MONTREAL - CEO Pierre Karl Peladeau took another swipe at what he called the lack of competition in the cellphone industry as Quebecor Inc. announced a 52 per cent jump in third-quarter profit on Thursday.
Quebecor is building a wireless network for mobile phones that's expected to be operating next year in the province of Quebec and in parts of Eastern Ontario.
Peladeau complained about the process to select sites for new transmission towers and sharing agreements with established carriers.
"We would have expected a greater support from the Canadian government in order to accelerate our entry into an industry that sadly, for the consumers, suffers from the lack of competition," he told analysts during a conference call.
Customer growth boosted the financial fortunes of the Montreal-based publisher, cable TV, Internet and phone service provider, which also owns the Sun Media newspaper chain.
Quebecor reported a profit of $69.4 million or $1.08 per share for the quarter ended Sept. 30. That's up from $45.7 million or 71 cents per share in the third quarter of 2008.
Quarterly revenues totalled $918.4 million, up from $908.1 million last year largely due to customer growth.
The figures beat analyst estimates which had on average expected earnings of 78 cents per share and revenue for the quarter at $910 million, according to Thomson Reuters.
Investors liked the news. Quebecor shares closed at $26.45, up $2.95, Thursday on the Toronto Stock Exchange.
"Quebecor's results trended strongly upward in the third quarter of 2009," Peladeau said. "Our growth sectors continue to meet our expectations."
Quebecor said the increase in profits was due to a combination of factors which included a $23.6-million increase in operating income, and a $8.1-million decrease in financial expenses.
These figures were, however, partially offset by increases in amortization charges, up $9.7 million to $86.8 million, and income tax expenses, which rose to $41.8 million from $38.8 million.
Quebecor said its Videotron subsidiary, which provides cable television, video on demand, wireless communication and Internet access services, posted a significant increase in operating income based on customer growth.
Videotron will be getting into the cellphone business next year when the network is read.
Quebecor has been able to secure leases or agreements for about 60 per cent of its towers, Peladeau said.
"Despite those challenges we will not lose site of our objective to launch a premium service support by a state-of-the-art network."
Peladeau has already complained that Ottawa needs to remove roadblocks that are hampering new cellphone companies to get into the market to compete against the big players.
Established wireless players Rogers Communications (TSX:RCI.B), Bell Canada (TSX:BCE) and Telus (TSE:T) are required to share their transmission towers. But new players have complained access is being made difficult.
Peladeau wouldn't comment on the CRTC decision that keeps potential new player Globalive out of the cellphone business because it's not considered Canadian-controlled.
RBC Capital Markets analyst Jonathan Allen wrote in a research note that he now sees Videotron as a potential partner for Globalive, which has spectrum across the country but not in Quebec.
"Globalive is not a competitive threat in Videotron's home market, and the roaming arrangement already brokered with Rogers does not have a prohibitive break fee attached," he wrote.
