VMedia purchase will sweeten Freedom deal for regulators: Quebecor’s PKP

Quebecor Inc.’s president and CEO has said the company’s recent purchase of VMedia Inc. will put it in a position to bundle services and convince the regulators that its purchase of Shaw Communications Inc.’s Freedom mobile will be good for competition. Pierre Karl Péladeau made the comments Thursday in a second quarter conference call with analysts. Péladeau said that despite the Competition Bureau’s silence on the company’s Freedom Mobile purchase, Quebecor feels that the regulator does not think it is good enough for competition. “This is our understanding. Do we have it from the horse's mouth? The answer is no. And again, you know, this is why we're still working on it. And we want to make sure that we will bring the arguments to convince them,” Péladeau told analysts. In May, the bureau wrote in its application to the Competition Tribunal to block the pending acquisition of Shaw by Rogers Communications Inc. that a simple divestiture of Shaw’s wireless assets would still harm competition in the wireless space “by severing from the divested business the wireline assets that the Shaw Mobile brand utilizes to provide bundles of wireline and wireless services to consumers.” “So, we are emphasizing the fact and regarding the file with VMedia, we now are in a position to do so,” Péladeau told analysts. VMedia deploys its services in all Canadian provinces and territories. As sole shareholder of VMedia, Quebecor essentially controls the company and all of its licences, but VMedia will continue to remain an independent entity, according to VMedia co-founder George Burger. Péladeau did not disclose the cost of Quebecor’s acquisition of VMedia to analysts. Péladeau admitted to analysts that its purchase of VMedia “could be considered early in the process” but that the Montreal-based company was being opportunistic in its purchase. He said the acquisition of VMedia will also help Quebecor to increase its content in an unregulated television environment. “The regulation of television is unfortunately, from our perspective, an additional factor which is basically putting our hands kind of handcuffed,” he said, adding that 99 per cent of the different programmes it is forced to distributed are not watched. Quebecor posted $1.12 billion in revenue, $16 million less (1.4 per cent) than it posted in its second quarter of 2021, for a total of The telecommunications sector and media sector netted $15.8 million (1.7 per cent) less, and $10.1 million (5.1 per cent) less in revenues, respectively, compared to Q2 2021. The segments netted a total of $912.6 million and $188.1 million in the second quarter. The media sector saw a $11.5 million jump in revenues (34.3 per cent) since this time last year for a total of $45 million. The majority of the lower revenues in telecommunications comes from wireline equipment sales which saw a 59.2 per cent decrease since its Q2 2021, dropping from $50.2 million to $20.5 million in revenue “mainly because of a lower volume of equipment sales related to the Helix platform,” according to its release. Wireline telephony dropped by 8.7 per cent, racking in $73.7 million in revenue compared to the $80.7 million it brought in last year. Finally, television also saw a decrease in revenue,going from $211.3 million this time last year to $200.4 million, accounting for a 5.2 per cent decrease. Despite the decrease in revenue, Quebecor’s net income increased by 25 per cent since last year jumping from $124.7 million to $156.3 million. Videotron increased its revenues from mobile services and equipment by $27.0 million (11.4 per cent) in the second quarter of 2022. Videotron’s total average revenue per user (ARPU) was $47.17 in the second quarter of 2022 compared with $47.22 in the same period of 2021, a $0.05 decrease (0.1 per cent). Mobile ARPU was $38.94 in the second quarter of 2022, a $0.53 (1.4 per cent) increase from the $38.41 generated in the same period of 2021. Quebecor added 34,600 mobile customers this quarter totalling almost 1.7 million – compared with an increase of 27,200 in the same period of 2021. Internet subscribers remained the same with approximately 1.8 million customers, whereas the company added 5,300 subscribers during the same period in 2021. Television subscribers dwindled by 12,900 for a total of 1.4 million. It’s second quarter on 2021 saw a bigger drop in subscribers, 3,200, for a total decline of 16,100. Over-the-top subscribers decreased by 16,100 customers from the end of the first quarter of 2022, totalling 504,800 this quarter. That accounts for 4,800 more losses than it saw during the same period last year, which saw a 11,300 subscriber decline. Péladeau noted to analysts that if the Rogers-Shaw merger review is dragged out it could have an effect on the subscriber base and the commercial strategy that Freedom Mobile is now using. He said it is up to Shaw on whether to carry on as business-as-usual, or put more emphasis on one company over the other – depending on how it wants to position itself in front of the bureau. When analysts asked Péladeau if he thought the Rogers-Shaw merger would go through a full tribunal, the CEO answered that Quebecor is “not running the show.” “I'm not going to say that we are in the bleachers. But you know, we are far from being on home plate and we're not playing directly with the Competition Bureau,” he said. “We respectfully think that the Competition Bureau, the CRTC, should realize that the longer they wait to act -- either by approving that sales or Freedom or by finally establishing the competitive MVNO framework -- the longer they encourage the current oligopoly that is actively limiting competition outside Quebec. Is it time to give a chance to operators who are capable and willing to jump in and break the stronghold of the big three – who in the meantime has been increasing their revenues and EBITA quarter after quarter at the expense of Canadians,” he said. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

VMedia purchase will sweeten Freedom deal for regulators: Quebecor’s PKP

Broadcast | August 4, 2022

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VMedia purchase will sweeten Freedom deal for regulators: Quebecor’s PKP

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