MONTREAL — Quebecor Inc. is considering breaking into the wireless market outside Quebec, and CEO Pierre Karl Péladeau said Shaw Communications Inc.’s wireless business offers a potential avenue.
In a statement on Thursday, he said the ground was ripe for growth beyond traditional telecommunications breeding grounds. The Competition Bureau’s opposition to Rogers Communication’s Inc.’s $26 billion bid to acquire Shaw and comments from the federal Department of Industry “have us looking increasingly favorably to the expansion of our wireless business,” said Péladeau.
He cited the prospect of either acquiring Freedom Mobile from Shaw if Rogers is forced to divest it, or launching a telecommunications bid in provinces where Quebecor has accumulated the spectrum licenses needed to transmit wireless signals.
“We believe that these alternatives position us very favorably, as governmental and administrative authorities, including the Canadian Radio-television and Telecommunications Commission, pursue the public policy of establishing the conditions for genuine competition in wireless services in the Canada,” Péladeau said in comments accompanying the Montreal firm’s first quarter results.
Industry Minister Francois-Philippe Champagne said a full takeover of Shaw by Rogers would be “fundamentally inconsistent” with the policies of the Trudeau government.
The CRTC also issued a decision that allows regional operators to lease access to the networks of major Canadian telecommunications companies, provided that they themselves have the local frequency spectrum. The regulatory conditions surrounding this decision are still pending.
“The opportunities are many and the alternatives promising,” Péladeau said.
On several occasions over the past few years, Péladeau has said that Quebecor is considering an incursion into other provinces. The company says it sees the Quebec market as “quite mature” and that the rest of Canada, where competition is weaker, would offer lucrative opportunities.
Asked about the subject Thursday, the CEO confirmed that his statements reflect a greater determination to expand the scope of Quebecor. But he reiterated that Quebecor could do it with or without Freedom Mobile under its roof.
“The answer is simple: yes, Quebecor is able to start its wireless business outside of Quebec thanks to the acquisition of licenses during the auctions that took place last year,” he said. analysts on a conference call.
In 2021, the company acquired 294 blocks of spectrum in the 3500 MHz band for $830 million. More than half of the investments are concentrated in four Canadian provinces: Ontario, Manitoba, Alberta and British Columbia.
Telus Corp. and BCE Inc., however, last summer asked the Federal Court to block Quebecor’s purchase of 5G spectrum in Western Canada, saying the company did not qualify to bid on the airwaves there.
The market frowned on Péladeau’s statements, with shares of Quebecor falling more than 6% or $1.69 to $26.42 by mid-afternoon on the Toronto Stock Exchange.
However, Jerome Dubreuil of Desjardins Capital Markets said investors had no reason to fear the breakout gamble. “We continue to believe that the share price is attractive, as the market overestimates the risk associated with a possible expansion outside Quebec,” he said in a note.
On Thursday, Quebecor announced that its first quarter profit was up slightly from a year ago.
The company said its net income attributable to shareholders was $121.4 million or 51 cents per share for the quarter ended March 31, compared with earnings of $121.3 million or 49 cents per share a year earlier.
Revenue for the quarter totaled $1.09 billion, compared to $1.09 billion in the first three months of 2021.
Quebecor said adjusted earnings from continuing operations were 54 cents per share, up from 52 cents per share in the same quarter last year.
This report from The Canadian Press was first published on May 12, 2022.
Companies in this story: (TSX:QBR.B, TSX:RCI.B, TSX:SJR.B, TSX:T, TSX:BCE)
Stephane Rolland, The Canadian Press