Despite a stock that is performing well, in part due to Quebecor’s thriving wireless business, CEO Pierre Karl Péladeau is critical of how the telecom industry is being run.Fred Lum/The Globe and Mail
Canada’s telecommunications industry is in bad shape and investors are fed up. The major providers, BCE Inc. BCE-T, Rogers Communications Inc. RCI-B-T and Telus Corp. T-T, have all seen their share prices fall in recent years. All are reducing capital expenditures and laying off employees. Rogers recently announced it is offering voluntary departure packages to about half its staff, which would be about 12,000 people.
Fingers are pointing in all directions about who is responsible for this mess. Some of the blame has been placed on intense price competition and reduced immigration, which reduces the number of potential new buyers.
The leading players in the industry say Canadian Radio-television and Telecommunications Commission decisions to force major providers to lease space on their networks to smaller competitors at regulated rates have reduced the financial incentive to invest billions in expanding fibre and 5G infrastructure. Rogers has criticized these rulings, saying it creates a “punitive” regulatory environment.
All this negativism has made the telecommunications subindex one of the worst performers on the TSX this year, up only 3.27 per cent.
Related: Rogers Communications offering buyouts to half its work force
It seems the only company making any progress in the business these days is one that’s there almost by accident.
In 2023, when Rogers was trying to acquire Shaw Communications, Ottawa insisted that the Freedom Mobile wireless operation be divested to ensure strong competition would be maintained within the sector.
Quebecor Inc. QBR-B-T, which was mainly a regional player operating in Quebec and Eastern Canada, saw the opportunity and jumped at it. Through its wholly owned subsidiary, Videotron, it bought Freedom for $2.17-billion. That deal now looks like a real steal.
Freedom has established itself as a strong competitor to wireless services provided by rivals BCE, Rogers and Telus. It operates its own cellular towers and network infrastructure in major urban and suburban areas across Canada. For national roaming, it uses mainly Rogers infrastructure.
Acquiring Freedom Mobile also enabled Quebecor to offer, through Videotron, multiservice bundles (wireless, internet, TV) across British Columbia, Alberta, Manitoba and Ontario.
In terms of client base, Quebecor is nowhere in the same league as its competitors, but it’s gaining ground and its stock is performing much better. Bell Canada parent company BCE is up 5.2 per cent so far in 2026, but that’s after a long downward slide that started in the spring of 2022 and included a large dividend cut. Rogers is down 2.49 per cent this year and Telus has lost 3.41 per cent. Quebecor, by contrast, is ahead 28.43 per cent.
Results for the first quarter of 2026 show modest growth in Quebecor’s revenue, profits and connectivity.
The company recorded revenues of $1.4-billion, up $52.1-million (3.9 per cent) from the prior year. Its telecommunications segment posted increases of $50.1-million (11.4 per cent) in adjusted cash flows from operations, $38.2-million (6.6 per cent) in adjusted EBITDA and $56.8-million (4.9 per cent) in revenues.
This included a $37.6-million (8.8 per cent) increase in mobile telephony service revenues and $10.1-million (3.2 per cent) in internet access service revenues. There were net increases of 28,800 (0.7 per cent) connections to the mobile telephony service.
Quebecor’s net income attributable to shareholders was $225.4-million ($1 per basic share), an increase of $34.7-million ($0.18 per share) or 18.2 per cent. Adjusted net income was $219.5-million ($0.97 per share), an increase of $34.4-million ($0.17 per share) or 18.6 per cent.
The consolidated net debt leverage ratio decreased by more than $120-million to 2.86x, the lowest among Canada’s major telecommunications providers.
Earnings: Quebecor first-quarter profit rises as it adds new mobile subscribers
Despite Quebecor’s recent strength, CEO Pierre Karl Péladeau expressed his displeasure with the way the Canadian telecommunications industry is being run. In the quarterly report, he said: “While we are pleased with these results, we remain extremely cautious due to the deep, ongoing structural crisis in the media industry.”
He cited the dominance of U.S. technology companies over the advertising business, reduced support from the Canada media fund, “unfair competition” from CBC/Radio-Canada and “the heavy regulatory burden” imposed by the CRTC as issues that “continue to weaken private broadcasters.”
He went on: “Facing these persistent challenges, a concerted effort by all stakeholders – governments, the CRTC, industry associations and unions – is needed to rebuild a viable model that reflects market realities and preserves our collective ability to produce and deliver news, entertainment, and sports content to domestic audiences and support the ecosystem that depends on it.”
Quebecor shares are doing well, closing on May 22 at $66.49. Plus, the stock pays a quarterly dividend of $0.40 a share ($1.60 a year) to yield 2.4 per cent. My Internet Wealth Builder newsletter rates the shares as a buy.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.