The Quebecor headquarters, in Montreal, on Oct. 6, 2014.Ryan Remiorz/The Canadian Press
Pierre Karl Péladeau, president and CEO of Quebecor Inc. , will replace the head of subsidiary Videotron Ltd., as the Montreal-based telecom conglomerate faces several key strategic decisions that will determine the future of its wireless business.
Jean-François Pruneau will step down from his role as Videotron’s president and chief executive on June 4 to focus on “personal investment projects,” Quebecor said in a news release Tuesday. Mr. Pruneau has been with the company for two decades and took on his current position in January, 2019.
His departure comes at a pivotal moment for Quebecor, as it heads into a critical auction for 5G airwaves and faces a decision on whether to expand its business outside of Quebec in light of a recent ruling by Canada’s telecom regulator. Videotron, which Quebecor took over in 2000, offers cable television, internet and wireless services, and it is Quebecor’s largest division, generating roughly 84 per cent – or $3.62-billion – of the conglomerate’s revenue last year. Quebecor also owns a media business and a sports and entertainment division.
Analysts reacted to the news with a mix of surprise and disappointment, noting Mr. Pruneau’s tenure as CEO was brief and his exit is the third departure of a Videotron CEO in seven years. He was preceded by Manon Brouillette, who left in 2018, and by Robert Dépatie, who ran Videotron until 2013 and then headed up Quebecor Inc. and Quebecor Media Inc. until 2014.
“We are sad to see [Mr. Pruneau] step down,” Scotia Capital telecom analyst Jeff Fan said in a note to clients, adding the executive was well liked by investors for his candor, strategic vision and ability to expand the business without sacrificing profits.
RBC analyst Drew McReynolds called it a “negative surprise.”
“We believe Jean-François Pruneau’s track record is very well respected among the investment community, with Mr. Pruneau being a key point of contact within the company for the street for well over a decade,” Mr. McReynolds said in a note to clients.
However, several analysts also noted that Mr. Péladeau, who will take over Mr. Pruneau’s duties, has overseen all of Videotron’s strategic moves for years. “We understand that Pierre Karl Péladeau was very involved in the management of Videotron so from an operational standpoint we don’t expect drastic changes,” Desjardins analyst Jérome Dubreuil said in an interview.
Mr. Pruneau’s exit comes hot on the heels of an announcement by Canada’s telecom regulator that it will force the Big Three national wireless carriers (BCE Inc.’s Bell Canada , Telus Corp. and Rogers Communications Inc. ) and SaskTel to temporarily sell network access to regional competitors who commit to building their own wireless infrastructure. Videotron is among the regional wireless carriers that would be eligible to participate under the rules set out by the Canadian Radio-television and Telecommunications Commission.
Quebecor said in a statement that it supports the decision, which recognizes the benefits that regional competitors bring to consumers.
Mr. Péladeau has also expressed interest in purchasing Shaw Communications Inc.’s wireless carrier, Freedom Mobile, if it were for sale. Shaw has entered into a $20.4-billion merger agreement with Rogers, and some analysts predict regulators will force Rogers to spin out Freedom to preserve competition in the wireless market.
Quebecor is “about to embark on an important strategic decision of whether to expand its wireless business outside Quebec and if so, how it will execute in light of potential Rogers divestitures as part of the Shaw acquisition,” Mr. Fan said.
Mr. Pruneau is the second executive departure announced this month at Quebecor. The company said on April 14 that France Lauzière, president and CEO of TVA Group and chief content officer of Quebecor Content, is taking a six-month break for “family reasons.” Mr. Péladeau has taken over her duties on an acting basis, the company said in a news release.
Shares of Quebecor fell by 5.2 per cent on the Toronto Stock Exchange Tuesday, closing at $33.55.
National Bank analyst Adam Shine called the decline a “knee-jerk reaction” that occurs every time there is a management change at the company. For instance, Quebecor’s shares briefly took a hit when Mr. Dépatie left the company, but performance remained stable, he said. “The company doesn’t skip a beat and keeps executing,” Mr. Shine said in a note to clients.
Mr. Péladeau thanked Mr. Pruneau for his service and wished him future success. “With his strong leadership and business acumen, he has made a vital contribution to the development of our business plan and the solidity of our company,” Mr. Péladeau said in a statement.
Mr. Pruneau praised Videotron’s team and thanked Mr. Péladeau. “I am turning a page in my professional life with a sense of accomplishment,” he said in a statement.
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