Vidéotron Télécom emerging as a coveted jewel in Quebecor’s newest media crown

Quebecor Inc startled many in the telephony world last week when it announced that the telecom assets of le Groupe Vidéotron ltée would be put on the selling block. It wasn’t the decision to sell that caught the industry off guard so much as the speed with which Quebecor acted. Some industry analysts believed the media conglomerate would study the subsidiary first to determine its potential value to Quebecor’s Canoe Internet portal. There’s no doubt Vidéotron Télécom, with its 6000-km fibre network, including 2500 km in the Montreal area, is an attractive asset for any company wanting a ready-made infrastructure base in Quebec. Even before the takeover, Vidéotron was entertaining offers for the division. "If they are going to put them up immediately for sale, that’s probably faster than the marketplace would have anticipated," Daniel Milliard, CEO of GT Group Telecom Inc, told Network Letter. His company is among those that has expressed interest in the Quebec telecom company. It held preliminary discussions with Vidéotron under its previous ownership, talks that were put in abeyance following the takeover. "We’re interested in looking at acquisitions that allow us to get into a market quicker," Milliard says, stressing his company wants to purchase a firm with established fibre networks and a customer base. "Certainly the Groupe Vidéotron Télécom assets fit those characteristics. With that being said, I’ve also said before that we are aggressively building out Montreal and Quebec City and Ottawa-Hull. So the value of these assets become less and less as we overlap more." The other major player thought to be eyeing Vidéotron’s property is Telus Corp. Last March the western telco established its presence in la belle province by buying 70 per cent of QuébecTel. The $585-million deal gave the ILEC an incumbent customer and network base in Quebec. It also permitted QuébecTel to expand beyond its licensed territory. (Ownership restrictions had kept the Quebec firm, which was previously controlled by American telco GTE Corp, from moving past its rural roots.) Telus would see its national footprint grow with the acquisition of Vidéotron Télécom, but a loss to Group Telecom or another competitor would not hinder its rollout plans. The prospect of several companies vying for the Quebecor division could shoot up the purchase price. "That’s always a possibility but I can tell you Group Telecom is not going to get into a bidding war over these assets," Milliard asserts. "They will have a value to us once we’ve made a reevaluation of where the business has come since we looked at it last. We will determine internally what we are willing to pay for it. If we were to decide to enter the bidding process, we would only pay what we think it’s worth and we’re not going to get caught up in a frenzy of having multiple bidders." Despite that caveat, Group Telecom is a logical contender for the assets. Its network is made up of several former cable-owned fibre companies, including the one previously owned by Shaw Communications Inc. Many of these large fibre networks are also interconnected. The former Rogers telecom backbone is linked at the Ottawa-Hull border with Vidéotron, which in turn connects at the New Brunswick border to the fibre network formerly owned by Fundy Cable. This summer Group Telecom bolstered its fibre holdings with the purchase of Cable Atlantic Inc’s telecom division in Newfoundland. The CEO says his firm will continue its rollout in Quebec and in southwestern Ontario and may expand into two or three secondary markets. "We already have what we think is a pretty good national footprint with the facilities we have, either today or that are going to be delivered to us as a result of our purchase of long haul intercity fibre," boasts Milliard. "So what our job is now, is to most fully develop our market share of the markets we are in."

Vidéotron Télécom emerging as a coveted jewel in Quebecor’s newest media crown

News | 09/25/2000 4:00 am EDT

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