Quebecor Q2 Profit Declines, Videotron Adds Over 45,000 Mobile Customers

by Gaurav Kheterpal on August 12, 2011

Videotron is a relatively low profile player in the Canadian wireless segment. In May, the Canadian media conglomerate Quebecor reported its first-quarter profit was badly hit due to the startup costs of its new wireless business. The carrier launched its 3G network (now 4G) last September but failed to make a significant impact last quarter.

Investors expected a better showing this time and Quebecor hasn’t disappointed. The company on Wednesday reported second-quarter earnings that beat analyst estimates. Though Q2 profit declined, reflecting higher amortization and restructuring charges, despite a six percent rise in revenues, Videotron added over 45,000 mobile customers.

Videotron’s net income decreased to $55.2 million from $60.8 million in the previous year. Adjusted income from continuing operations was $60 million, down from C$62.9 million last year. Quarterly revenue increased 6 percent to $1.05 billion from $994 million in the same quarter last year. Videotron will take heart from the fact that all its businesses reported growth this quarter.

Pierre Karl Peladeau, president and chief executive officer of the company said, “Attesting to the success of the Corporation’s investment and development strategy, revenues grew in all business segments despite aggressive competition in many of those segments.”

Quebecor maintains that the heavy investments in building its new wireless network are now beginning to pay and that the wireless business made up for its below-par performance in the cable segment. Quebecor added 45,900 wirelesses subscribers last quarter and its total subscriber base now tops 200,000 mobile phone customers – no mean achievement for a carrier that’s confined to Quebec.

To put things in perspective, the carrier added 29,000 wireless subscribers in Q1 2011 and had a total of 143,600 subscribers.

Back in June, the carrier insisted that bigger players like BCE Inc. and Telus should be limited to bidding on a single 700 MHz block of spectrum. These giants already own 800 MHz spectrum anyway. There’s little doubt that Videotron has a lot resting on the next spectrum auction.

Quebecor also announced it would buy back about 10 percent of its stock and reported solid growth at its fledgling wireless network, sending its share price higher. The company’s shares have lost more than a quarter of their value so far this year.

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

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