries. The
compensation 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 expiry date and any other conditions applicable to such 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 the fair market value of the common shares as determined by the compensation committee (if the common shares of
Quebecor Media are not listed at the time of the grant) or the market 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, as the case may be. Unless authorized by the compensation 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 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 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 will have until January 31, 2008 to exercise their vested options, which
period we refer to as the private company window. An additional private company window (from January 1st, 2010 to January 31, 2010) was recently approved by the board of
directors of Quebecor Media. At the time an optionee exercises his or her options, such optionee may request to receive in lieu of the underlying common shares a cash amount, or a cash exercise,
representing the difference between the exercise price of the option and the fair market value or the trading price, as the case may be, of the underlying common shares at the time of exercise. For
any cash exercises, and in particular for the anticipated multiple cash exercises if the private company window is in effect, Quebecor Media may elect to pay all amounts owing in several
installments if it is determined by Quebecor Media that it would be prudent to do so based on its financial condition. 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, and no optionee may hold options covering more than 5.0% of the issued and outstanding shares of Quebecor Media.

During
the year ended December 31, 2003, 14 of our executive officers were granted options to purchase 339,271 common shares of Quebecor Media at a price determined by the
compensation 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

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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 theIncome 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 theIncome 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 $4,583 in 2004.

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 theIncome 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.

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
|--------------- |  | -------------------
|
|
|$91,667 or more |  | $                  

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, 2003, 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 joint and 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, 2003, 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 joint and
survivor pension to the eligible surviving spouse representing 60.0% of the retiree's pension.

As
of December 31, 2003, one of our senior executive officers had a credited service of 2.3644 years under our supplemental retirement benefit plan, while a second senior
executive officer began to accrue service on February 4, 2003 under such plan.

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

|            |  | Years of Credited Service
|----------- |  | -------------------------
|
|
|$   300,000 |  | $                        
|400,000     |  |                          
|500,000     |  |                          
|600,000     |  |                          
|800,000     |  |                          
|1,000,000   |  |                          
|1,200,000   |  |                          
|1,400,000   |  |                          

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 Mssrs. André Bourbonnais, 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

54

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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, 2003, we had 2,304 full-time and part-time employees. Substantially all of our employees are based and work in the Province of
Québec. Approximately 1,825 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 a total of approximately
1,700 employees in the Montréal and Quebec City regions, were renewed in April 2003 and expire on December 31, 2006. We also have two other collective
bargaining agreements that cover the approximately 125 unionized employees in the Chicoutimi and Hull regions. The collective bargaining agreement for our unionized Chicoutimi employees expired
on December 31, 2002, was renewed on October 9, 2003 and expires on December 31, 2007. Our collective bargaining agreement with our unionized Hull employees expired on
August 31, 2003 and was renewed on January 20, 2004. This renewed collective bargaining agreement expires on August 31, 2008.

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:



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 CDP Capital-Communications. Quebecor Inc.'s primary assets are
its interests in Quebecor Media and Quebecor World Inc., one of the world's largest commercial printers. CDP Capital-Communications is a wholly-owned subsidiary of Caisse de
dépôt et placement du Québec, Canada's largest pension fund with over $140 billion in assets under management.

55

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RELATED PARTY TRANSACTIONS

The following describes some transactions in which we and our directors, executive officers and affiliates are involved. 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 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.

Telecommunications Services

We have entered into several contracts with Vidéotron Télécom ltée, or VTL, 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 VTL provides us with inter-city connections for the
transmission of both one-way and two-way video and telephony signals. Under the agreement, VTL 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 VTL 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 VTL provides maintenance services on our fiber
optic strands that are located within VTL's fiber optic cables, and we provide the same services on VTL'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 through our wholly-owned subsidiary, Vidéotron (1998)
ltée. In September 1999, Vidéotron (1998) ltée entered into two agreements with a wholly-owned subsidiary of VTL, Vidéotron
Télécom (1998) ltée, or VTL 1998, relating to the provision of Internet access services to their respective customers. Both agreements had an
initial term of three years with automatic renewal provisions for twelve-month periods thereafter. We have indicated to VTL our intent not to renew these agreements on their current terms.

56

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For
the year ended December 31, 2002, we paid to VTL a total of $22.5 million in access fees, and for the year ended December 31, 2003, we paid to VTL a total of
$12.2 million under these service agreements.

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. 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.

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,
|------------------- |  | -----------------------
|
|
|Revenues            |  | $                      
|Accounts receivable |  |                        
|Purchases           |  |                        
|Accounts payable    |  |                        
|Fixed assets        |  |                        

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 and $5.3 million for the year ended December 31, 2003. Management fees payable to Quebecor Media will amount to
$6.5 million for the year ended December 31, 2004 and will be agreed upon for the years 2005 and 2006.

Indebtedness to Quebecor Media

We have also entered into a subordinated loan agreement with Quebecor Media. See "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."

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, 2002 and 2003 and our consolidated statements of operations, shareholder's equity and cash flows for the
years ended December 31, 2001, 2002 and 2003, including the notes thereto and together with the auditors' report thereon, are presented at Item 17 of 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. In defense, we are arguing, among other
matters, that the rights accorded to Illico Informatique inc. with respect to the "Illico" trademark are limited to case law research with the assistance of computers, that the word Illico is
not proprietary to the plaintiff, that the word Illico can be found in French-language dictionaries, that the word Illico appears in the business name of more than forty businesses operating in the
Province of Québec and that the word Illico is not distinctive of the services offered by the plaintiff. This legal proceeding will be heard in March 2004 in the Superior Court
of Quebec.

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 Holding sold to Regional Cablesystems Inc. by CF Cable in October 1998.

We
believe that the legal actions and arbitration proceedings 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, 2003, our outstanding share capital consists of 11,174,813 common shares and 1 Series F preferred share, all of which are
held by Quebecor Media Inc.

No
dividends were paid during the years ended December 31, 2001 and 2002. In the fourth quarter of 2003, we paid a dividend of $20.0 million to Quebecor Media. We
expect to pay quarterly dividends to Quebecor Media, our sole shareholder, in the future, subject to the terms of our indebtedness and applicable law.

SIGNIFICANT CHANGES

On January 16, 2004, our subsidiary Vidéotron (1998) ltée borrowed $1.1 billion from Quebecor Media. This subordinated
loan bears interest at 10.75% per annum and matures on January 16, 2019. On the same day as the borrowing, Vidéotron (1998) ltée used all the proceeds from this
subordinated loan to purchase

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preferred
shares, Series D, of Quebecor Media. This transaction was effected to improve the tax consolidation in the Quebecor Media group of companies.

Except
as otherwise disclosed in this annual report, there has been no other material adverse change in our financial position since December 31, 2003.

ITEM 9  THE OFFER AND LISTING

OFFER AND LISTING DETAILS

Not applicable.

PLAN OF DISTRIBUTION

Not applicable.

MARKETS

On October 8, 2003, we issued and sold our 67/8% Senior Notes due January 15, 2014 in a private placement 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 a registration rights agreement with the initial
purchasers. Pursuant to this registration rights agreement, we agreed, among other things, to file an exchange offer registration statement with the Securities and Exchange Commission with respect to
a registered offer 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 the registered exchange offer on
February 9, 2004. Consequently, we have US$335.0 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

Our Articles of Amalgamation and the various Articles of Amendment to the Articles of Amalgamation filed by us are incorporated by reference from Amendment
No. 1 to our Registration Statement on Form F-4

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filed
with the Securities and Exchange Commission on January 8, 2004 (Registration No. 333-110697). In addition, the Articles of Amendment to our Articles of Amalgamation,
which were filed on January 16, 2004, are included as Exhibit 1.2 to this annual report. Our Articles of Amalgamation and the various 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 our Articles and our by-laws:



|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.
|-- | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



60

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Common Shares



61

---





Preferred Shares

Series A Preferred Shares







62

---





Series B Preferred Shares



63

---









64

---







Series C Preferred Shares



65

---







66

---





Series D Preferred Shares





67

---









Series E Preferred Shares



68

---









69

---







Series F Preferred Shares



70

---









71

---







Series G Preferred Shares



72

---





73

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74

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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.







75

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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 theInvestment Canada Act, as

76

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amended
(the "Act"), as amended by theNorth American Free Trade Agreement Implementation Act(Canada), and theWorld 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.

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:



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:



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 our exchange offer, which was completed on February 9, 2004, did not constitute a
taxable exchange for U.S. federal income tax purposes. A U.S. Holder will not recognize any gain or loss upon the receipt of a new note pursuant to this exchange offer and a
U.S. Holder will be required to continue to include interest on the new note in gross income in the manner and to the extent as now applies to an old note. A U.S. Holder's holding period
for a new note will include the holding period for the old note exchanged pursuant to this exchange offer, 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 and, with certain exceptions, will be "passive" or "financial services" income, which is treated separately
from other types of income for purposes of computing the foreign tax credit allowable to a U.S. Holder under the federal income tax laws.

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:



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 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.

78

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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:



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
the exchange offer, which was completed on February 9, 2004, or if you invested, as initial purchaser, in the notes and, for purposes of theIncome
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 Customs and 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.

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.

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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 the exchange offer, which was completed on February 9, 2004,
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, 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, 2003 |          
|------------------------ | ----------------------------------- | ----------------- | ---------
|
|
|
|Debt:                    |                                     |                   |          
|                         | Credit facilities(2)                |                   | 2008     
|                         | CF Cable notes(3)                   |                   | 2007     
|                         | Notes(3)                            |                   | 2014     
|                         | QMI subordinated loan               |                   | 2015     
|                         |                                     |                   |          
|                         |                                     |                   |          
|                         |                                     |                   |          
|Interest rate contracts: |                                     |                   |          
|                         | Interest rate swap agreements(4)(5) |                   | 2004-2006
|                         |                                     |                   |          

---

|                         |                                     | December 31, 2002 |          
|------------------------ | ----------------------------------- | ----------------- | ---------
|
|
|
|Debt:                    |                                     |                   |          
|                         | Credit facilities(2)                |                   | 2003-2009
|                         | CF Cable notes(3)                   |                   | 2007     
|                         |                                     |                   |          
|                         |                                     |                   |          
|                         |                                     |                   |          
|Interest rate contracts: |                                     |                   |          
|                         | Interest rate swap agreements(4)(5) |                   | 2003-2006
|                         |                                     |                   |          

---

81

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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, 2003, 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,
|------------------------
|
|2004                    
|2005                    
|2006                    
|2007                    
|2008                    
|Thereafter              

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 entered into interest rate swaps to manage our interest rate exposure on our credit facilities. We are commited 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, 2003, we will pay fixed interest rates ranging from 4.01% to 5.49% on a notional amount of
$315.0 million and will receive a floating interest rate based on the bankers' acceptance rate having a three-month maturity. These swaps expire from 2004 to 2006.

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, 2003, we have concluded cross-currency interest swaps to hedge the foreign
exchange fluctuations relating to our notes 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
interest rate at 7.657% 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.

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, 2003, we had unrealized foreign exchange gains of $23.6 million, as compared to $2.2 million for the same period in 2002 and foreign exchange losses of
$12.1 million for the year ended December 31, 2001.

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.

ITEM 12  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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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.

On
October 9, 2003, we formed an audit committee to, among other things, participate in the monitoring of the quality and integrity of our internal controls. Our chief executive
officer and our chief financial officer have concluded, based on their evaluation, that, other than the creation and integration of our audit committee in October 2003, 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 this annual report on Form 20-F.

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, 2003,
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. The following table presents the aggregate fees billed

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for
professional services and other services rendered by KPMG LLP for each of the years ended December 31, 2002 and 2003.

|                      |  | Year Ended December 31,
|--------------------- |  | -----------------------
|
|
|Audit Fees            |  | $                      
|Audit-Related Fees(1) |  |                        
|Tax Fees(2)           |  |                        
|All Other Fees(3)     |  |                        
|                      |  |                        
|Total                 |  | $                      
|                      |  |                        

---

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, 2002 and 2003 and our consolidated statements of operations, shareholder's equity and cash flows for the
years ended December 31, 2001, 2002 and 2003, including the notes thereto and together with the auditors' report thereon, are included at pages F-1 to F-36 to this annual report.

ITEM 18  FINANCIAL STATEMENTS

Not applicable.

ITEM 19  EXHIBITS

EXHIBITS

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

84

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|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).                                                                                                                                                                                                                                                                        
|1.3**  |  | By-laws of Vidéotron Ltée.                                                                                                                                                                                                                                                                                                                                                        
|1.4**  |  | Articles of Incorporation of Vidéotron TVN inc. (translation).                                                                                                                                                                                                                                                                                                                    
|1.5**  |  | By-laws of Vidéotron TVN inc.                                                                                                                                                                                                                                                                                                                                                     
|1.6**  |  | Articles of Incorporation of Vidéotron (1998) ltée (translation).                                                                                                                                                                                                                                                                                                                 
|1.7**  |  | By-laws of Vidéotron (1998) ltée.                                                                                                                                                                                                                                                                                                                                                 
|1.8**  |  | Articles of Incorporation of Le SuperClub Vidéotron ltée (translation).                                                                                                                                                                                                                                                                                                           
|1.9**  |  | By-laws of Le SuperClub Vidéotron ltée.                                                                                                                                                                                                                                                                                                                                           
|1.10** |  | Articles of Incorporation of Groupe de Divertissement SuperClub inc. (translation).                                                                                                                                                                                                                                                                                               
|1.11** |  | By-laws of Groupe de Divertissement SuperClub inc.                                                                                                                                                                                                                                                                                                                                
|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 by and among Vidéotron Ltée, the subsidiary guarantors signatory thereto and Wells Fargo Bank Minnesota, N.A., as trustee.                                                                                                                                                                                                                  
|2.4    |  | 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).                                                                                                                
|2.5    |  | Form of Indenture dated as of July    , 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).
|2.6*   |  | 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.                                                                                                                                                        
|2.7*   |  | 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.                                                                                                                                                       
|2.8*   |  | 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.                                                                                                                                             
|2.9*   |  | 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.                                                                                                                                               
|2.10   |  | 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).                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                   

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|2.11  |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.12  |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.13  |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.14  |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2.15* |  | 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").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.16* |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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 (the "Guarantors"),
and by Quebecor Media Inc.
|4.2*  |  | 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, 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 (included as Schedule 2 to Exhibit 4.1
above).                                                                                                                                                                                                
|4.3   |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.4   |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.5*  |  | Management Services Agreement effective as of January 1, 2002 between Quebecor Media Inc. and Vidéotron Ltée.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|4.6* |  | Subordinated Loan Agreement dated as of March 24, 2003 (the "Subordinated Loan Agreement") between Quebecor Media Inc. and Vidéotron Ltée.                                                                                                                                                                                                                                                                                       
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.7* |  | First Amending Agreement to the Subordinated Loan Agreement, dated as of October 8, 2003, between Quebecor Media Inc. and Vidéotron Ltée.                                                                                                                                                                                                                                                                                        
|4.8  |  | Lease Agreement dated November 24, 1993 between Le Groupe Vidéotron Ltée and National City 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.                                                                                                                                                                                                                                                                                                                                                                                                                  
|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 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 and Chief Financial Officer of Vidéotron Ltée required by Exchange Act Rule 13a-14(b) or 15d-14(b).                                                                                                                                                                                                                                                                                

87

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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:           

Dated: April 29, 2004

88

---





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                    |  |    
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Annual Consolidated Financial Information as at December 31, 2002 and 2003 and for the Years Ended December 31, 2001, 2002 and 2003 |  |    
|Auditors' Report                                                                                                                    |  | F-2
|Consolidated Statements of Operations for the years ended December 31, 2001, 2002 and 2003                                          |  | F-3
|Consolidated Statements of Shareholder's Equity for the years ended December 31, 2001, 2002 and 2003                                |  | F-4
|Consolidated Balance Sheets as at December 31, 2002 and 2003                                                                        |  | F-5
|Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2002 and 2003                                          |  | F-6
|Notes to Consolidated Financial Statements for the years ended December 31, 2001, 2002 and 2003                                     |  | F-8

F-1

---



AUDITORS' REPORT

TO THE SHAREHOLDER OF VIDÉOTRON LTÉE

We
have audited the consolidated balance sheets of Vidéotron Ltée as at December 31, 2002 and 2003 and the consolidated statements of operations,
shareholder's equity and cash flows for each of the years in the three-year period ended December 31, 2003. 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 Canadian generally accepted auditing standards and United States generally accepted auditing standards. Those standards require that we plan and
perform an 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.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Vidéotron Ltée as at December 31,
2002 and 2003 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2003 in accordance with Canadian
generally accepted accounting principles.

/s/
KPMG LLP
Chartered Accountants
Montréal, Canada
January 28, 2004

F-2

---



VIDÉOTRON LTÉE

Consolidated Statements of Operations

Years
ended December 31, 2001, 2002 and 2003
(in thousands of Canadian dollars)

|                                                                                         |                                                | 2001 |         | 2002    |   | 2003    |        
|---------------------------------------------------------------------------------------- | ---------------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|Operating revenues                                                                       |                                                |      |         |         |   |         |        
|                                                                                         | Cable television                               |      | $       | 607,942 |   | $       | 579,200
|                                                                                         | Internet                                       |      |         | 99,629  |   |         | 135,514
|                                                                                         | Video stores                                   |      |         | 35,155  |   |         | 35,344 
|                                                                                         | Other                                          |      |         | 22,728  |   |         | 30,982 
|                                                                                         |                                                |      |         |         |   |         |        
|                                                                                         |                                                |      | 765,454 |         |   | 781,040 |        
|Operating expenses                                                                       |                                                |      |         |         |   |         |        
|                                                                                         | Direct cost                                    |      |         | 227,322 |   |         | 259,686
|                                                                                         | Operating, general and administrative expenses |      |         | 274,202 |   |         | 285,816
|                                                                                         |                                                |      |         |         |   |         |        
|                                                                                         |                                                |      | 501,524 |         |   | 545,502 |        
|                                                                                         |                                                |      |         |         |   |         |        
|Operating income before the undernoted                                                   |                                                |      | 263,930 |         |   | 235,538 |        
|Depreciation and amortization (note 4)                                                   |                                                |      | 116,692 |         |   | 120,016 |        
|Financial expenses (note 5)                                                              |                                                |      | 101,307 |         |   | 76,188  |        
|Other items (note 6)                                                                     |                                                |      | 95,570  |         |   | 25,000  |        
|                                                                                         |                                                |      |         |         |   |         |        
|Income (loss) before income taxes, non-controlling interest and amortization of goodwill |                                                |      | (49,639 | )       |   | 14,334  |        
|Income taxes (note 7):                                                                   |                                                |      |         |         |   |         |        
|                                                                                         | Current                                        |      |         | 3,172   |   |         | 5,074  
|                                                                                         | Future                                         |      |         | (13,248 | ) |         | (2,411 
|                                                                                         |                                                |      |         |         |   |         |        
|                                                                                         |                                                |      | (10,076 | )       |   | 2,663   |        
|                                                                                         |                                                |      |         |         |   |         |        
|                                                                                         |                                                |      | (39,563 | )       |   | 11,671  |        
|Non-controlling interest in a subsidiary                                                 |                                                |      | 145     |         |   | 188     |        
|                                                                                         |                                                |      |         |         |   |         |        
|Income (loss) before amortization of goodwill                                            |                                                |      | (39,708 | )       |   | 11,483  |        
|Amortization of goodwill (note 1 (b) (i))                                                |                                                |      | 13,331  |         |   |        |        
|                                                                                         |                                                |      |         |         |   |         |        
|Net income (loss)                                                                        |                                                | $    | (53,039 | )       | $ | 11,483  |        
|                                                                                         |                                                |      |         |         |   |         |        

See
accompanying notes to consolidated financial statements.

F-3

---



VIDÉOTRON LTÉE

Consolidated Statements of Shareholder's Equity

Years
ended December 31, 2001, 2002 and 2003
(in thousands of Canadian dollars)

|                                                                                                                  |                                               | Capital stock |         | Contributed surplus |   | Retained earnings (deficit) |        | Total shareholder's equity |         
|----------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | ------------- | ------- | ------------------- | - | --------------------------- | ------ | -------------------------- | --------
|Balance as at December 31, 2000:                                                                                  |                                               |               |         |                     |   |                             |        |                            |         
|                                                                                                                  | As previously reported                        |               | $       | 1                   |   | $                           | 84,357 |                            | $       
|                                                                                                                  | Changes in accounting principles (note 1 (b)) |               |         |                    |   |                             |       |                            |         
|                                                                                                                  |                                               |               |         |                     |   |                             |        |                            |         
|                                                                                                                  | As restated                                   |               |         | 1                   |   |                             | 84,357 |                            |         
|Excess of purchase price paid over the carrying value of a business acquired from the parent company (note 2 (a)) |                                               |               |        |                     |   |                            |        |                            | (300,000
|Excess of the preferred share retractable value over the stated capital (note 2 (a))                              |                                               |               |        |                     |   |                            |        |                            | (273,171
|Net loss for the year                                                                                             |                                               |               |        |                     |   |                            |        |                            | (53,039 
|                                                                                                                  |                                               |               |         |                     |   |                             |        |                            |         
|Balance as at December 31, 2001                                                                                   |                                               |               | 1       |                     |   | 84,357                      |        |                            | (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 as at December 31, 2002                                                                                   |                                               |               | 1       |                     |   | 84,357                      |        |                            | (429,547
|Conversion of 2 Series E preferred shares into 820,000 common shares (note 14)                                    |                                               |               | 31,310  |                     |   |                            |        |                            |        
|Excess of the preferred share retractable value over the stated capital converted into Class A shares (note 14)   |                                               |               |        |                     |   | 301,170                     |        |                            |        
|Excess of purchase price over the carrying value of assets transferred by the parent company                      |                                               |               |        |                     |   |                            |        |                            | (2,000  
|Issuance of shares (note 14)                                                                                      |                                               |               | 141,925 |                     |   |                            |        |                            |        
|Excess of consideration issued to the parent company over the net book value of business acquired (note 14)       |                                               |               |        |                     |   | (26,699                     | )      |                            | (76,437 
|Transfer of tax deductions from a company controlled by the ultimate parent company (note 7)                      |                                               |               |        |                     |   | 3,382                       |        |                            |        
|Net income for the year                                                                                           |                                               |               |        |                     |   |                            |        |                            | 63,311  
|Dividend                                                                                                          |                                               |               |        |                     |   |                            |        |                            | (19,956 
|                                                                                                                  |                                               |               |         |                     |   |                             |        |                            |         
|Balance as at December 31, 2003                                                                                   |                                               | $             | 173,236 |                     | $ | 362,210                     |        | $                          | (464,629
|                                                                                                                  |                                               |               |         |                     |   |                             |        |                            |         

See
accompanying notes to consolidated financial statements.

F-4

---



VIDÉOTRON LTÉE

Consolidated Balance Sheets

As
at December 31
(in thousands of Canadian dollars)

|                                               |                                                        | 2002 |           | 2003     |  
|---------------------------------------------- | ------------------------------------------------------ | ---- | --------- | -------- | -
|
|Assets                                         |                                                        |      |           |          |  
|Current assets:                                |                                                        |      |           |          |  
|                                               | Cash and cash equivalents                              |      | $         | 16,041   |  
|                                               | Marketable securities                                  |      |           |         |  
|                                               | Accounts receivable (note 8)                           |      |           | 71,704   |  
|                                               | Amounts receivable from affiliated companies (note 19) |      |           | 11,062   |  
|                                               | Income taxes receivable                                |      |           | 621      |  
|                                               | Inventories (note 9)                                   |      |           | 19,130   |  
|                                               | Prepaid expenses                                       |      |           | 4,024    |  
|                                               | Future income taxes (note 7)                           |      |           | 12,525   |  
|                                               |                                                        |      |           |          |  
|                                               |                                                        |      | 135,107   |          |  
|Fixed assets (note 10)                         |                                                        |      | 959,583   |          |  
|Goodwill                                       |                                                        |      | 432,315   |          |  
|Deferred charges (note 11)                     |                                                        |      | 28,558    |          |  
|Future income taxes (note 7)                   |                                                        |      | 14,834    |          |  
|Investments                                    |                                                        |      | 66        |          |  
|                                               |                                                        |      |           |          |  
|                                               |                                                        | $    | 1,570,463 |          | $
|                                               |                                                        |      |           |          |  
|Liabilities and Shareholder's Equity (Deficit) |                                                        |      |           |          |  
|Current liabilities:                           |                                                        |      |           |          |  
|                                               | Issued and outstanding cheques                         |      | $         | 1,945    |  
|                                               | Accounts payable and accrued liabilities (note 12)     |      |           | 197,484  |  
|                                               | Amounts payable to affiliated companies (note 19)      |      |           | 65,429   |  
|                                               | Deferred revenue                                       |      |           | 79,931   |  
|                                               | Income taxes payable                                   |      |           | 937      |  
|                                               | Current portion of long-term debt (note 13)            |      |           | 86,145   |  
|                                               |                                                        |      |           |          |  
|                                               |                                                        |      | 431,871   |          |  
|Forward exchange contract                      |                                                        |      |          |          |  
|Future tax liabilities (note 7)                |                                                        |      | 117,179   |          |  
|Retractable preferred shares (note 14)         |                                                        |      | 332,480   |          |  
|Long-term debt (note 13)                       |                                                        |      | 1,033,480 |          |  
|Non-controlling interest in subsidiaries       |                                                        |      | 642       |          |  
|                                               |                                                        |      |           |          |  
|                                               |                                                        |      | 1,915,652 |          |  
|Shareholder's equity:                          |                                                        |      |           |          |  
|                                               | Common shares (note 14)                                |      |           | 1        |  
|                                               | Contributed surplus                                    |      |           | 84,357   |  
|                                               | Deficit                                                |      |           | (429,547 | )
|                                               |                                                        |      |           |          |  
|                                               |                                                        |      | (345,189  | )        |  
|                                               |                                                        |      |           |          |  
|                                               |                                                        | $    | 1,570,463 |          | $
|                                               |                                                        |      |           |          |  
|Commitments (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, 2001, 2002 and 2003
(in thousands of Canadian dollars)

|                                      |                                                      | 2001                                                                                                         |          | 2002    |        | 2003    |        
|------------------------------------- | ---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | -------- | ------- | ------ | ------- | -------
|
|Cash flows from operating activities: |                                                      |                                                                                                              |          |         |        |         |        
|                                      | Net income (loss)$                                   |                                                                                                              | (53,039  | )       | $      | 11,483  |        
|                                      | Adjustments for the following items:                 |                                                                                                              |          |         |        |         |        
|                                      |                                                      | Depreciation and amortization (notes 1 (b) (i), 4 and 5)                                                     |          | 139,427 |        |         | 129,985
|                                      |                                                      | Future income taxes                                                                                          |          | (13,248 | )      |         | (2,411 
|                                      |                                                      | Loss on disposal of fixed assets                                                                             |          | 8,686   |        |         | 7,566  
|                                      |                                                      | Non-controlling interest in a subsidiary                                                                     |          | 145     |        |         | 188    
|                                      |                                                      | Net premium, write-off of financing costs and other charges upon early redemption of long-term debt (note 5) |          | 2,476   |        |         |       
|                                      |                                                      | Write-off of fixed assets and deferred charges (note 6)                                                      |          | 91,706  |        |         |       
|                                      |                                                      | (Gain) loss on foreign currency denominated debt (note 5)                                                    |          | 12,145  |        |         | (2,211 
|                                      |                                                      | Other                                                                                                        |          | 1,756   |        |         | (768   
|                                      |                                                      |                                                                                                              |          |         |        |         |        
|                                      | Cash flows from operations                           |                                                                                                              | 190,054  |         |        | 143,832 |        
|                                      | Net change in non-cash operating items:              |                                                                                                              |          |         |        |         |        
|                                      |                                                      | Accounts receivable                                                                                          |          | 7,281   |        |         | 10,201 
|                                      |                                                      | Current income taxes                                                                                         |          | 4,232   |        |         | 126    
|                                      |                                                      | Amounts receivable and payable from/to affiliated companies                                                  |          | (9,932  | )      |         | (9,007 
|                                      |                                                      | Inventories                                                                                                  |          | (16,621 | )      |         | 10,604 
|                                      |                                                      | Prepaid expenses                                                                                             |          | 611     |        |         | 1,857  
|                                      |                                                      | Accounts payable and accrued liabilities                                                                     |          | 12,110  |        |         | 70,184 
|                                      |                                                      | Promissory notes payable to a company under common control                                                   |          | 22,543  |        |         | (22,543
|                                      |                                                      | Deferred revenue                                                                                             |          | (2,273  | )      |         | (9,320 
|                                      |                                                      |                                                                                                              |          |         |        |         |        
|                                      |                                                      | 17,951                                                                                                       |          |         | 52,102 |         |        
|                                      |                                                      |                                                                                                              |          |         |        |         |        
|                                      | Cash flows from operating activities                 |                                                                                                              | 208,005  |         |        | 195,934 |        
|Cash flows from investing activities: |                                                      |                                                                                                              |          |         |        |         |        
|                                      | Acquisition of fixed assets                          |                                                                                                              | (133,319 | )       |        | (93,041 | )      
|                                      | Disbursements for deferred charges                   |                                                                                                              | (6,988   | )       |        | (1,050  | )      
|                                      | Proceeds on disposal of fixed assets and investments |                                                                                                              | 5,602    |         |        | 4,103   |        
|                                      | Acquisition of short-term investments                |                                                                                                              |         |         |        |        |        
|                                      | Acquisition of Internet subscribers (note 2 (c))     |                                                                                                              |         |         |        |        |        
|                                      | Acquisition of non-controlling interest (note 2 (b)) |                                                                                                              | (600     | )       |        | (1,890  | )      
|                                      |                                                      |                                                                                                              |          |         |        |         |        
|                                      | Cash flows used in investing activities              |                                                                                                              | (135,305 | )       |        | (91,878 | )      

F-6

---



VIDÉOTRON LTÉE

Consolidated Statements of Cash Flows, Continued

Years
ended December 31, 2001, 2002 and 2003
(in thousands of Canadian dollars)

|                                               |                                                                   | 2001 |        | 2002     |   | 2003    |         
|---------------------------------------------- | ----------------------------------------------------------------- | ---- | ------ | -------- | - | ------- | --------
|
|Cash flows from financing activities:          |                                                                   |      |        |          |   |         |         
|                                               | Repayment of long-term debt                                       |      | $      | (137,623 | ) | $       | (159,277
|                                               | Issuance in long-term debt                                        |      |        | 447,000  |   |         |        
|                                               | Repayment of a promissory note to the parent company (note 2 (a)) |      |        | (300,000 | ) |         |        
|                                               | Financing cost on long-term debt                                  |      |        | (4,037   | ) |         |        
|                                               | Recouponing fees and termination of swaps                         |      |        |         |   |         |        
|                                               | Dividend to parent company                                        |      |        |         |   |         |        
|                                               | Other                                                             |      |        | (13      | ) |         | (95     
|                                               |                                                                   |      |        |          |   |         |         
|                                               | Cash flows from (used in) financing activities                    |      |        | 5,327    |   |         | (159,372
|                                               |                                                                   |      |        |          |   |         |         
|Net change in cash and cash equivalents        |                                                                   |      | 78,027 |          |   | (55,316 | )       
|Cash and cash equivalents at beginning of year |                                                                   |      | (8,615 | )        |   | 69,412  |         
|                                               |                                                                   |      |        |          |   |         |         
|Cash and cash equivalents at end of year       |                                                                   | $    | 69,412 |          | $ | 14,096  |         
|                                               |                                                                   |      |        |          |   |         |         
|Cash and cash equivalents are comprised of:    |                                                                   |      |        |          |   |         |         
|                                               | Cash and cash equivalents                                         |      | $      | 80,935   |   | $       | 16,041  
|                                               | Issued and outstanding cheques                                    |      |        | (11,523  | ) |         | (1,945  
|                                               |                                                                   |      |        |          |   |         |         
|                                               |                                                                   | $    | 69,412 |          | $ | 14,096  |         
|                                               |                                                                   |      |        |          |   |         |         

See
accompanying notes to consolidated financial statements.

F-7

---



VIDÉOTRON LTÉE

Notes
to Consolidated Financial Statements

Years
ended December 31, 2001, 2002 and 2003

1.     SIGNIFICANT ACCOUNTING POLICIES:





2001

2002

2003(in thousands of Canadian dollars)Net income (loss), as reported

$
(53,039
)
$
11,483

$
63,311Goodwill amortization


13,331





Adjusted net income (loss)

$
(39,708
)
$
11,483

$
63,311




F-8

---











F-9

---







2001

2002Balance at beginning of year:As previously reported

$
230,852

$
(394,532
)Changes in accounting principles


(17,673
)

(18,499
)As restated


213,179


(413,031
)Excess of purchase price paid over the carrying value of business acquired from the parent company (note 2 (a))


(300,000
)

Excess of the preferred share retractable value over the stated capital (notes 2 (a) and 14)


(273,171
)

(27,999
)Net income (loss) for the year


(53,039
)

11,483Balance at end of year

$
(413,031
)
$
(429,547
)








F-10

---





Asset

Basis

Period/rateReceiving and distribution networks

Straight-line

3 years to 20 yearsFurniture and equipment

Declining balance

20% to 33.3%and straight-line

3 years to 7 yearsTerminals and operating system

Straight-line

5 years and 10 yearsBuildings

Declining balance

5%Video rental inventory

Straight-line

3 yearsCoding and transmission material

Declining balance

20%










F-11

---













2.     BUSINESS COMBINATIONS AND REORGANIZATION:



F-12

---







F-13

---









3.     EMPLOYEE FUTURE BENEFITS:



2002

2003Pension
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

$
40,095

$
2,334

$
42,429

$
36,542

$
3,635

$
40,177Curtailment loss (gain)


115





115





(1,265
)

(1,265
)Service costs


2,067


164


2,231


1,999


175


2,174Plan participants' contribution


2,119





2,119


2,373





2,373Interest costs


2,559


231


2,790


2,554


256


2,810Change in assumptions





953


953


3,705


292


3,997Actuarial loss (gain)


(1,620
)




(1,620
)

1,914





1,914Benefits and settlements paid


(8,793
)

(47
)

(8,840
)

(5,075
)

(47
)

(5,122
)Benefit obligations, end of year

$
36,542

$
3,635

$
40,177

$
44,012

$
3,046

$
47,058


F-14

---



2002

2003Pension
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

$
45,041

$


$
45,041

$
43,604

$


$
43,604Plan participants' contribution


2,119





2,119


2,373





2,373Actual return on plan assets


2,181





2,181


3,325





3,325Employer contributions


1,935


47


1,982


2,149


47


2,196Actuarial gain


1,121





1,121


4,798





4,798Benefits and settlements paid


(8,793
)

(47
)

(8,840
)

(5,075
)

(47
)

(5,122
)Fair value of plan assets, end of year

$
43,604

$


$
43,604

$
51,174

$


$
51,174Reconciliation of funded status:Excess of fair value of plan assets over benefit obligations, end of year

$
7,062

$
(3,635
)
$
3,427

$
7,162

$
(3,046
)
$
4,116Unrecognized actuarial (gain) loss


(3,284
)

519


(2,765
)

(2,422
)

(466
)

(2,888
)Net amount recognized in balance sheet

$
3,778

$
(3,116
)
$
662

$
4,740

$
(3,512
)
$
1,228




2001Pension
benefits

Post-retirement
benefits

Total(in thousands of Canadian dollars)Service costs

$
2,886

$
151

$
3,037Interest costs


2,900


218


3,118Expected return on plan assets


(3,373
)




(3,373
)Curtailment loss


578





578Amortization of actuarial gain





(3
)

(3
)2,991


366


3,357Defined contribution pension plan:Employer's contribution during the period


5,152





5,1528,143


366


8,509Portion related to affiliated companies


2,077


42


2,119Net benefit costs

$
6,066

$
324

$
6,390


2002Pension
benefits

Post-retirement
benefits

Total(in thousands of Canadian dollars)Service costs

$
2,067

$
164

$
2,231Interest costs


2,559


231


2,790Expected return on plan assets


(3,417
)




(3,417
)Curtailment loss


37





37Amortization of actuarial gain





14


141,246


409


1,655Defined contribution pension plan:Employer's contribution during the period


2,542





2,5423,788


409


4,197Portion related to affiliated companies


1,139


31


1,170Net benefit costs

$
2,649

$
378

$
3,027


F-15

---



2003Pension
benefits

Post-retirement
benefits

Total(in thousands of Canadian dollars)Service costs

$
1,999

$
175

$
2,174Interest costs


2,554


256


2,810Expected return on plan assets


(3,325
)




(3,325
)Curtailment loss








Amortization of actuarial gain


(109
)

11


(98
)1,119


442


1,561Defined contribution pension plan:Employer's contribution during the period


2,954





2,9544,073


442


4,515Portion related to affiliated companies


(1,048
)




(1,048
)Net benefit costs

$
3,025

$
442

$
3,467




2002

2003Pension
benefits

Post-retirement
benefits

Total

Pension
benefits

Post-retirement
benefits

Total(in thousands of Canadian dollars)Employee future benefit costs

$
4,562

$


$
4,562

$
5,523

$


$
5,523Accrued benefit liability


(784
)

(3,116
)

(3,900
)

(783
)

(3,512
)

(4,295
)Net amount recognized

$
3,778

$
(3,116
)
$
662

$
4,740

$
(3,512
)
$
1,228




2002

2003Discount rate

6.75%

6.25%Expected return on plan assets

7.75

7.75Rate of compensation increase

3.25

3.25


4.     DEPRECIATION AND AMORTIZATION:

2001

2002

2003(in thousands of Canadian dollars)Fixed assets

$
111,802

$
114,305

$
121,928Deferred charges


4,890


5,711


1,030$
116,692

$
120,016

$
122,958




F-16

---



5.     FINANCIAL EXPENSES:

2001

2002

2003(in thousands of Canadian dollars)Third parties:Interest on long-term debt

$
82,939

$
74,522

$
63,588Write-off and amortization of deferred financing costs


2,528


4,607


4,128Amortization of debt premium and discount


(2,083
)

(973
)

(1,066
)Net premium, write-off of financing costs and termination costs of swap agreement


2,476





17,094(Gain) loss on foreign currency long-term debt


12,145


(2,211
)

(23,623
)(Gain) loss on foreign currency short-term monetary items


2,057


348


(1,848
)Bank fees


1,510


1,504


1,339Other interests and penalty charges


1,080


390


171102,652


78,187


59,783Interest capitalized to fixed assets


(709
)




Interest income


(1,469
)

(2,289
)

(676
)100,474


75,898


59,107Parent company:Interest (income) expense


79


(178
)

5,495Companies under common control:Interest expense


754


468


$
101,307

$
76,188

$
64,602




6.     OTHER ITEMS:

2001

2002

2003(in thousands of Canadian dollars)Write-off of fixed assets and deferred charges(1)

$
91,706

$


$
Restructuring costs(2)


3,836


25,000


(2,500
)Other


28





$
95,570

$
25,000

$
(2,500
)




F-17

---





7.     INCOME TAXES:



2001

2002

2003(in thousands of Canadian dollars)Income taxes based on the combined Federal and Provincial (Quebec) basic income tax rate of 37.16% in 2001; 35.12% in 2002 and 33.12% in 2003

$
(18,446
)

5,034


29,871Change due to the following items:Federal large corporations tax


2,737


2,315


2,405Non-deductible charges and/or loss deductible at a lower rate or for which the tax benefit was not recorded


6,125


204


(4,432
)Reduction of enacted tax rate


286


(1,422
)

(1,097
)Other


(778
)

(3,468
)

83Income taxes based on the effective income tax rate

$
(10,076
)
$
2,663

$
26,830




2002

2003(in thousands of Canadian dollars)Future income tax assets:Operating loss carryforwards

$
54,648

$
56,565Restructuring provisions


8,250


Other provisions


4,275


10,762Differences between book and tax bases of fixed assets and other assets


4,578


11,27871,751


78,605Future income tax liabilities:Differences between book and tax bases of fixed assets


(161,571
)

(176,726
)Differences between book and tax bases of other assets





(3,943
)(161,571
)

(180,669
)Net future income tax liability

$
(89,820
)
$
(102,064
)Presented as follows:Future income tax assets:Short-term

$
12,525

$
10,762Long-term


14,834


5,37627,359


16,138Future income tax long-term liability


(117,179
)

(118,202
)Net future income tax liability

$
(89,820
)
$
(102,064
)




F-18

---





8.     ACCOUNTS RECEIVABLE:

|                                |  | 2002 |         | 2003 |  
|------------------------------- |  | ---- | ------- | ---- | -
|
|Trade                           |  | $    | 82,919  |      | $
|Allowance for doubtful accounts |  |      | (11,215 | )    |  
|                                |  |      |         |      |  
|                                |  | $    | 71,704  |      | $
|                                |  |      |         |      |  



9.     INVENTORIES:

|                               |  | 2002 |        | 2003
|------------------------------ |  | ---- | ------ | ----
|
|Subscribers' equipment         |  | $    | 9,263  |     
|Video store materials          |  |      | 2,571  |     
|Other supplies and spare parts |  |      | 7,296  |     
|                               |  |      |        |     
|                               |  | $    | 19,130 |     
|                               |  |      |        |     

10.   FIXED ASSETS:

|                                    |  | 2002
|----------------------------------- |  | ----
|
|
|Receiving and distribution networks |  | $   
|Furniture and equipment             |  |     
|Terminals and operating system      |  |     
|Buildings                           |  |     
|Video rental inventory              |  |     
|Coding and transmission material    |  |     
|Land                                |  |     
|                                    |  |     
|                                    |  | $   
|                                    |  |     

|                                    |  | 2003
|----------------------------------- |  | ----
|
|
|Receiving and distribution networks |  | $   
|Furniture and equipment             |  |     
|Terminals and operating system      |  |     
|Buildings                           |  |     
|Video rental inventory              |  |     
|Coding and transmission material    |  |     
|Land                                |  |     
|                                    |  |     
|                                    |  | $   
|                                    |  |     

11.   DEFERRED CHARGES:

|                                       |  | 2002 |        | 2003
|-------------------------------------- |  | ---- | ------ | ----
|
|Long-term financing fees               |  | $    | 13,179 |     
|Employee future benefit costs (note 3) |  |      | 4,562  |     
|Forward exchange contract              |  |      | 8,948  |     
|Development and pre-operating costs    |  |      | 1,367  |     
|Leasehold inducement                   |  |      | 502    |     
|                                       |  |      |        |     
|                                       |  | $    | 28,558 |     
|                                       |  |      |        |     

F-19

---



12.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

|                                     |  | 2002 |         | 2003
|------------------------------------ |  | ---- | ------- | ----
|
|Trade accounts payable and accruals  |  | $    | 49,988  |     
|Subscribers' equipment suppliers     |  |      | 6,037   |     
|Royalties and service providers dues |  |      | 75,112  |     
|Restructuring accrual(1)             |  |      | 25,000  |     
|Employees' salaries and dues         |  |      | 17,984  |     
|Pension plan accrued liability       |  |      | 3,900   |     
|Provincial and federal sales tax     |  |      | 9,769   |     
|Interest due                         |  |      | 9,694   |     
|                                     |  |      |         |     
|                                     |  | $    | 197,484 |     
|                                     |  |      |         |     

|                                |                                     | Restructuring accrual |       
|------------------------------- | ----------------------------------- | --------------------- | ------
|
|Balance as at December 31, 2001 |                                     | $                     | 1,236 
|                                | Additional reserve (note 6)         |                       |       
|                                | Utilized in 2002:                   |                       |       
|                                |                                     | Payments              |       
|                                |                                     |                       |       
|Balance as at December 31, 2002 |                                     |                       | 25,000
|                                | Utilized in 2003:                   |                       |       
|                                |                                     | Payments              |       
|                                | Reversal of over provision (note 6) |                       |       
|                                |                                     |                       |       
|Balance as at December 31, 2003 |                                     | $                     |      
|                                |                                     |                       |       

13.   LONG-TERM DEBT:

|                                         |             | 2002 |           | 2003   
|---------------------------------------- | ----------- | ---- | --------- | -------
|
|Bank facility (a):                       |             |      |           |        
|                                         | Term-loan A |      | $         | 630,802
|                                         | Term-loan B |      |           | 365,044
|                                         | Term-loan C |      |           |       
|Senior Secured First Priority Notes (b)  |             |      | 123,755   |        
|Senior Notes (c)                         |             |      |          |        
|Subordinated loan  Quebecor Media Inc.  |             |      |          |        
|Other                                    |             |      | 24        |        
|                                         |             |      |           |        
|                                         |             |      | 1,119,625 |        
|Short-term portion of the long-term debt |             |      | 86,145    |        
|                                         |             |      |           |        
|Long-term portion of the long-term debt  |             | $    | 1,033,480 |        
|                                         |             |      |           |        







F-20

---









|                    |  | (in thousands of
Canadian dollars)
|------------------- |  | ----------------------------------
|2004                |  | $                                 
|2005                |  |                                   
|2006                |  |                                   
|2007                |  |                                   
|2008                |  |                                   
|2009 and thereafter |  |                                   

F-21

---



14.   SHARE CAPITAL:



2002

2003Common Shares

Retractable
preferred
shares (b)

Common Shares

Retractable
preferred
shares (b)(in thousands of Canadian dollars)Issued and paid:11,174,813 common shares (10,000,000 in 2002)$

$
1

$


$
173,236

$
Nil (2 Preferred shares, Series E in 2002)  book value of $31,310 (1 in 2002  book value of $26,829)





332,480





1 Preferred share, Series F











2,000$
1

$
332,480

$
173,236

$
2,000




F-22

---





15.   STOCK OPTION PLAN:



F-23

---





2003

2002Options

Weighted
average
exercise price

Options

Weighted
average
exercise priceBalance at beginning of year

268,532

$
17.69



$
Granted

339,271


18.69

276,880


17.64Transferred and cancelled

(62,164
)

18.18

(8,348
)

16.17Balance at end of year

545,639

$
18.49

268,532

$
17.69Vested options at end of year

7,730

$
16.17



$





Outstanding options

Vested optionsExercise price

Number

Weighted average
years to maturity

Number

Weighted average
exercise price$15.19

50,032

9.41 years



$
16.17

183,978

8.27 years

7,730


16.1719.46

240,749

9.60 years




21.42

8,869

9.93 years




21.77

62,011

8.23 years




$15.19 to 21.77

545,639

9.01 years

7,730

$
16.17




16.   FINANCIAL INSTRUMENTS:



2002

2003Book value

Fair value

Book value

Fair value(in thousands of Canadian dollars)Liabilities:Financial liabilities:Long-term debt

$
1,119,625

$
1,121,697

$
1,036,676

$
1,057,479Derivative financial instruments:Interest rate swaps





(13,438
)




(9,460
)Assets (liabilities):Cross currency interest rate swaps


8,948


8,336


(15,272
)

(24,588
)




F-24

---









17.   COMMITMENTS:



(in thousands of Canadian dollars)2004

$
6,5312005


5,3192006


3,8942007


2,8212008


1,9082009 and thereafter


2,636


18.   SUPPLEMENTAL CASH FLOW INFORMATION:

|                                             |                                                                                                                                    | 2001 |   | 2002   |   | 2003
|-------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ---- | - | ------ | - | ----
|
|Non-cash financing and investing activities: |                                                                                                                                    |      |   |        |   |     
|                                             | (i) Purchase of fixed assets financed by accounts payable and accrued liabilities                                                  |      | $ | 24,279 |   | $   
|                                             | (ii) Issuance of share capital in consideration of the acquisition of a subsidiary                                                 |      |   | 26,829 |   |     
|                                             | (iii) Issuance of share capital in consideration of the future tax asset related to the trademark acquired from the parent company |      |   |       |   |     
|                                             | (iv) Spending in deferred charges financed by accounts payable and accrued liabilities and by affiliated companies                 |      |   | (2,497 | ) |     

F-25

---



19.   RELATED PARTY TRANSACTIONS:



|                                |                                                 | 2001 |   | 2002   |   | 2003 |       
|------------------------------- | ----------------------------------------------- | ---- | - | ------ | - | ---- | ------
|
|Parent company:                 |                                                 |      |   |        |   |      |       
|                                | Operating and administrative expenses           |      | $ | 21,918 |   | $    | 16,060
|                                | Operating and administrative expenses recovered |      |   |       |   |      | (456  
|                                | Acquisition of fixed and intangible assets      |      |   | 5,552  |   |      | 3,895 
|                                | Proceeds on disposal of fixed assets            |      |   |       |   |      | (586  
|                                | Reorganization costs                            |      |   | 742    |   |      |      
|Companies under common control: |                                                 |      |   |        |   |      |       
|                                | Operating revenue                               |      |   | 1,755  |   |      | 1,693 
|                                | Direct costs                                    |      |   | 25,208 |   |      | 26,939
|                                | Operating and administrative expenses           |      |   | 21,107 |   |      | 35,877
|                                | Acquisition of fixed assets                     |      |   | 160    |   |      |      
|                                | Proceeds on disposal of fixed assets            |      |   | (75    | ) |      |      



20.   CONTINGENCIES:



21.   SUBSEQUENT EVENT:



F-26

---



22.   SIGNIFICANT DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES:



|                                                          |                                                                                   | 2001 |          | 2002    |   | 2003       |           
|--------------------------------------------------------- | --------------------------------------------------------------------------------- | ---- | -------- | ------- | - | ---------- | ----------
|
|
|Net income (loss) for the year based on Canadian GAAP     |                                                                                   | $    | (53,039  | )       | $ | 11,483     |           
|Adjustments:                                              |                                                                                   |      |          |         |   |            |           
|                                                          | Push-down basis of accounting (i)                                                 |      |          | (63,626 | ) |            | 2,838     
|                                                          | Goodwill impairment (i) and (ii)                                                  |      |          |        |   |            | (2,004,000
|                                                          | Development and pre-operating costs (iii)                                         |      |          | (2,931  | ) |            | 2,744     
|                                                          | Accounting for derivative instruments and hedging activities (iv)                 |      |          | (17,454 | ) |            | 3,338     
|                                                          | Interest on debt contracted by the parent company for financing of its subsidiary |      |          | (14,319 | ) |            |          
|                                                          | Income taxes (v)                                                                  |      |          | 17,209  |   |            | (856      
|                                                          |                                                                                   |      |          |         |   |            |           
|Net income (loss) for the year based on US GAAP           |                                                                                   |      | (134,160 | )       |   | (1,984,453 | )         
|Other comprehensive loss (vi):                            |                                                                                   |      |          |         |   |            |           
|                                                          | Pension and postretirement benefits (vii)                                         |      |          | (314    | ) |            |          
|                                                          | Accounting for derivative instruments and hedging activities (iv)                 |      |          |        |   |            |          
|                                                          |                                                                                   |      |          |         |   |            |           
|Comprehensive income (loss) based on US GAAP              |                                                                                   | $    | (134,474 | )       | $ | (1,984,453 | )         
|                                                          |                                                                                   |      |          |         |   |            |           
|Accumulated other comprehensive loss at beginning of year |                                                                                   | $    |         |         | $ | (314       | )         
|Changes in the year                                       |                                                                                   |      | (314     | )       |   |           |           
|                                                          |                                                                                   |      |          |         |   |            |           
|Accumulated other comprehensive loss at end of year       |                                                                                   | $    | (314     | )       | $ | (314       | )         
|                                                          |                                                                                   |      |          |         |   |            |           



|                               |  | 2001 |          | 2002 |   | 2003      
|------------------------------ |  | ---- | -------- | ---- | - | ----------
|Net income (loss), as reported |  | $    | (134,160 | )    | $ | (1,984,453
|Goodwill amortization          |  |      | 119,142  |      |   |          
|                               |  |      |          |      |   |           
|Adjusted net income (loss)     |  | $    | (15,018  | )    | $ | (1,984,453
|                               |  |      |          |      |   |           



|                                                      |                                                                   | 2002 |           | 2003       |  
|----------------------------------------------------- | ----------------------------------------------------------------- | ---- | --------- | ---------- | -
|
|
|Shareholder's equity (deficit) based on Canadian GAAP |                                                                   | $    | (345,189  | )          | $
|Cumulative adjustments:                               |                                                                   |      |           |            |  
|                                                      | Push-down basis of accounting (i)                                 |      |           | 4,329,075  |  
|                                                      | Goodwill impairment (ii)                                          |      |           | (2,004,000 | )
|                                                      | Development and pre-operating costs (iii)                         |      |           | (2,931     | )
|                                                      | Accounting for derivative instruments and hedging activities (iv) |      |           | (14,116    | )
|                                                      | Income taxes (v)                                                  |      |           | 913        |  
|                                                      | Pension and postretirement benefits (vii)                         |      |           | (314       | )
|                                                      |                                                                   |      |           |            |  
|Shareholder's equity based on US GAAP                 |                                                                   | $    | 1,963,438 |            | $
|                                                      |                                                                   |      |           |            |  

F-27

---













F-28

---











F-29

---





|                                                                   |  | Vidéotron
Ltée |          | Subsidiary guarantors |   | Subsidiary
non-guarantors |   | Adjustments and eliminations |         | Consolidated |  
|------------------------------------------------------------------ |  | -------------- | -------- | --------------------- | - | ------------------------- | - | ---------------------------- | ------- | ------------ | -
|
|Revenues                                                           |  | $              | 443,171  |                       | $ | 178,445                   |   | $                            | 172,637 |              | $
|Direct cost                                                        |  |                | 125,679  |                       |   | 55,941                    |   |                              | 47,111  |              |  
|Operating and administrative expenses                              |  |                | 179,075  |                       |   | 69,325                    |   |                              | 60,974  |              |  
|Depreciation and amortization                                      |  |                | 169,265  |                       |   | 54,109                    |   |                              | 37,245  |              |  
|Financial expenses                                                 |  |                | 79,799   |                       |   | 15,977                    |   |                              | 32,728  |              |  
|Other items                                                        |  |                | (5,826   | )                     |   | 7,219                     |   |                              | 2,414   |              |  
|                                                                   |  |                |          |                       |   |                           |   |                              |         |              |  
|Loss before the undernoted                                         |  |                | (104,821 | )                     |   | (24,126                   | ) |                              | (7,835  | )            |  
|Income taxes                                                       |  |                | (7,502   | )                     |   | (524                      | ) |                              | 5,199   |              |  
|                                                                   |  |                |          |                       |   |                           |   |                              |         |              |  
|                                                                   |  |                | (97,319  | )                     |   | (23,602                   | ) |                              | (13,034 | )            |  
|Share in the results of a company subject to significant influence |  |                | (556     | )                     |   |                          |   |                              | (212    | )            |  
|Non-controlling interest                                           |  |                |         |                       |   |                          |   |                              | 13      |              |  
|                                                                   |  |                |          |                       |   |                           |   |                              |         |              |  
|Net loss                                                           |  | $              | (96,763  | )                     | $ | (23,602                   | ) | $                            | (12,835 | )            | $
|                                                                   |  |                |          |                       |   |                           |   |                              |         |              |  

F-30

---





|                                                     |                                                                           | Vidéotron
Ltée                                 |         | Subsidiary guarantors |         | Subsidiary
non-guarantors |         | Adjustments and eliminations |         | Consolidated |       
|---------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------- | ------- | --------------------- | ------- | ------------------------- | ------- | ---------------------------- | ------- | ------------ | ------
|
|Cash flows from operating activities:                |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     | Net loss                                                                  |                                                | $       | (96,763               | )       | $                         | (23,602 | )                            | $       | (12,835      | )     
|                                                     | Items not involving cash:                                                 |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     |                                                                           | Depreciation and amortization                  |         |                       | 171,517 |                           |         | 60,986                       |         |              | 37,520
|                                                     |                                                                           | Future income taxes                            |         |                       | (8,918  | )                         |         | (1,129                       | )       |              | 3,764 
|                                                     |                                                                           | Write-off of fixed assets and deferred charges |         |                       | 32,464  |                           |         | (34,043                      | )       |              | (90   
|                                                     |                                                                           | Loss on foreign currency denominated debt      |         |                       | 5,343   |                           |         |                             |         |              | 6,802 
|                                                     |                                                                           | Other                                          |         |                       | (12,292 | )                         |         | 34,816                       |         |              | 3,310 
|                                                     | Shares in the results of a company subject to significant influence       |                                                |         | (556                  | )       |                           |        |                              |         | (212         | )     
|                                                     | Changes in non-cash operating working capital                             |                                                |         | 70,760                |         |                           | (32,884 | )                            |         | 494          |       
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     |                                                                           |                                                | 161,555 |                       |         | 4,144                     |         |                              | 38,753  |              |       
|Cash flows from investing activities:                |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     | Acquisition of fixed assets                                               |                                                |         | (63,329               | )       |                           | (31,786 | )                            |         | (20,462      | )     
|                                                     | Net change in deferred charges                                            |                                                |         | (877                  | )       |                           | (2,531  | )                            |         | 188          |       
|                                                     | Amounts receivable from parent company and from affiliated companies      |                                                |         | 498                   |         |                           | (12,898 | )                            |         |             |       
|                                                     | Other                                                                     |                                                |         | (25,852               | )       |                           | 26,786  |                              |         | (489         | )     
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     |                                                                           |                                                | (89,560 | )                     |         | (20,429                   | )       |                              | (20,763 | )            |       
|Cash flows from financing activities:                |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     | Increase in long-term debt                                                |                                                |         | 447,000               |         |                           |        |                              |         |             |       
|                                                     | Repayment of long-term debt                                               |                                                |         | (110,337              | )       |                           |        |                              |         | (26,370      | )     
|                                                     | Repayment of promissory note to the parent company                        |                                                |         | (300,000              | )       |                           |        |                              |         |             |       
|                                                     | Issuance of shares by a subsidiary                                        |                                                |         | 202,750               |         |                           | 15,192  |                              |         | (217,942     | )     
|                                                     | Advances on disposal of a preferred share issued by an affiliated company |                                                |         | (230,000              | )       |                           |        |                              |         | 230,000      |       
|                                                     | Other                                                                     |                                                |         | (4,690                | )       |                           |        |                              |         | (1,276       | )     
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|                                                     |                                                                           |                                                | 4,723   |                       |         | 15,192                    |         |                              | (15,588 | )            |       
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|Net increase (decrease) in cash and cash equivalents |                                                                           |                                                | 76,718  |                       |         | (1,093                    | )       |                              | 2,402   |              |       
|Cash and cash equivalents, beginning of year         |                                                                           |                                                | (5,679  | )                     |         | (1,232                    | )       |                              | (1,704  | )            |       
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       
|Cash and cash equivalents, end of year               |                                                                           | $                                              | 71,039  |                       | $       | (2,325                    | )       | $                            | 698     |              | $     
|                                                     |                                                                           |                                                |         |                       |         |                           |         |                              |         |              |       

F-31

---







|                                         |                                                   | Vidéotron Ltée |           | Subsidiary guarantors |   | Subsidiary non-
guarantors |         | Adjustments and eliminations |         | Consolidated |  
|---------------------------------------- | ------------------------------------------------- | -------------- | --------- | --------------------- | - | -------------------------- | ------- | ---------------------------- | ------- | ------------ | -
|
|Assets                                   |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Current assets:                          |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Cash and cash equivalents                         |                | $         | 14,870                |   | $                          | 47      |                              | $       | 1,124        |  
|                                         | Accounts receivable                               |                |           | 65,289                |   |                            | 6,254   |                              |         | 782          |  
|                                         | Amounts receivable from affiliated companies      |                |           | 42,632                |   |                            | 56,806  |                              |         | 56,932       |  
|                                         | Inventories and prepaid expenses                  |                |           | 10,578                |   |                            | 11,888  |                              |         | 525          |  
|                                         | Future income taxes                               |                |           | 8,948                 |   |                            | 3,190   |                              |         | 387          |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 142,317   |                       |   | 78,185                     |         |                              | 59,750  |              |  
|Fixed assets                             |                                                   |                | 769,148   |                       |   | 118,474                    |         |                              | 229,075 |              |  
|Goodwill                                 |                                                   |                | 1,401,545 |                       |   | 630,339                    |         |                              | 397,332 |              |  
|Deferred charges                         |                                                   |                | 23,763    |                       |   | 502                        |         |                              | 3,274   |              |  
|Future income taxes                      |                                                   |                |          |                       |   | 14,835                     |         |                              |        |              |  
|Investments                              |                                                   |                | 492,895   |                       |   |                           |         |                              | 878     |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Total assets                             |                                                   | $              | 2,829,668 |                       | $ | 842,335                    |         | $                            | 690,309 |              | $
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Liabilities and Shareholder's Equity     |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Current liabilities:                     |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Issued and outstanding cheques                    |                | $         | 1,015                 |   | $                          | 918     |                              | $       | 12           |  
|                                         | Accounts payable and accrued liabilities          |                |           | 160,567               |   |                            | 22,892  |                              |         | 30,932       |  
|                                         | Amounts payable to a company under common control |                |           | 110,862               |   |                            | 55,976  |                              |         | 4,377        |  
|                                         | Deferred revenue and prepaid services             |                |           | 53,794                |   |                            | 5,111   |                              |         | 21,026       |  
|                                         | Current portion of long-term debt                 |                |           | 86,142                |   |                            |        |                              |         |             |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 412,380   |                       |   | 84,897                     |         |                              | 56,347  |              |  
|Future income taxes                      |                                                   |                | 141,502   |                       |   | 2,210                      |         |                              | 36,707  |              |  
|Retractable preferred shares             |                                                   |                | 332,480   |                       |   | 37,187                     |         |                              |        |              |  
|Long-term debt                           |                                                   |                | 910,435   |                       |   | 71,642                     |         |                              | 145,260 |              |  
|Non-controlling interest in a subsidiary |                                                   |                |          |                       |   |                           |         |                              | 10      |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 1,796,797 |                       |   | 195,936                    |         |                              | 238,324 |              |  
|Shareholder's Equity:                    |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Capital shares                                    |                |           | 1                     |   |                            | 13,471  |                              |         | 235,025      |  
|                                         | Contributed surplus                               |                |           | 3,200,535             |   |                            | 640,094 |                              |         | 657,859      |  
|                                         | Deficit                                           |                |           | (2,167,665            | ) |                            | (7,166  | )                            |         | (440,585     | )
|                                         | Other comprehensive loss                          |                |           |                      |   |                            |        |                              |         | (314         | )
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 1,032,871 |                       |   | 646,399                    |         |                              | 451,985 |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   | $              | 2,829,668 |                       | $ | 842,335                    |         | $                            | 690,309 |              | $
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  

F-32

---





|                                                                   |  | Vidéotron Ltée |            | Subsidiary guarantors |   | Subsidiary non-
guarantors |  | Adjustments and eliminations |          | Consolidated |  
|------------------------------------------------------------------ |  | -------------- | ---------- | --------------------- | - | -------------------------- |  | ---------------------------- | -------- | ------------ | -
|
|Revenues                                                           |  | $              | 432,111    |                       | $ | 211,569                    |  | $                            | 165,482  |              | $
|Direct cost                                                        |  |                | 156,081    |                       |   | 57,144                     |  |                              | 48,409   |              |  
|Operating and administrative expenses                              |  |                | 178,868    |                       |   | 76,275                     |  |                              | 56,569   |              |  
|Depreciation and amortization                                      |  |                | 83,901     |                       |   | 36,393                     |  |                              | 17,721   |              |  
|Financial expenses                                                 |  |                | 57,588     |                       |   | 6,262                      |  |                              | 10,556   |              |  
|Impairment of goodwill                                             |  |                | 1,613,220  |                       |   |                           |  |                              | 390,780  |              |  
|Other items                                                        |  |                | 493        |                       |   |                           |  |                              | 113      |              |  
|                                                                   |  |                |            |                       |   |                            |  |                              |          |              |  
|(Loss) income before the undernoted                                |  |                | (1,658,040 | )                     |   | 35,495                     |  |                              | (358,666 | )            |  
|Income taxes                                                       |  |                | (16,414    | )                     |   | 10,153                     |  |                              | 11,427   |              |  
|                                                                   |  |                |            |                       |   |                            |  |                              |          |              |  
|                                                                   |  |                | (1,641,626 | )                     |   | 25,342                     |  |                              | (370,093 | )            |  
|Share in the results of a company subject to significant influence |  |                | (310       | )                     |   |                           |  |                              | (666     | )            |  
|Non-controlling interest                                           |  |                |           |                       |   |                           |  |                              | 95       |              |  
|                                                                   |  |                |            |                       |   |                            |  |                              |          |              |  
|Net (loss) income                                                  |  | $              | (1,641,316 | )                     | $ | 25,342                     |  | $                            | (369,522 | )            | $
|                                                                   |  |                |            |                       |   |                            |  |                              |          |              |  

F-33

---





|                                                    |                                                                      | Vidéotron Ltée                            |          | Subsidiary guarantors |           | Subsidiary non-
guarantors |         | Adjustments and eliminations |         | Consolidated |        
|--------------------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------- | -------- | --------------------- | --------- | -------------------------- | ------- | ---------------------------- | ------- | ------------ | -------
|
|Cash flows from operating activities:               |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    | Net income (loss)                                                    |                                           | $        | (1,641,316            | )         | $                          | 25,342  |                              | $       | (369,522     | )      
|                                                    | Items not involving cash:                                            |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    |                                                                      | Depreciation and amortization             |          |                       | 88,242    |                            |         | 41,755                       |         |              | 17,987 
|                                                    |                                                                      | Future income taxes                       |          |                       | (17,829   | )                          |         | 7,309                        |         |              | 10,612 
|                                                    |                                                                      | Write-off of goodwill                     |          |                       | 1,613,220 |                            |         |                             |         |              | 390,780
|                                                    |                                                                      | Gain on foreign currency denominated debt |          |                       |          |                            |         |                             |         |              | (1,628 
|                                                    |                                                                      | Other                                     |          |                       | (1,392    | )                          |         | 1,041                        |         |              | 1,010  
|                                                    | Changes in non-cash operating working capital                        |                                           |          | 106,998               |           |                            | (52,045 | )                            |         | (30,689      | )      
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    |                                                                      |                                           | 147,923  |                       |           | 23,402                     |         |                              | 18,550  |              |        
|Cash flows from investing activities:               |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    | Acquisition of fixed assets                                          |                                           |          | (49,993               | )         |                            | (29,568 | )                            |         | (12,853      | )      
|                                                    | Net change in deferred charges                                       |                                           |          | (923                  | )         |                            | 9,566   |                              |         | (89          | )      
|                                                    | Amounts receivable from parent company and from affiliated companies |                                           |          |                      |           |                            | (2,088  | )                            |         |             |        
|                                                    | Other                                                                |                                           |          | 1,677                 |           |                            | 142     |                              |         | (1,690       | )      
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    |                                                                      |                                           | (49,239  | )                     |           | (21,948                    | )       |                              | (14,632 | )            |        
|Cash flows from financing activities:               |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    | Repayment of long-term debt                                          |                                           |          | (155,868              | )         |                            |        |                              |         | (3,409       | )      
|                                                    | Other                                                                |                                           |          |                      |           |                            |        |                              |         | (95          | )      
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|                                                    |                                                                      |                                           | (155,868 | )                     |           |                           |         |                              | (3,504  | )            |        
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|Net increase (decrease) in cash and cash equivalent |                                                                      |                                           | (57,184  | )                     |           | 1,454                      |         |                              | 414     |              |        
|Cash and cash equivalents, beginning of year        |                                                                      |                                           | 71,039   |                       |           | (2,325                     | )       |                              | 698     |              |        
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        
|Cash and cash equivalents, end of year              |                                                                      | $                                         | 13,855   |                       | $         | (871                       | )       | $                            | 1,112   |              | $      
|                                                    |                                                                      |                                           |          |                       |           |                            |         |                              |         |              |        

F-34

---





|                                         |                                                   | Vidéotron Ltée |           | Subsidiary guarantors |   | Subsidiary non-
guarantors |         | Adjustments and eliminations |         | Consolidated |  
|---------------------------------------- | ------------------------------------------------- | -------------- | --------- | --------------------- | - | -------------------------- | ------- | ---------------------------- | ------- | ------------ | -
|
|Assets                                   |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Current assets:                          |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Cash and cash equivalents                         |                | $         | 27,772                |   | $                          | 89      |                              | $       | 468          |  
|                                         | Marketable securities                             |                |           | 22,100                |   |                            |        |                              |         | 1,030        |  
|                                         | Accounts receivable                               |                |           | 63,125                |   |                            | 5,464   |                              |         | 499          |  
|                                         | Amounts receivable from affiliated companies      |                |           | 86,109                |   |                            | 127,157 |                              |         | 335,968      |  
|                                         | Income taxes receivable                           |                |           |                      |   |                            | 4,950   |                              |         | 1,585        |  
|                                         | Inventories and prepaid expenses                  |                |           | 14,615                |   |                            | 14,881  |                              |         | 640          |  
|                                         | Future income taxes                               |                |           | 7,451                 |   |                            | 1,999   |                              |         | 1,312        |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 221,172   |                       |   | 154,540                    |         |                              | 341,502 |              |  
|Fixed assets                             |                                                   |                | 743,100   |                       |   | 81,285                     |         |                              | 225,206 |              |  
|Goodwill                                 |                                                   |                | 1,399,533 |                       |   | 631,239                    |         |                              | 396,844 |              |  
|Deferred charges                         |                                                   |                | 12,117    |                       |   | 407                        |         |                              | 3,435   |              |  
|Future income taxes                      |                                                   |                | 2,063     |                       |   | 2,813                      |         |                              |        |              |  
|Investments                              |                                                   |                | 458,053   |                       |   |                           |         |                              | 976     |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Total assets                             |                                                   | $              | 2,836,038 |                       | $ | 870,284                    |         | $                            | 967,963 |              | $
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Liabilities and Shareholder's Equity     |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|Current liabilities:                     |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Issued and outstanding cheques                    |                | $         | 2,584                 |   | $                          | 416     |                              | $       | 51           |  
|                                         | Accounts payable and accrued liabilities          |                |           | 127,805               |   |                            | 32,847  |                              |         | 31,084       |  
|                                         | Amounts payable to a company under common control |                |           | 210,192               |   |                            | 98,642  |                              |         | 258,623      |  
|                                         | Deferred revenue and prepaid services             |                |           | 50,536                |   |                            | 18,900  |                              |         | 19,879       |  
|                                         | Income taxes payable                              |                |           | 310                   |   |                            | 7,784   |                              |         | 45           |  
|                                         | Current portion of long-term debt                 |                |           | 50,000                |   |                            |        |                              |         |             |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 441,427   |                       |   | 158,589                    |         |                              | 309,682 |              |  
|Retractable preferred shares             |                                                   |                | 2,000     |                       |   |                           |         |                              |        |              |  
|Future income taxes                      |                                                   |                | 123,138   |                       |   | 4,763                      |         |                              | 47,373  |              |  
|Long-term debt                           |                                                   |                | 887,401   |                       |   |                           |         |                              | 123,984 |              |  
|Non-controlling interest in a subsidiary |                                                   |                |          |                       |   |                           |         |                              | 10      |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 1,453,966 |                       |   | 163,352                    |         |                              | 481,049 |              |  
|Shareholder's Equity:                    |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         | Capital shares                                    |                |           | 173,236               |   |                            | 43,427  |                              |         | 235,025      |  
|                                         | Contributed surplus                               |                |           | 3,476,551             |   |                            | 643,065 |                              |         | 660,187      |  
|                                         | Deficit                                           |                |           | (2,266,499            | ) |                            | 20,440  |                              |         | (407,744     | )
|                                         | Other comprehensive loss                          |                |           | (1,216                | ) |                            |        |                              |         | (554         | )
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   |                | 1,382,072 |                       |   | 706,932                    |         |                              | 486,914 |              |  
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  
|                                         |                                                   | $              | 2,836,038 |                       | $ | 870,284                    |         | $                            | 967,963 |              | $
|                                         |                                                   |                |           |                       |   |                            |         |                              |         |              |  

F-35

---





|                                                                   |  | Vidéotron Ltée |         | Subsidiary guarantors |   | Subsidiary non-
guarantors |   | Adjustments and eliminations |         | Consolidated |  
|------------------------------------------------------------------ |  | -------------- | ------- | --------------------- | - | -------------------------- | - | ---------------------------- | ------- | ------------ | -
|
|Revenues                                                           |  | $              | 424,904 |                       | $ | 245,920                    |   | $                            | 159,945 |              | $
|Direct cost                                                        |  |                | 162,244 |                       |   | 37,449                     |   |                              | 47,906  |              |  
|Operating and administrative expenses                              |  |                | 139,858 |                       |   | 103,718                    |   |                              | 61,103  |              |  
|Depreciation and amortization                                      |  |                | 82,468  |                       |   | 33,048                     |   |                              | 17,794  |              |  
|Financial expenses                                                 |  |                | 79,425  |                       |   | (1,557                     | ) |                              | (13,555 | )            |  
|Other items                                                        |  |                |        |                       |   |                           |   |                              |        |              |  
|                                                                   |  |                |         |                       |   |                            |   |                              |         |              |  
|(Loss) income before the undernoted                                |  |                | (39,091 | )                     |   | 73,262                     |   |                              | 46,697  |              |  
|Income taxes                                                       |  |                | (14,811 | )                     |   | 25,656                     |   |                              | 11,908  |              |  
|                                                                   |  |                |         |                       |   |                            |   |                              |         |              |  
|                                                                   |  |                | (24,280 | )                     |   | 47,606                     |   |                              | 34,789  |              |  
|Share in the results of a company subject to significant influence |  |                | 6,470   |                       |   |                           |   |                              | 77      |              |  
|Non-controlling interest                                           |  |                |        |                       |   |                           |   |                              |        |              |  
|                                                                   |  |                |         |                       |   |                            |   |                              |         |              |  
|Net (loss) income                                                  |  | $              | (17,810 | )                     | $ | 47,606                     |   | $                            | 34,866  |              | $
|                                                                   |  |                |         |                       |   |                            |   |                              |         |              |  

F-36

---





|                                                     |                                               | Vidéotron Ltée                                                                      |         | Subsidiary guarantors |         | Subsidiary non-
guarantors |         | Adjustments and eliminations |         | Consolidated |        
|---------------------------------------------------- | --------------------------------------------- | ----------------------------------------------------------------------------------- | ------- | --------------------- | ------- | -------------------------- | ------- | ---------------------------- | ------- | ------------ | -------
|
|Cash flows from operating activities:                |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     | Net income (loss)                             |                                                                                     | $       | (17,810               | )       | $                          | 47,606  |                              | $       | 34,866       |        
|                                                     | Items not involving cash:                     |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     |                                               | Depreciation and amortization                                                       |         |                       | 86,340  |                            |         | 37,250                       |         |              | 17,484 
|                                                     |                                               | Net premium and write-off of financing cost upon early redemption of long-term debt |         |                       | 17,094  |                            |         |                             |         |              |       
|                                                     |                                               | Future income taxes                                                                 |         |                       | (16,361 | )                          |         | 14,592                       |         |              | 10,459 
|                                                     |                                               | Adjustment of goodwill                                                              |         |                       | 2,012   |                            |         |                             |         |              | 488    
|                                                     |                                               | Loss on disposal of fixed assets                                                    |         |                       | (110    | )                          |         | 18,507                       |         |              | 50     
|                                                     |                                               | Gain on foreign currency                                                            |         |                       | (1,649  | )                          |         |                             |         |              | (21,251
|                                                     |                                               | Share in the results of a company                                                   |         |                       | (6,470  | )                          |         |                             |         |              | (77    
|                                                     |                                               | Other                                                                               |         |                       | 102     |                            |         | (148                         | )       |              | 1,729  
|                                                     | Changes in non-cash operating working capital |                                                                                     |         | 63,759                |         |                            | (71,359 | )                            |         | (23,225      | )      
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     |                                               |                                                                                     | 126,907 |                       |         | 46,448                     |         |                              | 20,523  |              |        
|Cash flows from investing activities:                |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     | Acquisition of fixed assets                   |                                                                                     |         | (54,598               | )       |                            | (21,154 | )                            |         | (19,879      | )      
|                                                     | Disbursements for deferred charges            |                                                                                     |         |                      |         |                            | (113    | )                            |         |             |        
|                                                     | Acquisition of short-term investments         |                                                                                     |         | (22,100               | )       |                            |        |                              |         | (1,030       | )      
|                                                     | Proceeds on disposal of fixed assets          |                                                                                     |         | 5,651                 |         |                            | 3,494   |                              |         | 27           |        
|                                                     | Proceeds of investment                        |                                                                                     |         | 7,231                 |         |                            | (7,231  | )                            |         |             |        
|                                                     | Other                                         |                                                                                     |         |                      |         |                            | (900    | )                            |         |             |        
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     |                                               |                                                                                     | (63,816 | )                     |         | (25,904                    | )       |                              | (20,882 | )            |        
|Cash flows from financing activities:                |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     | Repayment of long-term debt                   |                                                                                     |         | (1,033,321            | )       |                            |        |                              |         | (24          | )      
|                                                     | Issuance of long-term debt                    |                                                                                     |         | 1,038,732             |         |                            |        |                              |         |             |        
|                                                     | Financing cost on long-term                   |                                                                                     |         | (9,086                | )       |                            |        |                              |         |             |        
|                                                     | Recouping fees and termination swaps          |                                                                                     |         | (48,375               | )       |                            |        |                              |         |             |        
|                                                     | Dividends to parent company                   |                                                                                     |         | (19,956               | )       |                            |        |                              |         |             |        
|                                                     | Other                                         |                                                                                     |         | 20,248                |         |                            | (20,000 | )                            |         | (312         | )      
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|                                                     |                                               |                                                                                     | (51,758 | )                     |         | (20,000                    | )       |                              | (336    | )            |        
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|Net increase (decrease) in cash and cash equivalents |                                               |                                                                                     | 11,333  |                       |         | 544                        |         |                              | (695    | )            |        
|Cash and cash equivalents, beginning of year         |                                               |                                                                                     | 13,855  |                       |         | (871                       | )       |                              | 1,112   |              |        
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        
|Cash and cash equivalents, end of year               |                                               | $                                                                                   | 25,188  |                       | $       | (327                       | )       | $                            | 417     |              | $      
|                                                     |                                               |                                                                                     |         |                       |         |                            |         |                              |         |              |        

F-37

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