UPDATE 1-Quebecor Inc tight-lipped on Canada wireless expansion

Thu Mar 13, 2014 1:13pm EDT

By Alastair Sharp

TORONTO, March 13 (Reuters) - Canadian media and telecom company Quebecor Inc reported a 7 percent rise in quarterly operating income on Thursday, but shed little light on expansion plans after winning new wireless airwaves in a government auction last month.

Quebecor's Videotron unit won licenses to operate wireless airwaves in Ontario, Alberta and British Columbia in the auction, and added to its capacity in its home market of Quebec. The wins mean it can now operate in Canada's four most populous provinces.

But the Montreal-based company was reluctant to detail its plans for the spectrum, saying only that "various options for maximizing the value of our investment are now available to us," and that it will assess those options in the coming months.

On a conference call with analysts, Quebecor executives said a nondisclosure agreement prevented them from discussing a possible purchase of Mobilicity, a startup wireless provider currently under creditor protection. Mobilicity is also being pursued by national telecom company Telus Corp.

Canada's Conservative federal government is eager to have a fourth wireless provider in each part of the country, but may have soured on Quebecor after the company's controlling shareholder, former Chief Executive Pierre Karl Péladeau, announced last weekend he would run for the separatist Parti Quebecois in the April 7 Quebec provincial election.

Videotron added more than 25,000 wireless subscribers in the fourth quarter, slightly fewer than expected. The unit lost 5,300 basic cable-TV subscribers, a slower decline than those reported by its competitors, and added 10,100 Internet customers.

Executives said 71 percent of its wireless customers were using smartphones, which typically pay higher monthly bills, but it didn't say when Videotron might offer Apple's iPhone to its customers.

Quebecor said its news media business - led by the Sun chain of metropolitan newspapers - and broadcasting operations were both hurt by weak advertising trends, while competition with BCE Inc was "intense" in fixed-line services in major Quebec cities.

The company is in the process of selling a string of weekly newspapers in Quebec to Transcontinental Inc, and in its quarterly report it listed their results as discontinued operations, pending regulatory approval.

Quebecor's adjusted operating income rose to C$391.3 million ($351.5 million) in the fourth quarter from C$366.1 million a year earlier, helped by a 3.7 percent increase in revenue from the Videotron telecom business, the company's biggest unit by far.

Net income attributable to shareholders rose to C$43.4 million, or 29 Canadian cents a share, from C$7.1 million, or 5 Canadian cents a share.

The company said it benefited from a C$66.5 million favorable change in losses and gains on the valuation of financial instruments, among some other gains.

Revenue was nearly flat at C$1.12 billion.

Quebecor shares were 0.5 percent lower at C$24.82 early on Thursday afternoon on the Toronto Stock Exchange.