Quebecor “Disappoints” in Wireless Growth, Shines Everywhere Else

by Jordan Richardson on November 11, 2010

Quebecor boss Pierre Karl Peladeau believes strongly that the new wireless business provided by Videotron will be the key to the company’s success, but the numbers were below expectations as the Quebec company revealed its third quarter results.

In fairness, Videotron’s wireless venture was only open for three weeks in the third quarter. Optimistic Bay Street analysts had predicted that it would do a good amount of business right out of the box, predicting numbers in the 25,000-33,000 neighbourhood. The real numbers, however, were around the 8,400 mark.

Videotron launched its 3.5 network in early September to much fanfare and it was immediately expected that the company would give the big providers in the province something to think  about.

Interestingly, some analysts are reporting that Videotron’s numbers could have been much higher. Indeed, it is suggested that the numbers for wireless growth would have been more in line with predictions if Quebecor had been prepared for the consumer demand.

“The take-up of our new service was much greater than expected, quickly resulting in the selling out of three out of our four smart phones,” Robert Depatie, president and CEO of the wireless department said. “No doubt that our take-up would have been higher without this unfortunate situation.”

Lack of preparation aside, then, Videotron actually did quite well in the quarter. Analyst Jonathan Allen of RBC Capital Markets seems to agree, saying “Anecdotally, the launch appeared to go very well.”

As for the rest, Quebecor reported profit increases of nearly 20% and growth across nearly all of its telecommunications platforms. With a large share in home phone and internet, many analysts are expressing confidence in the company over the long haul. With the right preparation and continued growth, Videotron’s wireless angle should be able to do quite well and will probably still give the incumbents something to consider in Quebec.

Net income in the quarter was $82.8 million, up quite a bit from the $69.4 million in the same quarter a year prior. Operating earnings smoked Bay Street predictions handily, coming in at 93 cents on the share over the anticipated 77 cents adjusted profit. Total revenue was more in line with expectations, clocking at $970 million – up 4.9% compared to the same quarter a year ago.

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