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What’s Vidéotron’s Next Step?

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Videotron

The government’s long-term effort to encourage a fourth wireless player seems to have worked: the 700 MHz auction results are very promising, as Quebecor’s Vidéotron has acquired seven licences in four provinces that allow the telco to reach 80% of Canada’s population. Will this lead to more choice? Theoretically, yes. Will this lead to better deals? No guarantee.

The immediate effect of the auction will be an improvement in the quality of wireless services, which is due to the 700 MHz spectrum’s ability to penetrate walls. Quebecor was there to grab prime spectrum in key areas, and agreed to pay $233 million. Now that we know the company is apparently ready to expand its business, we are watching Quebecor’s next step closely, and the company has a handful of options.

Robert Dépatie has been careful not to drop any hints about the company’s future plans in the press release announcing Quebecor’s recent purchases, but below are a couple scenarios as seen by analysts.

First, if the rumours are true, Vidéotron had already signed a nondisclosure agreement with Mobilicity prior to the auction. A merger between the two telcos could make sense and it could also underscore Quebecor’s expansion plans. But we could go even further: Wind Mobile is also up for sale.

If the wireless player wants to become THE fourth national player, it needs to put an end to the competition between wireless startups. That’s when we can start talking about a potential competitor of the incumbents.

A second option could be to do nothing, wait five years, and then sell the spectrum license at a profit. Good ROI.

Also, Vidéotron could build its own network, but the current regulation doesn’t quite favor that. Desjardins Securities’ Maher Yaghi believes the telco won’t build a national network without significant changes to regulations.

These are just a few of the available options. What do you think? What will Videotron’s next move be?

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  • Fireeast

    Consolidation would be the best for Canadian consumers, but time will only tell. If they do consolidate and the reception is better o will switch.

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