JPMorgan projects Quebecor\u2019s mobile business will capture about one-third of industry subscriber growth through the end of the decade. (Andrew Francis Wallace\/Toronto Star via Getty Images) \u00b7 Andrew Francis Wallace via Getty Images <\/p>\n
JPMorgan has initiated coverage on Quebecor (QBR-B.TO<\/a>) with an “Overweight” rating and a $56 price target, saying the telecom is \u201cpositioned to drive outsized share gains\u201d in the years ahead.<\/p>\n Analyst Sebastiano Petti values Quebecor roughly in line with Telus (T.TO<\/a>, TU<\/a>) and at a premium to BCE (BCE.TO<\/a>) and Rogers Communications (RCI-B.TO<\/a>), arguing that the higher multiple reflects the company\u2019s long runway for growth.<\/p>\n \u201cWe believe this premium is justified given Quebecor\u2019s long-term market share opportunity in the Canadian mobile phone ecosystem and industry-leading EBITDA growth driven by wireless service revenue, cost improvements and operating leverage,\u201d Petti wrote.<\/p>\n Quebecor finished at $49 on the Toronto Stock Exchange on Monday, up 3.33 per cent from its Friday close. This year, the stock is up over 50 per cent, compared to just over 21 per cent for Rogers, around eight per cent for Telus, and flat price growth at BCE.<\/p>\n JPMorgan projects Quebecor\u2019s mobile business will capture about one-third of industry subscriber growth through the end of the decade, lifting its market share from roughly 11 per cent today to 14 per cent by 2030 \u2014 driven by its Freedom Mobile and Fizz brands. Petti expects that expansion to support about seven per cent annual wireless revenue growth, with earnings improving as margins widen. JPMorgan projects Quebecor’s dividend will climb from $1.40 per share in 2025 to $2.17 by 2030, alongside higher share buybacks.<\/p>\n Meanwhile, Scotiabank analyst Maher Yaghi offers a slightly more cautious tone, in a note summarizing sector earnings. He raised his target on Quebecor to $48 from $43.50 but kept a “Sector Perform” rating, noting that the roughly $16 gap between Freedom Mobile and the flanker brands of the other major carriers is \u201cunsustainable\u201d over time.<\/p>\n Yaghi warns that \u201c[e]ither Freedom will lift its prices soon or the market could return to price instability not before too long.\u201d But he also acknowledges that Quebecor captured the largest share of new wireless subscribers in the third quarter, showing that Freedom\u2019s offers continue to resonate.<\/p>\n JPMorgan\u2019s initiation comes days after Quebecor\u2019s third-quarter results showed signs that its wireless strategy remains effective. Executives say Freedom Mobile is now attracting \u201ccustomers that want a bit more, that want better performance,\u201d rather than just bargain hunters, while churn \u2014 a measure of customers leaving for other providers \u2014 has fallen from \u201cthe highest in the industry\u201d to \u201cfairly equal to the lowest.\u201d<\/p>\n Chief executive Pierre Karl P\u00e9ladeau says average revenue per user (ARPU) is \u201cturning the corner, and I would expect that corner to be very, very soon.\u201d Management also described the company’s investment plans as \u201cgradual, sensible increases, not a capex wall,\u201d and hinted that a buyback ramp-up is \u201cnot an unfair assumption.\u201d Management also pledged to be disciplined heading into the highly promotional Black Friday period, a time when executives say \u201cwe can easily go crazy and lose our shirt.\u201d<\/p>\n Quebecor\u2019s expansion beyond its home province accelerated after its 2023 purchase of Freedom Mobile, the divestiture required for Rogers to complete its takeover of Shaw Communications. The deal gave Quebecor access to markets in Ontario, Alberta and British Columbia, and turned it into Canada\u2019s fourth national wireless carrier.<\/p>\n Since then, Quebecor has relied on aggressive discounting<\/a> to build share. That disruptor role, however, has drawn scrutiny from analysts who question how long the strategy can last as competition has eroded all companies\u2019 ARPU.<\/p>\n JPMorgan cautions that slower population growth and continued pricing pressure could temper wireless gains, while broadband and media remain competitive drags. JPMorgan also flags a specific risk \u2014 if the brands aren’t distinct enough, too many customers might choose the cheaper, all-digital Fizz brand instead of the main Freedom line, which \u201ccould dilute ARPU.\u201d Even so, the bank argues Quebecor\u2019s network investments and improving cash generation leave it well positioned.<\/p>\n John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf<\/a>.<\/p>\n Download the Yahoo Finance app, available for Apple<\/a> and Android<\/a>.<\/p>\n