A man enters a Freedom Mobile store in Toronto.Nathan Denette/The Canadian Press
Pierre Karl Péladeau, the president and CEO of Quebecor Inc. QBR-B-T, says he will move “as quickly as possible” to make good on his promise of bringing down wireless prices for the customers of Quebecor’s newly acquired cellphone carrier, Freedom Mobile.
As Quebecor’s telecom subsidiary, Videotron Ltd., completed its $2.85-billion takeover of Canada’s fourth-largest wireless carrier on Monday, Mr. Péladeau said it was too early to divulge the details of how the Montreal-based company plans to win over customers outside of its home province of Quebec.
But he has no plans to do away with the Freedom Mobile brand, Mr. Péladeau noted during an interview Monday afternoon at the sleek downtown Toronto headquarters of his newly acquired company. “Freedom is a good brand,” he said, later adding, “You know, we paid $3-billion for it.”
Videotron’s opportunity for growth and national expansion – the acquisition of Freedom roughly doubles the telecom’s customer base by adding 1.7 million subscribers in Ontario, Alberta and British Columbia – materialized thanks to Rogers Communications Inc.’s RCI-B-T $20-billion takeover of Shaw Communications Inc. SJR-B-T. Rogers was forced to divest Freedom to prevent the takeover from hurting wireless competition.
In order to win the approval of federal Industry Minister François-Philippe Champagne, Videotron has made a number of written commitments, including that over a period of 10 years, it will offer wireless plans that are 20 per cent less expensive than those offered by the major carriers on a specific benchmark date in February, 2023. Videotron has also promised to spend more than $150-million upgrading Freedom Mobile’s network and to roll out 5G wireless services to 90 per cent of its customers within two years. The company has agreed to pay the government $25-million for each year it fails to meet that promise, starting in the third year, up to a maximum of $200-million.
Will the sale of Freedom Mobile in the Rogers-Shaw deal lead to lower wireless prices for Canadians?
“We’re going to act very quickly here,” Mr. Péladeau said, hinting that Videotron may expand its wireless business into Manitoba, as well. “There’s a high possibility that we’re going to go there, too.”
The Freedom deal was reached at an opportune time for Videotron, which has already captured 23 per cent of Quebec’s wireless market. The company’s executives said in late 2018 that Quebecor had roughly four more years of revenue and market share gains ahead before it would need to find a new wireless growth strategy.
It’s not the first time that Videotron has plotted a national expansion. It previously acquired spectrum – licences for the airwaves used to transmit wireless signals – outside of Quebec with the hope of taking its wireless operations national. But it wound up abandoning that effort and selling the licences, blaming the federal government for dragging its heels on wholesale roaming rates and tower-sharing rules.
This time, Mr. Péladeau believes the conditions are ripe for Videotron’s successful expansion. In addition to having acquired Freedom’s customers, wireless infrastructure and spectrum licences, allowing it to expand in one fell swoop, Videotron has also negotiated access to infrastructure owned by Toronto-based Rogers. That includes an agreement under the Canadian Radio-television and Telecommunications Commission’s new wireless, or mobile virtual network operator regime, Mr. Péladeau said.
The CRTC recently implemented a framework requiring the large wireless carriers to sell smaller competitors such as Videotron access to their networks for a period of time while the smaller carriers build out their own wireless infrastructure.
Mr. Péladeau said he’s also encouraged by the appointment of Vicky Eatrides, who spent 17 years working at the Competition Bureau, to the role of CRTC chair.
“My feeling is it’s a good thing, since we’re looking to have a more competitive environment,” Mr. Péladeau said. “She would certainly have the proper expertise.”
The Competition Bureau, which fought an unsuccessful legal battle to try to block the three-way deal, had argued that the agreements between Rogers and Videotron would leave the Montreal-based telecom vulnerable to anti-competitive actions by Rogers.
Mr. Péladeau said he “can’t ignore” that in 2021, Quebecor’s long-standing network pact with Rogers crumbled, resulting in an $850.3-million lawsuit. But he believes that that the Freedom Mobile transaction has allowed the two companies to “reset” their relationship.
With all of the right conditions now in place, Mr. Péladeau believes that Videotron will be able to offer its customers the same network quality as the Big Three telecoms – Rogers, BCE Inc. and Telus Corp. T-T – at a lower price.
“I guess it’s probably not good news for them,” the Quebecor chief executive officer said. “But that’s not my business.”