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Quebecor Ready to Become Canadian Wireless Competitor

(Corrects penultimate paragraph in story from June 18 to clarify that Peladeau won his seat while the separatist Parti Quebecois was defeated.)

Quebecor Inc. (QBR/B) is ready to become Canada’s fourth national wireless carrier, Chief Executive Officer Pierre Dion said, pitting the provider of phone services under the Videotron brand against entrenched rivals with millions of customers.

“Our vision is to provide Canadians with a new high quality, low-cost wireless choice and real wireless competition,” Dion said today at the Canadian Telecom Summit in Toronto, according to a release of his remarks. “We aim to deliver real low-cost wireless plans for consumers, real wireless competition, and a real new offering in the Canadian marketplace. Under the right conditions, we are ready, willing and able to become Canada’s fourth wireless competitor.”

Canada’s Industry Minister James Moore has pushed for another carrier to compete with the three national incumbents -- Rogers Communications Inc., Telus Corp. and BCE Inc. Quebecor took advantage of a lack of competition in a government auction this year to buy access to spectrum in British Columbia, Alberta and Ontario. Until now, Dion, who has been CEO for less than two months, was debating whether to use the airwaves to expand its mobile-phone service outside its home province of Quebec.

The plan to expand Videotron across the country will involve “major investments” in spectrum, as well as consolidation with willing partners. Dvai Ghose, an analyst at Canaccord Genuity Group Inc., said last month that the spectrum auction win earlier this year may put Quebecor in position to acquire Wind Mobile and Mobilicity, two smaller carriers that have struggled to make inroads against the three largest providers.

Wireless Consolidation

“We are contemplating the possibility of consolidation with one or two of the undercapitalized new wireless entrants,” Dion said. “If completed, this would allow us to almost triple our customer base.”

Dion said hurdles still remain to national expansion. Roaming charges need to be lower and federally regulated because the current setup favors the incumbent players in Canada, he said.

“The key unresolved issue is the wholesale roaming prices charged by incumbents to new entrant competitors,” Dion said. “If this barrier can be brought into line on a competitive level playing field that is fair to all service providers, we will be standing at the dawn of a new era of wireless competition and expansion in Canada.”

Management Overhaul

Quebecor has about 520,000 wireless subscribers and 1.8 million cable subscribers.

Quebecor shares rose 1.2 percent to C$27.53 today.

Dion’s decision to take on the national carriers is on the heels of a management overhaul. Dion is the Montreal-based company’s third CEO in a year. He replaced Robert Depatie, who resigned for health reasons. Controlling shareholder Pierre-Karl Peladeau resigned as vice chairman in March to run as a candidate in the Quebec provincial elections to advocate for separating from Canada. While he won his seat, the separatist Parti Quebecois was defeated. Peladeau had spent 14 years as the company’s CEO before giving up the post in May 2013.

Former Canadian Prime Minister Brian Mulroney, currently vice chairman, will be named as board chairman after Quebecor’s annual meeting tomorrow. Francoise Bertrand decided not to seek re-election as chairman.

To contact the reporters on this story: Christina Pellegrini in Toronto at cpellegrini3@bloomberg.net; Stefanie Batcho-Lino in Toronto at sbatcholino1@bloomberg.net

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

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