Quebecor Meeting With Partners for Wireless Expansion

Quebecor Inc. (QBR/B) said it’s meeting with potential partners as it weighs plans to expand its wireless network across Canada.

Chief Executive Officer Pierre Dion said the Montreal-based company is in talks with “several” partners for possible consolidation to become the fourth national carrier in Canada. The talks include financial and strategic partnerships, he said.

“Everything is on the table,” Dion said on a conference call with analysts following the release of quarterly earnings today. “We continue to meet with several potential partners to assess their interest in partnering with us should we decide to consolidate the industry following positive regulatory developments.”

Dion, who became CEO in April, said last month that he was prepared to expand Quebecor’s Videotron brand nationally under the right circumstances, including “fair” and federally regulated roaming charges. The Canadian government has been pushing for more than six years for a fourth carrier to compete on a national scale against the three incumbents -- Rogers Communications Inc., Telus Corp. and BCE Inc., which claim about 90 percent of Canadian customers.

Quebecor was little changed at C$26.46 at the close in Toronto.

The carrier reported second-quarter profit, excluding some items, of 54 cents a share, beating the 47 cents that analysts estimated on average.

Revenue Gains

Revenue rose about 1 percent to C$1.07 billion ($982.4 million), the Montreal-based company said in a statement. Analysts had projected C$1.09 billion, according to the average of estimates compiled by Bloomberg.

Quebecor bought airwaves in Ontario, Alberta and British Columbia during a government auction this year, giving it the spectrum needed to carry data through dense urban areas in Canada’s most populous provinces.

“We have acquired an asset of great fundamental value at a basement price,” Dion said today. “Acquiring the spectrum at that price provides us many options, from operating a business to monetizing the asset to disposal in the future.”

The company has urged the Canadian government to make changes to the pricing system for domestic wholesale roaming rates, which an operator pays when customers use another carrier’s network.

“We are more convinced than ever that low wholesale rates are necessary to provide Canadian consumers with a viable low-cost option,” Dion said.

Still, even if Quebecor gets a favorable decision on roaming rates, expansion is far from certain, Dvai Ghose, a Toronto-based analyst with Canaccord Genuity Group Inc. said in a note to clients.

Expanding nationally would demand new investment, while contributing only spectrum to a potential partnership wouldn’t bring Quebecor much return, Ghose said.

“Management seemed more cautious on wireless expansion than in the recent past,” he said. “A national launch is far from a given.”

To contact the reporters on this story: Christina Pellegrini in Toronto at cpellegrini3@bloomberg.net; Gerrit De Vynck in Toronto at gdevynck@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.