Quebecor Inc. CEO Pierre Karl Peladeau is positive about the overall direction of the business and growth of free cash flow, which, he says, could support a higher dividend.Fred Lum/The Globe and Mail
Through the windows of a glass-walled conference room, employees of Canada’s fourth-largest telecom carrier are buzzing around a kitchen counter laden with plates of neatly sliced cake. They’re celebrating the third anniversary of their company’s acquisition of Freedom Mobile, the deal that made Quebecor Inc. a challenger to the country’s largest carriers.
And no one looks happier than the chief executive officer himself, Pierre Karl Péladeau.
Sitting in a corner office overlooking Toronto’s waterfront, the 64-year-old executive looks relaxed after an early morning swim – his regular routine – and his journey from Montreal to Toronto that morning. He’s fresh off a ski vacation with his children, and wears a beaded bracelet spelling “St. Moritz” – a luxury resort town in Switzerland – around his wrist.
Dessert aside, it’s no wonder the company’s executive and staff seem pleased.
In the three years since Quebecor acquired Freedom Mobile, the company has succeeded in forcing down the price of mobile wireless plans, attracting an outsized share of new cellphone subscribers in Canada and expanding bundling options with internet and television – all the while, maintaining the lowest leverage among its peers and raising its dividend.
The markets have rewarded it. Since the end of 2023, the year it bought Freedom, Quebecor’s share price has boomed, skyrocketing 85 per cent. Meanwhile, its three big competitors – Rogers Communications Inc., Bell Canada parent company BCE Inc. and Telus Corp., which by market capitalization are all more than double its size – have seen their own share prices fall by 20 per cent or more.
Freedom Mobile now has 4.4 million wireless customers across Ontario, B.C., Alberta, Manitoba and Quebec – an expansion which has been made possible by a federal policy which has required Quebecor’s rivals to allow it to piggyback on their networks. Without that policy, which provides regulator arbitration if companies can’t reach a deal, Quebecor would be on its own to make commercial agreements.
Just one hitch: that mandated access is currently set to run out in 2030.
Telecom experts say it’s unclear whether the federal government will extend that mandate. While Vicky Eatrides, the chair of the Canadian Radio-television and Telecommunications Commission, maintained last year the agency currently intends to follow through on the scheduled seven-year sunset, analysts and industry observers have noted the regulator may hesitate to remove a policy which has contributed to more price competition.
For Mr. Péladeau, however, the matter is simple. He says Quebecor is not depending on the regulator to extend the policy. That’s why the company is ramping up spending now and building out infrastructure ahead of the cutoff, he said.
Mr. Péladeau said he expects the company will spend upward of $700-million in capital expenditures annually before the 2030 deadline, not including spectrum purchases, to expand its own networks to reduce its reliance on rivals. (The company confirmed it plans to spend $700-million this year then an additional $50-million a year for the next three years.)
“We do not think that we would need to do much more,” Mr. Péladeau said. “We’re building our network, one tower after the other.”
The company will still need roaming agreements in areas the company hasn’t built yet or doesn’t own spectrum – airwaves used to transmit wireless signals. Whether it can continue to get good rates will come down to negotiation, he said.
Mandated network access been a source of debate within the telecom sector, as the incumbents have argued that too much network sharing will disincentivize the investments in physical infrastructure that create “facilities-based competition,” which the government has set out to prioritize.
Nonetheless, Quebecor’s strategy has been lauded by analysts. “Quebecor is playing their hand perfectly and acting in the most rational way by managing capex [capital expenditure] spend until they get clarity on the post 2030 outcome,” said Bank of Nova Scotia analyst Maher Yaghi in a recent note to investors.
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That praise, however, has also come with warnings from Bay Street’s bankers that price wars resulting in lower cell plan prices ultimately put a cap on the whole telecom industry’s earnings.
On Thursday, Toronto Dominion analyst Vince Valentini downgraded his target price and ratings for Rogers, BCE and Telus on expectations of continued price discounting.
He didn’t change his recommendations for Quebecor, as its earnings are less susceptible to declines given that its average revenues per customer are already lower than peers.
To Mr. Péladeau, that approach is all part of the strategy. Quebecor has focused on cutting costs and improving telecom margins through bundling in recent years. It now offers internet and digital television service to subscribers, a tactic to attract more customers from the incumbents.
Despite this, things are not all rosy for the Montreal-based company, which was founded in 1965 by Mr. Péladeau’s father, Pierre Péladeau, and made its fortunes off publishing and, later, broadcasting.
The telecom company is dealing with the decline of its legacy businesses. Its television and home phone subscriber counts also declined by more than 100,000 subscribers each since the end of 2023 to 2025.
And while the company’s revenues from media and sports and entertainment rose after a period of restructuring, the company continues to contend with the decline of its readership, circulation and advertising revenues.
Mr. Péladeau told The Globe that Quebecor is in talks with the National Hockey League and Rogers to renew a broadcast deal for French-language hockey games. But TVA Sports, the Quebecor-owned channel that would play those games, has seen its total revenue and subscriber base from linear television decline in each year since 2021, according to CRTC filings.
It’s unclear how long Quebecor will be willing to support a division which Mr. Péladeau has previously described as being at risk of going out of business.
But for the time being, Mr. Péladeau is feeling positive about the overall direction of the business and growth of free cash flow, which could support a higher dividend, he said. The company’s payout range is between 30 and 40 per cent of free cash flow, and after a 14-per-cent hike in February remains at 35 per cent.
When asked what he thinks his late father would think of what Quebecor has become, he thinks for a moment. “Maybe he would say that the boy has learned well.”