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Quebecor says it won't rush to market with its new wireless business

MONTREAL - The head of Quebecor Inc.'s cable TV and cellphone division said Wednesday the company won't rush to market with its wireless service, especially after seeing the struggles of some recent new entrants into the Canadian cellphone arena.

MONTREAL - The head of Quebecor Inc.'s cable TV and cellphone division said Wednesday the company won't rush to market with its wireless service, especially after seeing the struggles of some recent new entrants into the Canadian cellphone arena.

Quebecor (TSX:QBR.B) has learned some lessons about being properly prepared, especially when it comes to network reliability, said Robert Depatie, president and CEO of Quebecor's Videotron division.

"We're trying to be focused, but not be pressured to go as quickly as possible to market because we want to make sure that we do it right," Depatie told a conference call with analysts after Quebecor announced it earned $73.8 million in the fourth quarter of 2009.

Although he did not cite Toronto-based competitor Globalive's Wind Mobile by name, that company has received some negative attention following its debut.

A recent analyst report said the Wind Mobile launch has been too rapid and hasn't attracted significant numbers if customers, citing Wind's problems as a "cautionary tale" for other new wireless players.

Other analysts have noted that Wind Mobile has had some network problems.

"Lessons have taught us recently from the new entrants that don't be too pressured to go to the market, make sure that your network is well built," Depatie said.

"The issue remains coverage. That's the ongoing battle."

Quebecor has said it expects to launch its wireless service this summer and will spend up to $1 billion on the network.

New wireless players Public Mobile and Mobilicity, both based in Toronto, are also expected to launch in the coming months.

RBC Capital Markets analyst Drew McReynolds wrote in a note to clients that Quebecor shares could react positively to a few good quarters of wireless additions later this year.

"We expect Videotron to add one million wireless subscribers within five years, which is similar to the one million home-phone additions over the same period," McReynolds wrote.

And Quebecor president and CEO Pierre Karl Peladeau said he's not opposed to Ottawa opening up the telecommunications industry to more foreign ownership, after the federal government said in last week's Throne speech that it would change the rules.

"If foreign ownership is able to bring this, that's fine," he said.

"At the end of the day, I think, there are also elementary business rules that you need to follow. It's not because you are a national or a foreign operator that you will be able to succeed."

In its financial results, the Montreal-based media and cable company said it benefited from growth in its telecommunications segment and productivity improvements in its news media division.

The profit for the three months ended Dec. 31 amounted to $1.15 per share, compared with a loss of $343.6 million or $5.34 per share in the fourth quarter of 2008 when the company wrote down the value of goodwill and other intangible assets.

Revenue from all segments grew $25.6 million to just under $1.03 billion.

Excluding discontinued operations, Quebecor earned $1.12 per diluted share. That was ahead of the average analyst estimate of 94 cents per share, according to figures compiled by Thomson Reuters.

Quebecor said its news media segment, which includes the Sun Media and Osprey newspaper chains, increased its operating profit by $14.5 million or 26.5 per cent compared with the fourth quarter of 2008.

The telecommunications segment, which includes the Videotron cable and phone business in Quebec, increased its operating income by $62.8 million, or 28.8 per cent.

"Despite the economic crisis, which has hit the media industry hard, Quebecor's diversified business model proved to be a robust driver of growth," Peladeau said.

For the full year, Quebecor earned $277.7 million or $4.32 per basic share, in 2009, up from $188.8 million or $2.92 per basic share in 2008. Revenue increased to $3.78 billion from $3.73 billion.

 
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