By J. Sturgeon | National Post | March 11
Marrying content to networks has become the vogue with cable and Internet companies to differentiate themselves from peers. The consensus among industry watchers, failing to see any strong upside in value, has been lukewarm, but there are always exceptions.
Yesterday, Quebecor Inc. gave analysts and investors a deeper glimpse into plans to introduce wireless services this summer and further its position as a cross-platform content provider. And both groups came away enthused.
On a fourth-quarter earnings call, chief executive Pierre Karl Peladeau said the Montreal-based communications and media giant was "pushing ahead" with its wireless ambitions through cable subsidiary Videotron Ltd.
The wireless rollout is part of a broader campaign "aimed at producing and distributing content of the highest quality on the greatest number of distribution platforms," he said.
Videotron is a dominant player in Quebec's telecom services business, with a strong position in cable, Internet and residential phone markets. But it also operates dozens of French-language media assets, ranging from newspapers like Le Journal de Montreal and the TVA conventional television network.
With a population of 5.8 million French-speaking residents, the most consumed content in Quebec remains francophone, with Quebecor the owner of much of it, said Dvai Ghose, analyst at Genuity Capital Markets.
The company's media offerings resonate deeply with its customer base, and analysts say Quebecor plans to use that to advantage as it pursues a $1-billion wireless rollout.
"All this is going to be used to present a portal to wireless subscribers who want to have that French content," said Maher Yaghi of Desjardins Securities. "They see media as a source of interest to their customers and surround that media with ways to supply it to customers."
The company paid $550-million for airwave licences that blanket Quebec during Ottawa's wireless-spectrum auction in mid-2008. Analysts say Quebecor plans to bundle cellphone and smartphone products with its other services to steal share against larger rivals such as BCE Inc.
Mr. Ghose at Genuity is cautiously bullish that Quebecor can effectively use its content as a persuasive differentiator. "Can they execute it well? Time will tell. But they have the content and they have the wireless asset," he said.
Investors responded positively yesterday, sending shares in the company 5% higher before a slight afternoon retreat. The stock finished at $33.67, up 4.5%.
Most were reacting to a better-than-expected performance in the last quarter. Quebecor swung to a fourth-quarter profit of $73.8-million, or $1.12 a share, in the three months ended Dec. 31, compared with a loss of $344-million ($5.34) a year earlier because of sizable goodwill impairment.
The results were driven by continued growth in telecom services, where operating income jumped 29% year over year to $280.9-million. Media operations saw revenue declines slow as the recession ebbed and through restructuring efforts. The division earned $69.3-million.
Combined revenue rose 2% to $1.02-billion for the quarter.
jasturgeon@nationalpost.com
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