Cable / Telecom News

BCE/MTS deal could squeeze SaskTel profits, quash Feds’ four carriers objective

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REGINA – BCE’s acquisition of MTS could result in new government policies designed to create incentives for additional wireless competition, says SaskTel’s risk assessment report of the proposed deal.

SaskTel, a crown corporation owned by the people of Saskatchewan, said the analysis of the risks of the potential transaction will become part of the strategic planning process that it undertakes annually.  The report, commissioned in May and released Monday, was conducted by Mark H. Goldberg & Associates Inc. as the independent third party.

Key risks outlined in the report include:

– The further concentration of the market in Manitoba could see the removal of the four carriers objective by the Federal government, possibly enabling Shaw to sell its acquired Wind Mobile business or partner with other telecoms.  If Shaw launches a competitive mobile service, there is a risk that SaskTel’s consumer communications services will face significant pressure from a second bundled service package in Saskatchewan;

– There is a risk that the establishment of Winnipeg as a western headquarters for Bell could lead to an erosion of SaskTel’s share of the Saskatchewan business market;

– There is a risk that Rogers will look to replace its lost partnership with MTS by developing retail partnerships with cable companies in Manitoba and Saskatchewan.  This would improve the competitive positions of Rogers, as well as local cable companies;

–  The possibility that reduced numbers of facilities-based carriers in Manitoba could lead Federal government policy makers to create incentives for additional wireless competition to develop through lower costs for new entrant spectrum or other measures.  Such measures could reduce the costs for competitors and increase costs or restrict capacity expansion for SaskTel;

–  For the reasons identified in the report, there is a risk that SaskTel’s net income will be unable to support the level of dividends that have been returned to the province in recent years.

“The report provides an excellent high level assessment of the potential impacts this transaction may have on SaskTel,” said SaskTel president and CEO Ron Styles, in the news release.  “It is also worth noting that some of the risks in the report are not new to the corporation; however, those risks may increase due to this acquisition.”

Saskatchewan premier Brad Wall has told media outlets in the province that the company could be sold, but that he would put such a move to the voters, first.