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Stock of the Week: Quebecor

Why the deal to buy Freedom Mobile makes a lot of sense.

Andrew Willis 20 June, 2022 | 9:34AM
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Andrew Willis: You know what would help competition in Canadian wireless? Another competitor…Enter Quebecor (QBR.B). Vidéotron, telecommunications and a wide variety of media outlets. Not to mention an owner of sports and entertainment venues.

Handing off the deal between Rogers (RCI.B) and Shaw (SJR.B) for Freedom to Quebecor makes a lot of sense. They have ambitions to grow their wireless business to another province and they meet the conditions as an operator as set by the regulators when they mandated access to incumbent networks.

Investors in Quebecor would be well served for wider access – after all, as equity analyst Matthew Dolgin notes, Quebecor’s telecom business already makes up more than 80% of the company’s revenue… Now add a province or a few.

Getting such great growth comes at a cost, however, and we’re holding off on making any related changes to our fair value until we hear the price. Meanwhile, we believe recent selloffs in the stock have been unwarranted, especially considering the company intends to expand even without Freedom.      

Quebecor says incumbents aren’t in any hurry to give up access to their networks, so big changes here could be slow – but they should eventually happen and we believe investors are overly discounting any outcome in the company’s wireless rollout.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Quebecor Inc Shs -B- Subord.Voting28.63 CAD1.81Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. He previously produced content for Fidelity Investments and finance events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @AndrewWillisCDN.

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