Quebecor Inc. is moving forward with plans to launch a national cellphone network, rather than waiting to acquire any wireless businesses that regulators may force rival Rogers Communications Inc. to sell in order to acquire Shaw Communications Inc.
In an interview on Tuesday, Quebecor chief executive officer Pierre Karl Péladeau said the Montreal-based company’s experience in its home province shows there is strong consumer demand for competition. In less than two decades, the company captured 22 per cent of Quebec’s cellphone market.
“There is now a mature market in Quebec, and if we want to grow, and we do, it will be outside of our historic market place,” Mr. Péladeau said. In July, Quebecor spent nearly $830-million on wireless spectrum sold by the federal government, with more than half of that investment in four Canadian provinces outside of its home market: Ontario, Manitoba, Alberta and British Columbia.
Quebecor is one of several companies, including private equity firms, expected to bid on Rogers’s wireless businesses if federal competition regulators demand their sales as a condition for approving the Toronto-based company’s $26-billion bid for Shaw, which is based in Calgary.
Mr. Péladeau said while Quebecor is interested in acquiring wireless units such as Shaw Mobile and Freedom Mobile, and has made this clear to Rogers, any sales process is likely 12 to 24 months away. He said: “I’m not the kind of guy who waits around.”
Previously, analysts said Mr. Péladeau would likely be patient and wait for regulators to rule on the Shaw acquisition before committing Quebecor to launching a national network. “As we believe that Rogers is awaiting the Competition Bureau to complete its review of the Rogers-Shaw transaction and communicate any areas of concern, we think Quebecor, too, is waiting without full clarity, and thus the wireless file remains fluid,” analyst Drew McReynolds at RBC Dominion Securities said in a recent report.
Quebecor’s CEO said the company could launch its own wireless network, then add services, customers or spectrum acquired from Rogers down the road. While Mr. Péladeau declined to comment on details of a planned Quebecor national wireless service, such as its branding, pricing and target market, he said recent regulatory decisions and advances in technology are lowering the cost of launching a network.
Mr. Péladeau said Quebecor is considering providing service in Western Canada and Ontario using what’s known as a Mobile Virtual Network Operator (MVNO), a wireless service that doesn’t own its network infrastructure, but rather piggybacks on competitors’ existing networks. Recent regulatory decisions paved the way for MVNOs by forcing incumbents such as BCE Inc. and Telus Corp. to rent network space to rivals such as Quebecor.
However, one of the challenges facing Quebecor is negotiating the terms for its MVNO. RBC’s Mr. McReynolds said the most likely path forward for Quebecor is to launch as an MVNO in Western Canada and Ontario, “followed by a gradual and measured build of facilities over seven years under the new wireless framework.”
Quebecor is picking up customers in Quebec with its Fizz brand of cellphone and Internet services, which targets price-conscious consumers with features such as carrying unused data from one month to the next. Mr. Péladeau highlighted Fizz as an example of the product offering Quebecor is considering rolling out nationally. While Quebecor is investing in 5G networks, Mr. Péladeau said the company’s spending on these ultrafast wireless systems will be driven by consumer demand, in contrast to rivals with more aggressive 5G expansion plans.
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