Quebecor Inc. is warning it won’t expand its wireless services outside Quebec unless Ottawa changes the rules to give new entrants a fighting chance to compete with Canada’s Big Three.
“We are well aware that some have tried to compete in the past in the Canadian wireless business and have struggled. Repeating the history is not our plan,” Robert Dépatie, CEO of Quebecor, said.
“All of our energy in the next months will be spent at determining whether the right conditions could be implemented before deploying additional resources in such a venture,” Mr. Dépatie added.
This will come as a cold shower for the federal Conservatives, which have been trying for years to foster competition to take on BCE Inc., Rogers Communications Inc. and Telus Corp. Federal Industry Minister James Moore cheered the results of the recent wireless auction, in which Quebecor's Vidéotron unit won prime blocks of spectrum outside Quebec, in Ontario, Alberta and B.C. Mr. Moore said that winning bid paves the way for a fourth national player.
But Mr. Dépatie portrayed the $233-million investment – a bargain price, according to analysts – as a simple “opportunity” his company “could not let pass.”
“We took advantage of a great price, No. 1, and as you know, spectrum is a great asset to own. So we could sit on it or do something with it,” he said.
Mr. Dépatie did not spell out the conditions under which Vidéotron would expand outside Quebec. Industry observers believe Quebecor will likely demand Ottawa give the Montreal-based company secure roaming rights on rivals’ networks and use of their towers at a fixed, low cost.
Quebecor also denied it has any interest in buying wireless upstarts Wind Mobile or Mobilicity, which is in the middle of a court-supervised sales process. “We are not in the midst of deciding of buying more spectrum. We haven’t thought about it, we haven’t planned it,” Mr. Dépatie said. Before the Industry Canada auction results were known, Quebecor made a nearly $200-million offer for Mobilicity, The Globe has reported.
Mr. Dépatie’s comments were made on a conference call on Thursday after Quebecor released its 2013 results. They are the first public statements by a top executive since Pierre Karl Péladeau, the company’s controlling shareholder, resigned to run for the Parti Québécois in the upcoming provincial election. Quebecor executives played down the notion the company would suffer a backlash from Mr. Péladeau’s public quest for the independence of Quebec.
Asked about anecdotal reports some Vidéotron clients are switching to Bell in protest, Vidéotron president and chief operating officer, Manon Brouillette, said that she had witnessed “nothing so far” to that effect.
Instead, Ms. Brouillette drew the analysts attention to Vidéotron’s expanded LTE wireless network, which will be launched this summer in Quebec and Ottawa, covering “at least 70 per cent” of the company’s market. The remainder of the wireless network that promises higher speeds and better coverage will be completed in the next two years. There is still no word, though, on when Vidéotron will offer the popular iPhone. Both the LTE network and the iPhone are expected to boost the company’s average revenue per user.
Mr. Péladeau’s departure caps a transformational year for Quebecor. The company exited a number of businesses, such as door-to-door distribution of flyers and regional weeklies, and invested heavily to become the French broadcaster of the National Hockey League for the next 12 years.
Revenues in the fourth quarter grew by 0.5 per cent to $1.1-billion, bringing the year’s total to $4.25-billion. Net income in the quarter totalled $43.4-million or 35 cents per share. Earnings on an adjusted basis reached $68-million or 55 cents per share. That result beat the analysts’ average estimate of 52 cents, as compiled by Bloomberg, though it benefited from a one-time $5.2-million reversal of a litigation reserve in the news media division.
Barclays Capital analyst Phillip Huang said the overall financial results were “a bit lighter than expected,” but the company’s cable subscriptions were “better than feared.” In 2013, Vidéotron lost 29,900 cable customers. But that drop was more than compensated by additions in mobile services (100,700), cable (30,600), and telephony (21,200). At the end of last year, Vidéotron was selling over five million different telecom services.