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Quebecor in talks to build national wireless network if barriers removed

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MONTREAL - Quebecor says it is in talks with other new wireless carriers and potential financial partners to establish Canada's fourth national carrier if barriers such as high roaming fees and tower sharing problems are resolved.

"The global vision is to offer a pan-Canadian service," CEO Pierre Dion said Thursday after telling shareholders about its efforts.

The company, which provides cellphone service to more than 500,000 customers in Quebec, said it is well-placed to provide Canadians with more competition.

Dion said Quebecor, which also operates cable, TV and newspapers, is thinking about combining with one or two of the new wireless entrants — Wind Mobile or Mobilicity. He said that would almost triple Quebecor's consumer base.

Earlier this week, Wind Mobile chief executive Anthony Lacavera said Canada's new wireless companies should have worked harder to combine forces to compete with the three big wireless companies when they launched.

Meanwhile, Mobilicity is operating under court protection from creditors while it works to restructure.

Dion declined to provide timelines for making a decision or setting up a network, or any hint of the required financial investment.

"No dollar amounts, no timelines today. These will be answers we'll probably be able to commit in the weeks, months to come," he told reporters.

"The future will tell us how fast this process will be but I think the pressure is coming from consumers who will be more than happy and are anxious to have real competition in Canada."

Quebecor, through its Videotron subsidiary, has spent more than $1.6 billion to date, including $788 million on wireless spectrum to build its network.

Dion said the key to expanding its service is the need for a fair and competitive, federally regulated roaming policy.

He said current regulations favour the three large wireless players — Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) — which have more than 25 million wireless subscribers among them and control about 90 per cent of Canada's market.

The Canadian Radio-television and Telecommunications Commission has public hearings scheduled for September to determine if big players are putting small wireless players at an unfair disadvantage with the wholesale roaming rates they charge them for using their networks.

Ottawa moved recently to cap the amount large Canadian wireless companies can charge other smaller companies for roaming fees.

The government is also making changes to give the CRTC and Industry Canada the ability to fine companies that break rules such as the wireless code and agreements on deploying wireless spectrum and cellphone tower sharing.

Analyst Dvai Ghose of Canaccord Genuity said a national wireless expansion would be more of a risk than an opportunity for Quebecor.

He said the company would incur huge losses to build its own network outside Quebec, adding that the Canadian market, like the United States and Europe, may not be able to support four large players.

Ghose said Videotron Wireless has not been a total success in Quebec and that it has no "obvious competitive advantages outside Quebec." Its balance sheet is also weak and small, especially considering it needs to purchase the Caisse de depot's remaining 25 per cent stake in Quebecor Media by 2019.

"Given that virtually every Canadian telecom new entrant has failed, we wonder why financial institutions would want to partner with Quebecor when it comes to national wireless expansion," he wrote in a report.

However, Dion insisted its wireless efforts in Quebec have been successful and the efforts to provide lower prices in the rest of Canada would be well received by consumers.

Meanwhile, Quebecor shareholders elected former prime minister Brian Mulroney as chairman and paid tribute to controlling shareholder Pierre Karl Peladeau who entered politics as a sovereigntist member of the Parti Quebecois and possible future leader.

"Mr. Peladeau's decision was a personal decision and we respect his choice," Dion said, noting that the son of the company's founder is no longer involved in operations or strategy.

"Mr. Peladeau has left a good heritage with a lot of talented people and we thank him for that."

Follow @RossMarowits on Twitter

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