By agreeing with Rogers to buy Freedom, Shaw’s mobile division, Quebecor pulled the rug out from under Globalive, which had tabled a $900 million offer a few days earlier than its own, set at 2 .85 billion. This situation infuriates the founder and president of Globalive, Anthony Lacavera, who is making himself a prophet of doom if the offer is approved by Ottawa.
“Rogers negotiated this agreement with his billionaire friends who will not want to compete with him and who will be ready to resell Freedom to him at any time”, declared Mr. Lacavera in particular in reaction to the announcement of an agreement between Rogers and Quebecor . A surprising assertion given that no other observers or analysts specializing in the telecommunications sector have raised this possibility.
On the contrary, analysts interviewed by The duty all think that Quebecor has a clear intention of establishing itself as the fourth national provider of wireless services. Freedom currently has 2.2 million customers, all located west of the Ottawa River. He is currently the fourth largest wireless provider in the country. Quebecor and its subsidiary Videotron — which also operates the Fizz brand — come next with 1.3 million wireless subscribers located mainly in Quebec, but also in Ontario, in the Ottawa region.
There are approximately 34 million wireless service users in total in Canada. Between them, Bell, Rogers and Telus monopolize 89% of this market.
Quebecor President Pierre Karl Péladeau told the To have to as early as September have a “firm intention” to become a pan-Canadian wireless service provider. He would surely have laughed if the possibility of reselling his wireless activities to Rogers, so dreaded by Anthony Lacavera, had been mentioned…
Cheaper wireless?
The Videotron and Freedom twinning will consolidate their influence in the Canadian market. The intention, if this new fourth player takes shape as expected, is to play the role of the proverbial dog in a game of bowling, although that may take a little while to kick in.
Pierre Karl Péladeau has been preparing the ground for months. First, he warned that deploying a national network will be expensive and will take time. But when it does, the strategy could be the same as that adopted in Quebec starting in 2008. Videotron has had success with a slightly lower pricing structure than its rivals.
In wireless, the primary indicator of a provider’s financial health is the average monthly revenue per subscriber it generates. At the end of 2021, Bell had an average monthly revenue of $58.61 per user. Rogers’ is $57.25. At Telus, it is $56.45.
Videotron? $38.70. Freedom Mobile’s is even lower, at $37.66. Videotron’s influence in wireless is greater than Freedom’s because it is concentrated in the Quebec market, where the cost of wireless is cheaper than elsewhere in Canada. Videotron will have a good chance by becoming a national supplier to adopt the same inexpensive strategy to quickly win new subscribers, which should not be difficult, according to the specialists.
In notes to investors, analysts Jérôme Dubreuil, of Desjardins Securities, and Adam Shine, of National Bank Financial, believe that the impact of this transaction will be more positive than negative. “We believe that Freedom will be renamed Fizz”, goes so far as to predict Adam Shine. Fizz is Videotron’s inexpensive brand.
“Not everyone needs a Porsche,” illustrates Jérôme Dubreuil. “Canadian networks have a high level of quality […], but we believe that the market can easily accommodate a mid-range service — which Quebecor can offer. No offense to Globalive.