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Quebecor delays wireless launch; plans to be up by the end of year at latest

MONTREAL - Quebecor Inc. (TSX:QBR.B) is delaying the launch of its wireless network until at least the fall to make sure it can offer uninterrupted service and be ready for the competition, CEO Pierre Karl Peladeau said Wednesday.

MONTREAL - Quebecor Inc. (TSX:QBR.B) is delaying the launch of its wireless network until at least the fall to make sure it can offer uninterrupted service and be ready for the competition, CEO Pierre Karl Peladeau said Wednesday.

"Launching a network is not a piece of cake," Peladeau said at a news conference after the company's annual shareholders' meeting.

He said Quebecor won't launch a product without a "high-quality performance."

The network launch had been expected this summer.

Quebecor's Videotron division plans to enter the wireless business in Quebec and eastern Ontario, where it will compete with established players Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) and other new cellphone companies.

"We want to keep offering our clients quality products and, in telecommunications, this means service without interruption and offering quality content," he earlier told shareholders.

New cellphone company Globalive launched its Wind Mobile brand last December and had some network hiccups, including dropped calls.

Quebecor reported Wednesday that its telecommunications unit showed strong revenue growth in the first quarter, while other divisions were flat or fell from last year's performance.

Peladeau told shareholders that the company's advanced wireless network would be up and running by the end of the year, but later said he expected a launch by early fall.

"We are quite satisfied with the deployment but it isn't finished yet," he said of the network, which the company has said is on its final leg of testing.

Peladeau said he's ready for the competition and added: "Let's call it a fight."

He also noted that Rogers, Bell and Telus have reduced some wireless prices and Bell and Telus have built new advanced networks. "This is the environment that we're in," he said.

Videotron has been selling mobile phones since 2007 and has an agreement to use Rogers' network.

Desjardins Securities analyst Maher Yaghi said that while the wireless business is a risky venture, Videotron is well positioned to succeed in the Quebec market given its strong brand and current base of customers.

"Thus, we believe, wireless will provide the next leg of growth for Quebecor; however, it may take a few years before wireless growth materially impacts overall profitability," Yaghi wrote in a note to clients.

In its financial results, Quebecor said its overall first-quarter revenue was $948.1 million, up $45 million from the same time last year. That was ahead of analyst estimates, but Quebecor's adjusted income fell short, according to figures compiled by Thomson Reuters.

The telecom division, which includes the Videotron cable, Internet and phone business, saw a $51-million increase in revenue while the news media segment fell about $4 million and Quebecor broadcasting revenue was flat.

Quebecor reported $38.3 million or 60 cents per basic share of net income in the first quarter, before adjustments, down from $57.7 million or 90 cents per share from the same period last year, with the decline mostly due to non-operational, accounting items.

Adjusted income from continuing operations was $46.8 million or 73 cents per share, up from $43.1 million or 67 cents per share in the first quarter of 2009.

Peladeau also addressed the issue of locked-out employees at Le Journal de Montreal. He said the union must accept job cuts at the newspaper due to the changing media landscape.

The union can't say the cuts aren't necessary on the basis that it's a profitable operation, he said. "It is totally obvious that we can't subscribe to this logic, for which there is no economic basis."

But Peladeau said he hoped the matter can be resolved through negotiations.

Shares in Quebecor closed at $37.92, up 78 cents, Wednesday on the Toronto Stock Exchange.

 
 
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