TORONTO – Canada's three new wireless-only carriers are having little impact on the country’s big telecom incumbents, according to a new report from Moody's Investors Service.
The report, ‘Canadian Telecommunications and Cable Industries: Consolidation Could Be in Store as New Wireless Companies Appear to Struggle’, says Wind Mobile, Mobilicity and Public Mobile, which are not rated by Moody’s, do not have the economies of scale, the access to funding, or the latest products to undercut or challenge the incumbents' market share. Rogers (Baa1 stable), Bell Canada (Baa1 stable) and Telus (Baa1 stable) together make up nearly 92% of Canada’s market share, with the smaller regional and wireless-only carriers competing over the remainder.
"Reports that Canada's three new wireless-only carriers – Wind Mobile, Mobilicity and Public Mobile – are struggling may presage consolidation activity over the next couple of years," said Moody’s VP Bill Wolfe. He went on to describe a potential wireless-only merger as “a low probability event” given the continued funding challenges a consolidated entity would likely face in terms of network and spectrum investments.
The report says that it is more likely that one of the regional cable companies, such as Quebecor Media (Ba2 stable), Shaw Communications (Baa3 stable), or Bragg Communications Inc (unrated), could buy a wireless-only carrier to enhance its ‘quadruple play’ service offerings, expand its wireless footprint, accelerate its market access, and augment spectrum holdings.
