Quebecor Inc. is stepping up in the battle with BCE Inc. for customers in Quebec with the launch of a new digital television platform, illico TV. This should enable Quebecor to pre-emptively protect customers from Bell’s competing IPTV solution, according to Greg MacDonald, analyst at Macquarie Capital Markets.
“Importantly, the service at a minimum matches IPTV’s whole-home PVR and web-based user interface, which significantly enriches the viewer experience,” he told clients.
Of its 1.8 million installed digital boxes, Quebecor’s Videotron unit has deployed 500,000 of the new units that will support a 6-TV PVR and the new illico digital service. It will be available in the greater Quebec region on April 4.
Bell is rolling out fibre-to-the-home (FTTH) in the Quebec City area, where Videotron has deployed 100,000 of its new boxes.
While there are no official plans to swap out boxes that are not currently compatible, Mr. MacDonald noted that Quebecor’s flat year-over-year capex guidance suggests the company will continue to deploy the service aggressively and exchange boxes as a retention tool.
The analyst noted that Videotron customers will soon be able to use the illico service via tablets and smartphones.
“With the TV Everywhere functionality already in place and given Videotron’s claim to have the most French language HD content in Canada, we believe the content advantage will positively impact wireless economics at some point, probably in the 1–2 year period given this development,” he said.
Mr. MacDonald rates Quebecor shares at outperform with a $50 price target. Despite gains of 10% in the past month, the analyst continues view Quebecor as the most attractively valued Canadian cable stock.
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