Public Mobile trying to get bought out, Lacavera says

Public Mobile’s new $15 a month unlimited talk plan is a sign of a company that wants to be bought out, Anthony Lacavera, chairman of competitor Wind Mobile, said in an interview Thursday. On Thursday Public Mobile said its is lowering its unlimited, province-wide plans, available in Toronto and Montreal, to $15 per month starting Friday. The company also announced that it is adding email service for an additional $5 per month. But Lacavera said the pricing plan is not realistic. “Public Mobile’s new pricing is reflective of a company that is in very much distress, in a weak market position, and a weak offering, and now they’re just in desperation to sell services below cost,” Lacavera said. “Some consumers clearly would be attracted to that pricing. I would just caution that the pricing is not sustainable and we know the cost structure of this, so we know they can’t last very long selling at this price.” He added: “They’re trying to force either Wind or one of the big guys to buy them out … We are certainly open to that but we’re not going to be pressured into doing that.” The reduction was seen as a swipe at the incumbent telcos, but it also makes Public Mobile’s plans cheaper than its new entrant competitors as well as landline and prepaid services. Wind offers a Canada-wide unlimited talk-and-text plan for $25 a month (inside Wind’s coverage areas). "This isn't just another rate plan. This takes the belly out of the prepaid market," Public Mobile CEO Alek Krstajic said at a news conference Thursday. Krstajic acknowledged that the reduced plans are something of a pricing attack on landline phone services. He also took issue with the suggestion that the company cannot earn profits from the plan. "We've obviously done the math and feel that with our cost structure we can make it profitable," Krstajic said at the news conference. Lacavera said he does not believe the new rates will pose a challenge to Wind. “You have to look at their coverage and the types of phones that they carry, and I don’t think it’s a competitive offer at all to Wind,” Lacavera said. Public Mobile covers Toronto and Montreal and pitches its plans as a low-cost basic mobile service. The company does not currently offer data plans or smartphones, but Krstajic said customers can expect web-access service in April. Wind covers Canadian cities Vancouver, Edmonton, Calgary, Toronto and Ottawa. Its roaming charges are 25 cents per minute. Public Mobile says its new plan is permanent and not just a way to lure in new customers before jacking up the price. Krstajic said Thursday that he expects competing new entrants, Mobilicity and Wind, to face shortages in capital. "I think one or more of the other new entrants runs out of money by the end of this year … we are extremely well-capitalized, we have some very solid partners. I'd love to be an acquirer." Public Mobile is financed by OMERS, an Ontario pension fund, as well as Barrick Gold, company chairman Peter Munk, and U.S. private equity firms. Bell Canada and Rogers Communications Inc. also operate discount mobile brands with specials for talk-only plans at $25 per month. news@thewirereport.ca

Public Mobile trying to get bought out, Lacavera says

News | March 31, 2011

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