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New Cell Phone Competition: What’s in store for Canadian Telecom Giants?

Wednesday, August 26, 2009

New Cell Phone Competition: What’s in store for Canadian Telecom Giants?

Stock Talk
   My Advice! Don’t touch Bell BCE Inc (Public, TSE:BCE), Telus (Public, TSE:T), or Rogers (Public, TSE:RCI.B), the big 3 wireless providers in Canada with a 10 foot telephone pole.


   There has been an iron grip in the Canadian Wireless Communications Industry for years held by the duopoly of Bell, Telus, and Rogers-They hold 95% of the Canadian wireless market according to the Economics Division of the Parliamentary Information and Research Service. New competitors have been blocked time and time again through legal action and other restrictive barriers to entry in the cell phone communication sector. The Canadian Radio-television Telecommunications Commission (CRTC), has not helped anyone but the commanding corporations in the past so what’s about to change?

    There is a price war starting between the big boys, but it’s not just Bell, Telus, and Rogers on the battle field; there are 8 new wireless carriers. At first you might think, does that mean Fido, Solo, Koodoo, and Virgin plan to fight? No, no, don’t be silly Fido is run by Rogers, Koodo by Telus, and Virgin and Solo by Bell.

   So who are these Guerrilla Warriors?

  Globalive Wireless – Backed by Eqyptian Billionaire Oraxcom’s Sawiris 
   ($442,099,000 on 30 Licenses)

   Data and Audio-Visual Enterprises Wireless (DAVE)
   ($243,159,000 on 10 Licenses)

   ($65,690,000 on 3 Licenses)

   A number company from Montreal
   ($52,385,077 on 4 licenses)

   Manitoba Telco MTS Allstream
   ($40,773,750 on 3 licenses)

   3 have TV / Internet / or Land Line to offer bundle discounts

   Shaw Communications
   ($189,519,000 for 18 licences)

   Quebecor’s Videotron
   ($554,549,000 for 17 Licenses)

   Bragg Communications’ Eastlink
   ($25,628,000 on 19 Licenses)

   In 2008 the federal government, hoping to lower wireless prices through competition, reserved 40% of the spectrum licenses for new companies entering the wireless market. This was the first time in 13 years that new licenses became available and these licenses allow providers to broadcast cell phone frequencies. To stop Bell, Rogers, and Telus from out bidding the new entrants, 40% of the licenses were set aside for new providers only.

   The new entrants are expected to begin operating in the second half of 2009. Get read for a price war.

   Price = Lower Profit Margins for the Big 3 and less subscribers = Lower profits = Stock Prices Decline to reflect the new profit levels.

   This price competition has not be limited to cellular phones. Much of this battle is also being fought through bundling of Television, Internet, and Home Phone as well. A perfect case of this was Shaw’s most recent predatory pricing that has been discussed by many on . This is not the end.

   There are more offers coming in the mail from competing companies as well. Telus just sent me an offer in the mail for 75 HD TV channels for $20/month.

   This price war will really heat up if the anticipated new national carrier headlined by Globalive Wireless is created.

   If you’re renegotiating your wireless, home phone, TV, or internet then get ready to squeezes these companies for all you can get.

   If you’re thinking of buying shares of Bell, Telus, or Rogers than heed my warnings.

1 comment:

Anonymous said...

Solo is by Bell, not Rogers