(Bloomberg) — Quebecor Inc. spent C$830 million ($667 million) in Canada’s wireless spectrum auction, a move that signals an ambition to challenge the country’s three dominant telecommunications companies in 5G services.
Quebecor’s Videotron Ltd. unit came out as the fourth-largest bidder in the auction that raised a record C$8.9 billion for the government.
The Montreal-based cable and media company currently offers wireless services primarily in the province of Quebec. But it snapped up 294 licenses covering about 30 million people, including blocks of spectrum in southern and eastern Ontario, Alberta and British Columbia, positioning the company “to realize its ambition of boosting healthy competition in telecom beyond the borders of Quebec,” Quebecor said in a statement.
“The biggest surprise in the results is the C$830 million spent by Quebecor,” CIBC World Markets analyst Robert Bek said in a note. The spending suggests “the clear aspiration to become the fourth national wireless player in Canada,” he said.
The aggressive move for a share of the 3,500 MHz spectrum, a critical component of the nation’s 5G rollout, paves the way for Quebecor to seek out acquisitions to bulk up.
Quebecor Chief Executive Officer Pierre Karl Peladeau has expressed an interest in buying Freedom Mobile — the wireless division of Shaw Communications Inc. that some analysts believe may be put up for sale as a condition of Rogers Communications Inc.’s proposed takeover of its rival.
Quebecor on Thursday reiterated its interest in buying the asset, urging federal regulators examining the Rogers-Shaw deal to foster competition in the country of 38 million people.
“We are confident that we are the right player, the one with a real ability to break the oligopoly and put consumers across Canada back in the driver’s seat,” Peladeau said.
Shares Lag
For now, though, the license expense might be hard for investors to swallow. Concerns about Quebecor’s strategy in the auction, its eyeing of Freedom Mobile, and the recent departure of Videotron CEO Jean-Francois Pruneau have already been weighing on the stock, Scotiabank analyst Jeff Fan wrote in a report earlier this month.
Quebecor shares are down about 4% since the Rogers-Shaw deal was announced on March 15, trailing an index of Canadian telecom companies that is up about 6.2%.
It’s not the first time Quebecor, a company with roots in print media, has expressed national ambitions. In 2014 it paid C$233 million for licenses in Ontario, Alberta and British Columbia, only to sell them a few years later.
“QBR spent much more in this auction than we had anticipated, but also ended up with much more spectrum than we expected,” Desjardins analyst Jerome Dubreuil said.
A vocal personality who has dabbled in provincial politics with the separatist Parti Quebecois, Peladeau was most recently in the news for attempting to buy, through his investment company, struggling vacation operator Transat AT Inc. Those talks fell through.
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