Quebecor’s Q1 Profit Hit By Wireless Startup Costs

by Gaurav Kheterpal on May 27, 2011

Canadian media conglomerate Quebecor yesterday reported its first-quarter profit was badly hit due to the startup costs of its new wireless business. The company’s operating income grew 1.3 per cent to $294.3 million, while revenues increased 4.5 per cent to $990.5 million from $948.1 million. Q1 profit slipped to $34.3 million.

However, CEO Pierre Karl Péladeau isn’t a worried man. Instead, he believes Quebecor has its wireless network “mostly in place” and the company now plans to focus its energy on content distribution. Speaking to reporters after the company’s annual general meeting, he urged CRTC to ease TV rules and lent his support to the “Unregulated Netflix model“.

Quebecor want Videotron customers to benefit from company’s growth as it plans to offer reliable and robust land and mobile networks, state-of-the-art handsets and tablets, new HD channels and the most advanced platforms.

On an adjusted basis, earnings were 56 cents per share, below expectations of 58 cents. Peladeau maintains Quebecor experienced the impact of major investments in new products and services in 2011 for the purpose of protecting and expanding its markets. Quebecor launched Videotron as a provincial wireless service last September. Though Videotron is beginning to make an impact in the wireless segment, it has affected Quebecor’s overall financial health.

Videotron added 29,000 wireless subscribers in Q1 2011 and now has a total of 143,600 subscribers. The carrier launched its services in Saguenay–Lac Saint-Jean and several other municipalities across Québec last month. Videotron announced it’s expanding its mobile services to the Outaouais region where it plans to offer the Unlimited Evenings and Weekends plan, including messaging, for $24.95. HTC Panache, Videotron’s first 4G offering, is now available for $479.95 (and $169.95 with a monthly $40 plan or higher).

Quebecor, though, lost 3,000 cable subscribers, added 24,100 digital TV users, and signed up 11,500 Internet customers and 15,500 digital phone customers in the quarter. While it was expected that wireless startup costs would take a toll on its performance, Péladeau has reasons to be worried after it performed poorly in News media and broadcasting sectors. He says Bell (CTV) and Shaw (Global TV) are following Quebecor’s business model to integrate multiple broadcast and distribution platforms.

So, while Videotron is now a settled line of business, Quebecor is reeling under pressure in the TV segment due to stiff competition from Bell and Shaw. Will Quebecor manage to fare any better in Q2? Only time will tell.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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