BUSINESS

Quebecor not interested in buying Wind by itself but sees room for partnership

09/17/2014 03:08 EDT | Updated 06/16/2017 00:56 EDT
MONTREAL - Quebecor's finance chief says the company is "certainly interested" in talking with Wind Mobile's new investors about a partnership but doesn't want to buy the Toronto-based company on its own because of the follow-on costs involved.

Quebecor (TSX:QBR.B) chief financial officer Jean-François Pruneau told an investor conference Wednesday that the Montreal-based company could have afforded the initial $300 million that a group of investors has agreed to pay to buy a majority ownership stake in Wind Mobile.

But Wind CEO Tony Lacavera said Tuesday that the company will need to buy spectrum, either through one of Ottawa's auctions next year or from other companies, while an industry analyst has said Wind will also need to find money to fund marketing, customer support and advertising in order to grow its subscriber base.

"We didn't want to be the buyer of Wind for that specific reason. Because, once you've started that, you're at risk for the rest," Pruneau said a CIBC investor conference in Montreal.

"I've had many, many discussions with many, many potential partners and — as we do — they want to see the risk level going down."

Meanwhile, Pruneau said Ottawa took a "very, very good step" when it imposed a temporary cap on wholesale rates in June.

"It has decreased our costs. There's no doubt about that. But we need more than that," Pruneau said.

But he said the roaming rates for Videotron customers making calls while outside the Quebecor coverage area are also critical. CRTC hearings set to begin on Sept. 29 will deal with that issue but a decision is likely months away.

Pruneau said a network sharing agreement with Rogers, one of Canada's three national wireless carriers, was very important to Videotron because it was able to offer an advanced LTE service sooner than it would have on its own.

"That translates into higher revenue potential and a higher return on investment. So this agreement was key to Videotron and I certainly believe it was also key to Rogers," Pruneau said.

Earlier in the day, the head of Rogers Communications (TSX:RCI.B) was asked whether the Toronto-based company is well-positioned to be a supplier to a fourth national carrier, if one emerges, as it has been to small regional carriers such as Quebecor.

"I would describe myself as neutral," said Guy Laurence, a former Vodafone UK CEO who has headed Rogers since December.

Rogers has got the capacity to handle more traffic on its system, given the 700 megahertz spectrum that it acquire earlier this year, but it doesn't need partners, Laurence said. "Let's see what happens in the (CRTC) hearings."

Laurence did say a content agreement with Quebecor — which has acquired French-language rights to NHL games through Rogers — is good for both companies.

He said that sports and entertainment content are key to the Rogers strategy, because consumers see value in getting those and will be willing to pay for the wireless services that the company offers.

Over the past year, Rogers has spent billions to increase its wireless data capabilities and committed to spend billions more for rights to content, such as National Hockey League games for 12 years starting with the 2014-15 season.

"We fundamentally believe that Canadians will consume huge amounts of content on their mobile phones. In order to facilitate that, you need big pipes in the sky, spectrum. . . . .And that's what we bought," Laurence said.

By David Paddon in Toronto.

— Follow @DavidPaddon on Twitter.