Cogeco hopes for mobile wireless launch by this time next year
By Ahmad Hathout
TORONTO – Rogers CEO Tony Staffieri said Tuesday that Freedom’s competitive mobile wireless offers ahead of the back-to-school season didn’t have a “material impact” on its market share in Ontario.
“They launched a few, I would say, price points [of] sub-$40 that we were careful in how we responded and [they] didn’t have a material impact on the market, frankly,” Staffieri said during the BMO telecom conference.
“So one of the things we’ve gotten a lot better at is to let the competition do their thing, we’ll do our thing, and we don’t have to respond to every move they make — let’s let the customer decide what is important to them, and so the fact that we had little-to-no response on that, really speaks for itself.”
The comments are in contrast to what Pierre Karl Peladeau, CEO of Freedom-owner Quebecor, said earlier this year when he declared a “different landscape” with the newly resurrected mobile wireless provider’s new plans in the market.
“The market suddenly became more competitive in Ontario,” Peladeau said during a second-quarter earnings conference call with analysts last month. “We should not be surprised.”
Over the past couple of months, Freedom has frozen its rate plans, added more data to existing plans, launched a Canada and U.S. plan with 40 GB of data for $50 and a 5G plan with 50 GB that includes U.S., Canada and Mexico for $65.
“We are seeing very favourable market reaction on this, so that’s something we felt was a plus for us and it’s working out well,” Quebecor chief financial officer Hugues Simard said at the time.
The comments are also in contrast to how the incumbents have responded to Freedom offers when the carrier was still owned by Shaw. Freedom back then was largely credited with instigating the push for more data in mobile wireless plans.
Staffieri said Tuesday that the back-to-school rush went “extremely” well for the company, as it saw year-over-year growth in market share in Ontario, specifically in Toronto.
“It’s all coming together well,” he noted.
Feeling the heat in the west
Rogers has also touted strong market share gains out west, where it took over the operations of Telus rival Shaw.
For Telus’s chief financial officer Doug French, the Vancouver-based telecom did feel the heat.
“It’s been very intense,” French said Tuesday. “Both wireline and wireless have been more competitive and more volatile than I’ve seen for a long time. I think the last little bit stabilized again, so it’s not continuing to be surprised every other day, but it has been pressurized.
“And I think that you would expect that, when the regulator had to approve the acquisition and there were promises made on reducing prices, you would expect this.”
French noted that the bundle has become a focal point for competitive intensity, as Rogers is well-positioned to capitalized on that opportunity.
“Early days it has been impacting pricing a bit in the west with that bundle,” French said. “A lot of the customers [who] are bundling, though, were never Telus customers in the first place,” he noted. “We’re still holding very well.”
But French raised what the telco has been saying for a while now – that it is difficult to compete against pure fibre connections.
Regulatory discussion
On wholesale rates, French said he believes that the CRTC will, or should be, thinking about the impact of drastically lower third-party rental prices for network space when it comes to determine those access prices.
He reiterated what Telus has said in submissions to the regulator that it should be mindful that fibre has a long payback period and that the telco should be able to make a return on the asset before drastic regulatory changes. Otherwise, he said, there could be a dramatic reduction in jobs, as Telus goes through a restructuring that will shave 6,000 jobs across two businesses.
“I don’t see them going far off that path, to be honest, I think it’s dangerous from — you look at the job impacts already, you think of the integration that’s happening with our peers, etc. — there could be material job losses, and to compound that would be even worse, if the regulatory environment went too far beyond that tone.”
The CRTC will also be looking at mandating access to last-mile fibre under the current regime. Bell CEO Mirko Bibic said the company expects to be able to manage the impact, though that will depend on what the terms are.
Bibic also reiterated what the company believes was a “potentially significantly negative” decision by the CRTC to favour Quebecor’s rate offer for access to Rogers wireless network under the mobile virtual network operator (MVNO) regime. The regulator said the lower price would allow Quebecor to offer more data and therefore more packages in new markets.
Bell sent a letter to the Federal Court of Appeal last week backing Rogers’s appeal on the matter. Specifically, Rogers is concerned that the decision runs interference on the “just and reasonable” provision under the Telecommunications Act because the regulator said in its decision that it’s okay for Rogers to absorb a loss in its wireless segment because its other segments are profitable.
“If it’s taken in isolation, okay we’ll see,” Bibic said of the Rogers-Quebecor final offer arbitration decision. “If it’s a principle that gets applied more broadly, that’s potentially significantly negative and frankly I think, way off base. The legislation in Canada says that rates need to be ‘just and reasonable;’ ‘just and reasonable’ has to have a notion of compensatory, and that’s why there are appeals on this.”
Bell is currently in final offer arbitration with Quebecor for that same network access.
Meanwhile, Cogeco’s chief financial officer Patrice Ouimet told BMO’s Tim Casey that the telco hopes to launch its mobile wireless business using the mobile virtual network operator model by this time next year. The company is still negotiating access rates to the incumbents’ wireless networks.
Screenshot of BMO’s Tim Casey, Rogers CEO Tony Staffieri and Rogers CFO Glenn Brandt at BMO telecom event Tuesday
