According to Globe and Mail, Rogers agreed to sell Freedom Mobile to Xplornet, rather than Quebecor, which had shown interest, in an effort to meet federal requirements to obtain government approval for its project merger with Shaw. What would be next for the Quebec company?
Posted at 7:00 a.m.
What are the implications for Quebecor?
“It’s clear that Quebecor is not Rogers’ preferred partner, if they have the choice,” said analyst Jérôme Dubreuil of Desjardins Securities in an interview. “We will see if the government is open to Rogers’ proposal. Quebecor was not really included in the negotiations. Assuming that the information of the Globe and Mail is fair, then Rogers finds that a transaction with Xplornet is more favorable than a transaction with Globalive [l’autre acquéreur pressenti pour Freedom Mobile]. »
Can Quebecor still expand outside of Quebec in wireless?
Quebecor still has the opportunity to break into the wireless market using mobile virtual network operator access. However, we do not yet know the rules and prices of this virtual operator model, “but it is certainly a possibility for Quebecor”, says Jérôme Dubreuil. In this regard, Quebecor said it was ready last year to negotiate rates with the main suppliers [Rogers, Bell et Telus] specifying that this possibility was however only possible “under the right conditions”.
Is this an interesting solution?
Jérôme Dubreuil does not believe that this would be an “extremely profitable” project. “The rules ensure that the big players will have their say in this negotiation. At the same time, it’s not a project that requires large initial outlays since you can use other players’ networks. It is a low initial investment. You can probably demonstrate that it’s worth at least exploring the market,” he says.
PHOTO DAVID BOILY, LA PRESSE ARCHIVES
Quebecor would like to deploy its mobile telephone service outside Quebec.
Does Quebecor have other options?
Buying Xplornet eventually is definitely an option. “On the other hand, says Jérôme Dubreuil, the Ontario company Xplornet was bought in 2020 by the American investment firm Stonepeak. The typical holding period for an investment from such a firm is around 5 to 10 years. Quebecor would be a potential buyer of the assets if they are available in a few years”, believes this expert.
Does Quebecor want to have a wireless presence outside Quebec?
The big boss of Quebecor, Pierre Karl Péladeau, said that the purchase of blocks of spectrum in the country (Ontario, Manitoba, Alberta, etc.) last summer at a cost of 830 million was the “first step” towards expansion of telecommunications activities outside Quebec. If the resale for profit of these licenses is not to be ruled out, Pierre Karl Péladeau maintains that Quebecor has the expertise and the means to successfully deploy its mobile telephony service in English Canada. However, the costs associated with growth outside Quebec are fueling concerns. Quebecor’s success in Quebec can be explained in particular by its product offering (wireless, cable, Internet and residential telephony). The competitive environment outside Quebec with a single product – wireless – could prove difficult.
And Cogeco, in all this?
“Cogeco did not want to buy Freedom,” says Jérôme Dubreuil. “Cogeco could become a partner with advantageous roaming agreements or resell the Xplornet network and offer wireless service in their own market, especially in Ontario in the Oakville area, because in Quebec, Freedom is not there. There would be no deal to be made. Cogeco could also become a mobile virtual network operator. However, management says it is waiting for the rules surrounding this model to be known before making a decision.