Management will undoubtedly face further questions about plans for a potential wireless expansion when Quebecor Inc. reports second-quarter results Thursday.
Speculation has been rife that the Montreal-based telecommunications and media company would make a national play since it spent $233-million on spectrum licences in Quebec, Ontario, British Columbia and Alberta in the public auction for the cellular airwaves in February.
It was just last month that newly installed chief executive officer Pierre Dion said the company is “ready, willing and able” to offer national services at low rates. However, Quebecor’s carefully worded announcement made clear that certain conditions must be in place before it fully embraces the idea, most importantly the guarantee of what it calls “fair” rates to roam on its larger competitors’ national networks.
Since that time, telecom analysts have been at odds over whether Quebecor will play a role in some sort of joint venture that could include consolidation of Mobilicity and Wind Mobile.
Scotia Capital Inc.’s Jeff Fan and Macquarie Capital Markets’ Greg MacDonald have published reports suggesting the possibility is likely and arguing the federal government will do whatever it takes to help clear the way. Others, notably Dvai Ghose of Canaccord Genuity, dismiss the idea as overblown, arguing there are many barriers to such a plan working out, including what he estimates could be more than $2-billion in capital costs.
The Canadian Radio-television and Telecommunications Commission is set to consider wholesale roaming rates – the fees companies pay to roam on each other’s networks – at a proceeding this September. The federal government has passed legislation to cap those rates on an interim basis but the CRTC may not issue a decision until early next year. In the absence of clarity on that, Mr. Dion may have little new to say about Quebecor’s wireless plans on Thursday.
The mere prospect of Quebecor’s national expansion has been a major influence on its stock of late – not to mention the share prices of the Big Three telecom providers. But analysts will also be watching its second-quarter report for concrete signs its wireless business is performing well.
“Quebecor could report better than expected wireless subscribers and ARPU [average revenue per user] where we estimate +30,000 and $40.60 (flat year over year), respectively,” Macquarie’s Mr. MacDonald wrote in a research report. “A beat in these metrics … would improve sentiment on Quebecor’s larger wireless strategy in our view.”
Consensus estimates suggest the company will report adjusted earnings per share of 47 cents and consolidated revenues of $1.088-billion, according to Bloomberg.