The chief executive of Videotron is leaving the company at a critical time for the wireless sector and will be replaced by Pierre Karl Péladeau, who will oversee the company as head of Québecor Inc.
Appointed to the job a little over two years ago, Jean-François Pruneau is stepping down effective June 4 to focus on personal investment projects.
His departure marks the third change of leadership at the wireless and cable company in seven years.
Analyst Drew McReynolds of RBC Capital Markets called the announcement a “negative surprise,” especially because the arrival of Pruneau as head of Videotron was relatively recent.
“We believe that Jean-François Pruneau’s track record is highly respected among investors,” McReynolds wrote. “He had been a key point of contact within the company for over a decade.”
Québecor shares were down $1.55 or 4.4 per cent at $33.85 in afternoon trading on the Toronto Stock Exchange.
Earlier this month, Québecor Media subsidiary TVA Group Inc. announced that France Lauzière, the company’s president and CEO and chief content officer of Québecor Content, would be stepping away from her duties for up to six months for family reasons.
Péladeau will temporarily assume her duties at TVA Group, North America’s largest broadcaster of French-language entertainment, news and public affairs programming, and Quebecor Content.
Pruneau was chief financial officer of Québecor from 2010 to 2018 before taking on the top job at Videotron, which provides cable television, internet, telephone and wireless service and is a subsidiary of Québecor Media.
Québecor said Tuesday that in the wake of Pruneau’s departure that Péladeau, as the president and chief executive of Québecor Media, will now also take over the responsibilities for Videotron.
During the year ended Dec. 31, Videotron generated about 84 per cent of the total revenues of Québecor, which also owns a media division as well as a sector dedicated to sport and entertainment. It also generated 95 per cent of adjusted operating income of $1.95 billion last year.
“The departure of (Jean-Francois) comes as Québecor is about to make an important strategic decision surrounding the expansion of its mobile telephony activities outside of Quebec and, if so, how it will execute its strategy, in light of the potential divestitures of Rogers as part of (its plan) to acquire Shaw,” said analyst Jeff Fan of Scotiabank in a report.
Québecor’s main subsidiary is due to participate in the wireless spectrum auction next month that will be essential for the future of fifth generation (5G) network services.
In addition, Péladeau has signalled some interest in Freedom Mobile, which is owned by Shaw, in order to expand its wireless business outside of Quebec.
Industry watchers widely expect Rogers will have to sell some or all of Freedom Mobile — the fourth largest competitor in mobile telephony in certain markets outside Quebec — as a condition for regulatory approval of its proposed merger with Shaw.
The Canadian Radio-television and Telecommunications Commission earlier this month forced BCE, Rogers and Telus to open their networks to regional players who own local licences. This decision could allow Videotron to have access to networks located outside the province.
“We don’t think this news (of Mr. Pruneau’s departure) will have any impact on the final decision,” Fan wrote.
“Investors should (remember) that Mr. Péladeau is the controlling shareholder and has overseen all major strategic decisions over the years.”
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