CEO’S departure viewed as ‘negative’

“The numbers speak for themselves,” said Adam Shine, managing director of equity research at National Bank Financial. “Vidéotron performed extremely well under Manon’s tenure. As the main driver of Quebecor, Vidéotron was well-fuelled.”

Vidéotron’s growth spurt coincided with an explosion in demand enjoyed by all the major wireless companies. But Brouillette, who was born in the small Quebec town of Saint-louis-deFrance near Trois-rivières, pointed out that adoption is lower in Canada than in other countries. She said Vidéotron’s wireless strategy allowed it to gain market share from the Big Three since launching a decade ago.

“We worked very hard to get there. The competition is fierce,” she said. “We’re still a new entrant, we still have to fight our way in.”

Brouillette is pretty sure Shaw Communications

Inc. would say the same thing about Freedom Mobile. Freedom, then called Wind Mobile and owned by Globalive, entered the market at the same time as Vidéotron after winning spectrum in the 2008 auction, which was designed to entice

new players to take on BCE Inc., Rogers Communications Inc. and Telus Corp.

Vidéotron had previously dabbled in the mobile space as a reseller, but Brouillette said it wanted more control over its infrastructure. She said it was necessary for the government to motivate new entrants — the feds set aside a block of spectrum exclusively for new players — to create sustainable competition.

“When a company has skin in the game, they’ll be at their best,” she said.

A decade later, the cable giants in Quebec and Western Canada have gained the most market share of the new entrants, while others such as Public Mobile Inc. and Data and Audio-visual Enterprises Wireless (aka Mobilicity) were swallowed by Telus and Rogers.

At one point, Vidéotron had plans to create a national network, but refocused on Quebec after Shaw bought Wind, now Freedom, for $1.6 billion. Freedom has network infrastructure in Alberta, British Columbia and Ontario.

Brouillette defended the Quebec-only strategy, saying it made more sense than both new entrants rolling out side-by-side national networks. Last year, Vidéotron sold its spectrum outside Quebec to Shaw for $430 million. She would not comment on whether she sees the pair partnering in the future to create a national network.

The focus on Quebec enabled Brouillette to chase ambitious goals for the regional network, with a public target of grabbing 25 per cent of the wireless market share in Quebec and the National Capital Region. She believes Vidéotron can achieve more.

“I tell my team, we are No. 1 in TV, we are No. 1 in internet, why wouldn’t we be No. 1 in mobile?” she said.

Compared to the incumbents, Vidéotron offers more data at lower prices than are available in most Canadian provinces and embraces customers who bring their own devices. Regulators have said Quebecers enjoy lower wireless prices in part because the province has four strong operators.

Brouillette characterizes the competition today as even more intense thanks to numerous sub-brands such as Fido and Chatr. Consumers don’t necessarily consider that Bell owns Lucky Mobile or Telus owns Koodo when they’re shopping, she said.

To grapple with the cheaper competitors, Vidéotron launched the Fizz flanker brand in November. Fizz only has a few plans, is only available online and does not offer promotions (it would lower prices for the entire customer base if it decreases them at all).

“There’s a segment of consumers that doesn’t resonate with the way the mobile industry is treating them,” Brouillette said, pointing to millennials and “smart digitals” — people of any age who, like her, essentially live online.

She has four children in their late teens to mid-20s, so has an inside look at a demographic that immediately posts negative reviews if they’re not pleased with a brand.

Fizz has a novel structure in Canada’s wireless market. Its relatively small number of offers, lack of physical store presence and uniform treatment of customers makes it cheaper to operate, which, in turn, lowers prices.

“The fact that there’s so many offers in the industry, the fact that there’s a lot of players makes it more confusing than ever,” she said. “I say let’s forget about the rest of the industry, and let’s focus on what we can do today to simplify the story.”

Brouillette said Fizz’s margins will be similar to the premium Vidéotron product, but its lower prices will also lower the company’s average billings per user, an important industry metric. She believes the measurement is outdated in an industry in which more emphasis is being placed on value brands and the government has increased its push for affordable service.

Fizz already has 5,000 subscribers, according to the company. National Bank analyst Shine said the brand is “off to a rather good start,” noting that extra website traffic created some technical issues, and RBC analyst Drew Mcreynolds noted that its pricing is the “most attractive in Quebec.

Fizz seems like it’s a hit, but not all of Vidéotron’s new ideas have succeeded. The regulator even banned its offer of unlimited data to stream music, ruling it violated net neutrality rules that demand all content be treated equally.

Unsurprisingly, Brouillette isn’t a fan of regulatory intervention, saying it should be up to companies to innovate to keep customers happy, not the Canadian Radio-television and Telecommunications Commission. The regulator is in the midst of two proceedings that could give providers more headaches: an inquiry into aggressive or misleading sales practices and the creation of an internet code.

Brouillette believes the CRTC should instead be focusing on industry-wide problems such as carriage fees and what to do about Netflix.

“The regulator wants to interfere in the commercial aspect of the business while they’re not doing their job on major concerns we have for the industry,” she said. “All the rulings that they’ve put in place over the last five to seven years have made it worse for the consumer.”

As one example, Brouillette pointed out that sales agents aren’t allowed to simplify text when describing contracts to consumers. But that doesn’t bother her as much as what she sees as a lack of focus on bigger issues such as carriage fees.

Vidéotron’s cable packages had about 60 channels when Brouillette started, but have ballooned to about 300, with higher carriage fees leading to higher cable bills. As a result, consumers started ditching their TV subscriptions for simpler online offerings.

She said carriage fees must be revisited and rebalanced so underperforming channels don’t continue to get as much money and new entrants have a chance to succeed.

“I’ve been talking about that for many years, and I truly feel like I’m preaching in the desert here,” she said.

The CRTC has proposed a tax on internet service providers such as Vidéotron to fund Canadian content in the future, rather than relying on stagnating cable revenue. But Brouillette doesn’t believe ISPS are the right target in an era where TV providers fight against Netflix, Apple and Prime Video for viewers.

“We need to revisit the net neutrality … the real people that are benefiting from that are the big conglomerates,” she said.

Last time she checked, Netflix accounted for 37 per cent of Vidéotron’s internet traffic at peak hours.

“If they didn’t have access to that internet highway, they wouldn’t have any business model … and they don’t charge tax. I always get back to that because it drives me nuts.”

Although Netflix is a behemoth, Vidéotron’s French-language streaming service Club Illico has attracted more than half-amillion subscribers since it launched.

Brouillette’s final product launch is an upgraded version of Vidéotron’s TV prod- uct called Helix, which uses Comcast’s X1 platform, the same platform Shaw and Rogers use. The premium product promises to connect entire homes and begins rolling out to employees in December.

She is confident about the platform’s future despite Shaw’s lacklustre TV performance since it launched a similarly premium product earlier this year. For one thing, Vidéotron is starting with a more advanced version, she said. Eventually, she expects the company will offer a scaled-back TV product under the Fizz brand to entice digital-first consumers.

All told, it’s been a busy year of product launches for a CEO who has worn off the red on the soles of her Christian Louboutin pumps.

Normally, a telecom executive’s choice of footwear isn’t worth commenting on. But in an industry dominated by men, Brouillette’s heels stand out since she is the only woman in charge of a major wireless operator in Canada.

Indeed, she’s one of only two women in the ranks of the 25 top executive officers at Canada’s five largest communications companies. (The other, France Lauzière, also works at Quebecor as president and CEO of TVA Group.) With a salary of $3.95 million in 2017, she’s also the highest-paid woman at these five public companies, which dominate Canada’s communications landscape with 83 per cent of the market share.

Brouillette has forged her own path since she travelled to Central America at 19 years old, only able to place the occasional collect call home.

She didn’t consider her gender a factor as she climbed the corporate ladder, so was surprised when she became CEO and people kept asking her how she did it. They assumed she didn’t have a family and worked constantly, she said. Rather, she starts her days early, works 10 intense hours and gets home in time for dinner with her family and a run or yoga.

“If you want to be a leader, it has nothing to do with being a woman or a man. It has to do with comportment,” she said, describing the required qualities. “You have to be courageous. You have to take decisions all the time. You have to listen to people.”

Industry analysts seem to like that leadership style, calling Brouillette’s departure a negative for Quebecor.

“Given the significant growth of Vidéotron, we view Ms. Brouillette as one of the leading telecom executives in Canada and see her departure as directionally negative for the company,” RBC’S Mcreynolds noted when she announced her departure in October.

Brouillette isn’t retiring completely — she will sit on Quebecor’s board as of January and remain on the board of TV operator Altice USA — but she didn’t reveal any other plans beyond a sailing trip in the Caribbean.

“I want to see what the universe will bring me. It’s as simple as that,” she said.

As this chapter of her career closes, she credited Quebecor chief executive Pierrekarl Péladeau for valuing strong women and thanked the team she worked with throughout the years.

“I’m in a culture that sees people before seeing man or woman,” she said. “That’s it. I could have everything. I’m a happy wife, I’m a happy mother and I’m a happy CEO.”

THE REGULATOR WANTS TO INTERFERE IN THE COMMERCIAL ASPECT OF THE BUSINESS WHILE THEY’RE NOT DOING THEIR JOB ON MAJOR CONCERNS WE HAVE FOR THE INDUSTRY. ALL THE RULINGS ... HAVE MADE IT WORSE FOR THE CONSUMER. — MANON BROUILLETTE

GRAHAM HUGHES FOR NATIONAL POST Manon Brouillette isn’t retiring completely — she will sit on Quebecor’s board as of January and remain on the board of TV operator Altice USA. “I want to see what the universe will bring me,” she says.