Quebecor Expands West in Canada Spectrum Sale

Quebecor Inc. (QBR/B) took a step closer to becoming Canada’s next national wireless operator after spending C$233 million ($210 million) to buy airwaves across the country in an auction that netted the Canadian government a record C$5.27 billion.

Quebecor’s Montreal-based Videotron unit bought seven licenses for 700-megahertz spectrum, prized for its ability to send data through dense urban areas, in Quebec, Eastern and Southern Ontario, Alberta and British Columbia, the company said in a statement yesterday.

“It has the ability to become a national player,” Iain Grant, president of the consulting firm SeaBoard Group, said in a phone interview from Montreal. “Possibly it would involve a name change -- Canadacor.”

Quebecor, which began offering mobile-phone service in Quebec after buying spectrum in the last auction in 2008, is poised to emerge as a challenger to Rogers Communications (RCI/B) Inc., Telus Corp. (T) and BCE Inc. (BCE) that together account for 90 percent of wireless consumers in Canada.

Quebecor Chief Executive Officer Robert Depatie didn’t specify yesterday whether the company would use the spectrum to expand outside its home province or potentially reserve it to sell at a later date.

“With the high-quality frequencies acquired in this auction, Videotron is now well-equipped to develop its network in the years to come,” Depatie said in the statement. “We now have a number of options available to us to maximize the value of our investment.”

Four Carriers

The government had limited bidding by Rogers, Telus and BCE to encourage new entrants and smaller players to participate and meet its goal of having four carriers in each region of the country. Industry Minister James Moore said Quebecor’s move is evidence the government’s plan is working.

“They have the capacity to be and I think that they will be,” Moore told reporters yesterday in Ottawa when asked about Quebecor’s potential to be a fourth national player.

Rogers, the country’s largest carrier, was the biggest spender in the auction that began Jan. 14, bidding C$3.29 billion for 22 licenses, accounting for more than half the total raised.

“Rogers comes out of this with the best of the beachfront,” Seaboard Group’s Grant said. Toronto-based Rogers secured a 12-year C$5.2 billion deal in November for the broadcasting rights to the National Hockey League and the additional spectrum should help it beam more hockey programming to its smartphone and tablet users, he said.

“They’ve got a lot of hockey, now they have a lot of spectrum, I can see the two being married,” Grant said.

‘Video Experience’

Rogers said the 20-year licenses it bought will help it achieve that goal. Customers “want the ultimate video experience and this spectrum will allow us to deliver just that,” Rogers CEO Guy Laurence said yesterday in a statement.

Telus and BCE, Canada’s two other major carriers, spent C$1.14 billion for 30 licenses, and C$566 million for 31 licenses respectively.

Telus, based in Vancouver, said in a statement yesterday that its new spectrum will allow it to deliver better mobile broadband connectivity to its customers and improve coverage in urban areas. Wade Oosterman, the president of BCE’s Bell Mobility wireless business said what it bought will help it take its network further to “towns, rural locations and remote communities across the country.”

Foreigners Absent

Observers had predicted a smaller windfall for the government after foreign bidders pulled out. New York-based Verizon Communications Inc. (VZ) said in September it wouldn’t join the auction after expressing interest earlier. Wind Mobile, Canada’s largest new operator, pulled out after its backer, Amsterdam-based VimpelCom Ltd. (VIP), decided not to fund its bid.

The results came near the top of the range of C$3.4 billion to C$5.7 billion estimated by Dvai Ghose, an analyst at Canaccord Genuity Inc. in Toronto.

The last auction in 2008 netted the government C$4.25 billion, almost triple analysts’ predictions, with the big three carriers accounting for 62 percent of the spending.

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net; Gerrit De Vynck in Toronto at gdevynck@bloomberg.net

To contact the editor responsible for this story: Sarah Rabil at srabil@bloomberg.net

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