Quebecois telco Videotron has laid out its vision to become Canada’s fourth nationwide mobile operator and said it is looking to consolidate with willing partners.
Speaking at a telecoms summit in Toronto, Pierre Dion – the new CEO of Videotron’s…
Quebecois telco Videotron has laid out its vision to become Canada’s fourth nationwide mobile operator and said it is looking to consolidate with willing partners.
Speaking at a telecoms summit in Toronto, Pierre Dion – the new CEO of Videotron’s parent Quebecor – said he wanted to offer a low-cost alternative to the country’s big three operators.
The plan is based upon investing in spectrum, building out its network, and consolidating other operators – likely to mean small challenger Wind Canada and bankrupt minnow Mobilicity.
Earlier this year Videotron acquired a swathe of 700 MHz spectrum, set aside by the government for a smaller player, for C$233m, giving it the opportunity to expand its footprint across the country.
However, Dion’s speech included a significant caveat. He lobbied for regulatory concessions and said they were key to Videotron expanding.
Dion’s argument centred on reforming roaming policy and wholesale pricing, which he said was “critical to the vision”. He cited a previous comment from the Competition Bureau of Canada, which has said incumbent players have used the roaming policy as a “strategic tool to eliminate or reduce the competitive pressure… in Canadian mobile wireless markets”.
Canada’s Conservative government wants to increase competition in the mobile sector and has looked to provide the conditions for a new player to enter the national market and challenge Bell Canada, Rogers Wireless and Telus.
Quebecor has selected former Canadian Prime Minister Brian Mulroney, who has ties to the current Conservative administration, as its new chair. The appointment led to speculation that he may have been appointed to aid Videotron’s nationwide ambitions.
Playing politics
Canaccord Genuity analyst Dvai Ghose told TelecomFinance that Videotron was likely awaiting the outcome of The Canadian Radio-television and Telecommunications Commission’s (CRTC) wireless wholesale review, expected in early 2015, before deciding whether to proceed.
However, he felt that nationwide expansion was more of a risk for the Montreal-headquartered operator than an opportunity.
Ghose said that while the government may bend over backwards to nurture Videotron’s ambitions, politics and regulatory are “fickle games”.
“With a Federal election expected in 2015 and a possible Liberal win; and Quebecor’s controlling shareholder (Pierre Karl Peladeau) being an avowed Quebec separatist and [a member of Quebec’s national assembly, representing Parti Quebecois], perhaps Quebecor should be wary when it comes to future regulatory uncertainty,” Ghose said.
The analyst also pointed to European countries such as France where the regulatory environment has changed and authorities now favour a reduction from four players to three. He said that strict resale conditions imposed on established players had hit investment in the sector.
RBC Capital Markets analyst Drew McReynolds told TelecomFinance that he expected Videotron to wait nine to 12 months before making a decision, and that it would be more focused on the outcome of the CRTC’s roaming review than the next election.
McReynolds said Dion was posturing in his speech, delivered to a room filled with influential governmental and regulatory figures, but that Quebecor was serious about expanding outside of Quebec and had been talking about doing so for the last decade.
McReynolds said that Videotron would have to take a long term view and plan for the next 10 to 20 years. He added that Videotron, Wind and Mobilicity had to find a way to combine and pool their spectrum assets due to their limited options.
