New entrants would be ‘perfectly rational’ to sell, Aitken says

OTTAWA—New entrant wireless carriers choosing to sell their companies to larger players would reflect a “perfectly rational assessment” of the Canadian telecom market, former competition commissioner Melanie Aitken said. Aitken—who left the Competition Bureau in September and who is now co-head of competition, antitrust and foreign investment for Bennett Jones LLP in Washington, D.C.—said Wednesday at a panel discussion on Canadian competition that new entrant carriers would be justified if they sought to sell their companies to a larger player, such as one of the country's three incumbent carriers, BCE Inc., Rogers Communications Inc. and Telus Corp. “I think that's just a perfectly rational assessment of the market there, and what their prospects are,” she said during the panel discussion hosted by Canada 2020, a non-partisan think-tank. Several new entrant carriers entered Canada’s wireless market after acquiring spectrum in Industry Canada’s 2008 wireless auction. “The environment into which those new entrants came in had a certain established status quo and very strong players,” she said. “It's not necessarily that is what they would do or what they claim to do, but rather from my perspective, I can see it as a perfectly rational place to ultimately end up in.” Moody's Investor Services said in an April 2012 report that new entrant carriers Wind Mobile, Public Mobile Inc. and Mobilicity must consolidate with larger carriers to grow and generate greater returns on their investments. The note said regional cable companies such as Quebecor Media Inc. or Bragg Communications Inc. appeared most likely to purchase a new entrant. Analysts have also speculated about consolidation among new entrants, and the possibility of Wind merging with Mobilicity. MacDougall, MacDougall & MacTier analyst Troy Crandall told The Wire Report earlier this month that VimpelCom Ltd.’s acquisition of voting shares for full control of Wind would make it easier to sell the company once a five-year moratorium on the sale of Wind’s spectrum expires in September 2014. The Moody’s report last year said the new entrant carriers held a 3.4 per cent share of the national wireless market, regional players such as Quebecor Media Inc., Shaw Communications Inc. and Bragg Communications Inc. had 5.1 per cent, and that the three incumbents had 91.5 per cent. According to the CRTC Communications Monitoring Report released in September, the new entrant carriers had a two per cent share of the $19.1-billion industry's revenues in 2011 and a four per cent share of the industry's 27.4 million subscribers. Those market share numbers had doubled over the previous year, the report said. Canadian Council of Chief Executives president and CEO John Manley, who was on the panel with Aitken, said the Canadian telecom industry is now more competitive than he believed it could be when he issued the first competitive wireless spectrum licences while serving as federal industry minister in 1995. “Between Bell, Telus, Rogers, and others, it's fierce competition,” said Manley, who joined Telus' board of directors in August. “We do have three competitors. We didn't actually believe we could get to more than three, but we have three competitors.” As commissioner of competition, Aitken oversaw the Competition Bureau’s launch of competition lawsuits in the telco sector, one against Rogers related to advertising about the new entrants and another against the three incumbents related to premium text messages and rich content services on mobile devices. She said increasing competition in some segments of the wireless market is a positive sign. “We're seeing some very robust competitive activity, particularly in a certain ... segment of the market, the sort of urban, relatively lower cost part of the market,” she said. “That's a good thing.” —Reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca

New entrants would be ‘perfectly rational’ to sell, Aitken says

News | 01/31/2013 9:12 am EST

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