Revitalized Vidéotron Télécom moves into Ontario with takeover of Stream assets

The takeover of the telecom assets of Stream Intelligent Networks Corp. by Vidéotron Télécom ltée heralds a new approach by the Quebec-based telco. On death’s doorstep a few months ago, the CLEC has stormed back and is now anxious to assume its place in the Canadian telecom scene. Late last month, the Ontario Superior Court of Justice in Bankruptcy approved a deal whereby the subsidiary of Quebecor Inc. bought most of the assets of the defunct carrier. It did not buy the rights to the Sewer Telecommunication Access by Robot (STAR), a piece of equipment that permits installation of fibre in sanitation and storm pipes. "It is not our business. We are not in the construction business," Vidéotron Télécom president/GM Eugène Marquis tells Network Letter. "I’m subcontracting all the construction business per se. We run a fibre network." Under the deal, Vidéotron Télécom will receive Stream’s customer base as well as the POPs, infrastructure and building access connected with it. Vidéotron was already operating an intercity backbone; this takeover moves it into Canada’s largest city. "It would be a pure complement because we had a network already reaching Toronto but we didn’t have any local network in Toronto," Marquis notes. "So that would give us an extension to our own regional network to cover about 100 business places in Toronto." The network operating centre will be set up in Toronto to handle traffic during regular business hours, the president explains. The Montreal NOC will control things in off-peak hours. The acquisition of Stream’s assets marks an abrupt change in the fortunes of Vidéotron Télécom. When Quebecor initially purchased Le Groupe Vidéotron ltée, it put the telecom division on the market. Just over a year ago, the media conglomerate expected to unload the telco by last summer (NL, Feb. 26/01). Companies such as Telus Corp., GT Group Telecom Inc., and Norigen Communications Inc. considered purchasing all or some of the assets, but all eventually took a pass. Telus bought QuébecTel, Group Telecom bought assets from other companies, and Norigen went out of business. When it could not dispose of its telecom unit, Quebecor decided to revitalize the division. It shuffled the executive and committed itself to repositioning the company. "Vidéotron Télécom has undertaken a complete turnaround," Quebecor spokesman Luc Lavoie wrote Network Letter in an email earlier this year (NL, Mar. 12/02). "In less than 12 months, it has gone from a near bankrupt entity to a profitable one with expectations of 30 per cent growth a year for the foreseeable future." Marquis is not opposed to moving into other parts of the country, but is restricting his territory to the two largest provinces for now."Basically we position ourselves for the moment as being what I call an eastern Canada CLEC," he states. "That means we are connecting Toronto to the U.S., Toronto to Ottawa and Montreal, and Montreal down to the U.S. In fact we cover the whole Windsor-Quebec corridor. And that’s more than 75 per cent of the telecom business in Canada." The president won’t speculate on rolling out into western Canada or the Atlantic provinces, and makes clear that such a strategy is a long way off, if ever."We’re moving slowly but surely," he says. "We try to take care of our capital and we have limited resources. So we do prefer to move slowly." Stream had been awarded a major portion of 38 GHz spectrum in Industry Canada’s auction over two years ago. It got at least one licence in each of the 59 serving areas. (For more information, see the Nov. 29/99 edition of NL affiliate publication Report on Wireless.)Vidéotron Télécom will have to get approval from Industry Canada for the transfer of the spectrum licences. Marquis does not foresee any problems with that. He plans to use the spectrum as a secondary technology. If the company is not able to roll out fibre to an area, it will turn to wireless deployment. "The microwave will only be an interim solution, because basically Vidéotron Télécom operates a fibre network," Marquis reports.The telco president could not provide a breakdown of its client base divided between fibre and wireless, but says the microwave service is "marginal" and that the spectrum is merely "an accessory" to its core business. STAR still for sale Marquis says Stream’s receiver, PricewaterhouseCoopers (PwC), is still trying to find a buyer for the STAR technology. The global patent is held by a German company, which sublet its rights to firms across the world. No financial terms of the Vidéotron-Stream deal have been released. PwC senior VP Andy Wilcynski says the money will be used to pay off Stream’s creditors and to reimburse the receiver for its costs."It will be distributed to the creditors in order of the ranking. There’s actually a number of secured creditors, and it’ll be distributed in accordance to the priority of their security," he tells Network Letter. "I guess depends on terms of liquidating some of the obligations we’ve incurred while trying to sell and operate Stream for the interim period since it went under." Marquis reports that Vidéotron Télécom has already hired some Stream employees and expects to have more on board after the company determines its workforce needs.

Revitalized Vidéotron Télécom moves into Ontario with takeover of Stream assets

News | April 9, 2002

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