MONTREAL – Quebecor CFO Jean-Francois Pruneau told an investor’s conference Wednesday that despite all of the company’s spectrum holdings beyond its home province, it has no plans to build another national wireless company.
During the CIBC World Markets 2015 Institutional Investor Conference, Pruneau outlined the company’s moves over the last few years and complained about how much its stock price (it closed at $28.58 on Wednesday) undervalues the company. Its recent share repurchase from La Caisse de depot et Placement du Quebec value the company at $36/share, insisted the CFO.
Part of that increased value, he continued, is the market value versus book value of the spectrum rights the company owns. It has plenty of spectrum for its Quebec wireless operations, but it also owns several chunks of 700 MHz and 2500 MHz in Ontario, Alberta and British Columbia.
That has led many over the past couple of years (including Quebecor's CEO) to speculate the company could launch a national wireless play. Not going to happen, Pruneau told investors with certainty on Wednesday.
“We just could not pass on the opportunity to acquire high quality spectrum at such an attractive price in Canada’s most populated provinces,” said Pruneau of the spectrum it purchased – at a big discount compared to the prices paid by the likes of Rogers, Bell and Telus because the licenses Quebecor purchased were chunks set aside for new wireless entrants which the Big Three could not bid on.
“We now have various options to maximize our return on investment while minimizing risk,” he continued. “Those options include, among others, transferring the spectrum to a third party for cash, securities or both”
“Building a new wireless network from scratch in the rest of Canada is not among the options being considered.”
“The Mobilicity transaction has changed the landscape and now it’s possible to believe even on a short term basis that transferring the spectrum to an incumbent could be done.” – JF Pruneau, Quebecor Media
QMI, Pruneau added, could sell the spectrum to one of the Big Three, or form a partnership with Wind Mobile, which could certainly use additional spectrum in Toronto, Vancouver, Calgary, Edmonton and Ottawa – where Videotron owns licenses.
Despite the fact the federal government has been extremely reluctant to see spectrum bought by newcomers be sold to incumbents, Pruneau told investors he believes the climate has changed with the purchase of Mobilicity by Rogers. “When you’re talking about selling or transferring your spectrum, you have two choices. Either you go with the incumbents, or you go with Wind. Going with Wind could be cash or securities,” he said.
“We think there is definitely value we can bring to Wind’s operations… we also have some expertise, we definitely can combine our purchases of handsets and whatnot so there is definitely some value that we can bring.
“The Mobilicity transaction has changed the landscape and now it’s possible to believe even on a short term basis that transferring the spectrum to an incumbent could be done.”
Left unsaid at the conference was the possibility of selling it to an outsider such as Verizon, which we (and others) speculated about here in 2014.
