THE CHANGES WHICH have happened in wireless market over the last five years have been stunning in their breadth, depth and speed. The explosion in popularity of the Android platform and the Apple iPhone and the implosion of BlackBerry often gobble up all the headlines, but riding those waves for half a decade now in Canada has been Wind Mobile.
The company celebrated its birthday Tuesday by using Twitter to give away 50 new Nexus phones – and by making its new CEO, Pietro Cordova (right), available to the media. He’s no Canadian neophyte, having worked here in the 1990s, is married to a Canadian – and has plans for Wind, which don’t include any immediate mergers. He says the company is on track for a million customers in 2015 and he can’t wait to get his hands on more spectrum.
What follows is an edited transcript of his chat with Cartt.ca editor and publisher Greg O’Brien.
Greg O’Brien: So, Wind is five years old now but you’ve been there two, two-and-a half?
Pietro Cordova: Two-and-a-half, June 2012. But, I had one previous year on Wind Mobile, with the head shareholder, VimpelCom. So, all in all, I’ve been following this baby for three-and-a-half years now.
GOB: What do you think about being an operator in Canada as compared to being an operator elsewhere in the world?
PC: Well, it takes a little time to get used to it. Fortunately, I lived in Canada for a long-time in the ’90s in another super-regulated business – banking. So, some of the dynamics are not foreign to me, or at least less foreign to someone who might come and tackle the Canadian market. Besides that, I’ve had a Canadian wife for 25 years, so I’m used to the ways in Canada.
But, it’s definitely different. It takes a little time for people to digest certain dynamics of the market, because they seem to be quite different from what you see maybe in European markets, or the markets of the Far East. Some dynamics of deflationary markets are not the same here. So, you have to get used to it.
GOB: What was the biggest thing you had to get used to? And as a follow up to that, I mean what are you hoping to, perhaps, import here?
PC: Oh, I wouldn’t say that much is being imported, because quite frankly the business model here is one that is not that present in many other markets. For instance, the subsidies on the phones, for instance, is something that you don’t find in many other markets other than the States.
If you remember five years ago when this company started with Orascom, I think they were mostly a pre-paid operator and they thought they could import that here. A lot of the other new entrants had the same kind of idea that they could, somehow, apply those market dynamics to the Canadian environment and I it was a fairly rude awakening for a lot of us. That’s why Wind, at the end of 2010, so fairly quickly, changed completely, its position in the market and its strategy. It is post-paid, and that’s the way it’s going to be in Canada.
“Quite frankly the business model here is one that is not that present in many other markets.” – Pietro Cordova, Wind
I would say it’s more trying to take the Canadian business model and bring new ideas to it rather than to change the structure of the market. So, we came here and everybody had a three-year contract. We decided that it was good for us to have no contract. So, no hidden fees, no penalties. That was the idea. It’s not as if we don’t provide the subsidy for the phone, but it was done in a slightly different way, in a more transparent way. So, it is actually trying to bring improvements to the market, rather than trying to bring a revolution to the market.
GOB: People really love their zero-dollar phones here, which is something Wind found out early on.
PC: They love it and it’s a handset-driven market. I mean, you have to have the lineup. That’s why in the past two years we’ve worked very, very hard to have very strong relationships with all the main manufacturers, like Samsung and LG and Blackberry and Motorola. We’re very happy that today, with the exclusion of the iPhone, you actually walk into a Wind store and there you have the same lineup as anyone else. I agree with you, that was such a big driver for the Canadian market that you cannot be successful unless you play in that arena.
GOB: I mean you’re not the only – of the newcomers who found that out.
PC: Yeah, but we were lucky enough – or I would venture to say good enough – to understand it a little sooner than the other people. We also had shareholders who were willing to back us up, because the handset-driven markets are cash-intensive because you have to buy the phones and the subsidies are cash-intensive as well. So, it’s not only a question of understanding where the market is going or what kind of markets you’re playing in, it’s just also whether or not your shoulders are big enough to carry that kind of weight.
GOB: And the Canadian government is getting into it right now with the Competition Bureau looking at what Apple’s contracts say to the carriers and seeing if they’re fair or not.
PC: That’s one very specific kind of handset, but I don’t think that the agreements with other manufacturers have the same kind of features. So, I wouldn’t say that that’s the market standard, I think it is more of an Apple standard.
GOB: Speaking of the government, are you happy with the direction it has taken? The folks at Vidéotron have talked about certain conditions needing to be in place for there to be a more competitive market in Canada. Some things have changed, some things have stayed the same. Are you happy now with the market rules that have been set in place by Industry Canada and the CRTC?
PC: Well, let me put it this way, we are extremely satisfied with a lot of things that have happened in the past 12 to 18 months: starting from the (Wireless) Code of Conduct, onward. We have acknowledged the change in attitude from the government vis-à-vis fostering real competition in the market and fostering it with actual facts and actions for the well-being of a fourth operator.
Instead of just making statements on policies, they actually went out and did things, so we are very grateful for that. ‘Happy’ is a different word. I think there is a way to go and there is room to improvement. We have an ongoing dialogue with the government. We might not have dialogue with the government through newspapers and we got to have constructive communications with them, but the rules of the AWS-3 auction are going in the right direction… The statement that they made about not allowing transfer of unused or underutilized spectrum blocks from non-incumbents to incumbents is also a very factual stance that the government has stated.
"‘Happy’ is a different word." – Cordova
So, there are a number of things that we see which are going in the right direction, and we believe that if we come up and sit down with them with reasonable requests, I think they will entertain those requests.
GOB: Are the conditions in place now for Wind to really hit the gas? You know the original projections were for Wind to have a lot more subscribers in Canada by now.
PC: I would go back to what I was trying to say before. Originally they came to Canada with different expectations for what could have been done in this market. So, I wouldn’t really look at those projections. We haven’t looked at them in a long, long time.
GOB: Everything changes once you’re in it
PC: And again, it was not an easy awakening, but we got the wakeup call and we changed our tactics and clearly you cannot expect to see those numbers. Don’t forget, also Wind went through couple of years in which the shareholders were deciding what to do with the asset. So, I wouldn’t describe them as years in which they poured a lot of money into this company.
GOB: As well, people forget that when the AWS auction happened, the iPhone wasn’t yet in Canada.
PC: That is true. And now it seems to a lot of people that they cannot survive without the iPhone and it’s only five years ago.
But we are super happy where we are today with all objective situations being taken into consideration, believe me. 
But if things had gone in a different way could we be somewhere else? It really doesn’t matter.
So, where we are is a very good place. We are growing. We’re going to go through 800,000 customers at the end of the year, we have ambitious plans for next year to keep on growing in a healthy way, in an organic way. We hope to hit the one million customer milestone toward the end of next year. Nothing dramatic, but a good, solid healthy growth company. So, I think that’s a good place to be in all honesty.
GOB: What about on the merger and acquisition front? The CFO of Vidéotron told an investor conference last month that they’d been talking to some of the Wind financial backers about perhaps putting the two companies together.
PC: I don’t think that they meant in a sense of merging the two companies. I think that the idea would be that they do have unutilized spectrum in the provinces where we operate and we need spectrum. So, one of the avenues that could be taken is that of putting our resources together, but specific resources. I don’t think that they have discussed, for instance, the idea of us starting to be active in Quebec. So, I think it’s more of a question of ‘I have resources, you have resources, let’s put them together where it makes sense and maybe we’ll do something about it.’
“I wouldn’t really hold my breath on any of those deals, let me put it that way.” – Cordova
GOB: Yes, I worded my question a little sloppily there. There’s not going to be a merger between Vidéotron and Wind, it was more or less the way you described it.
PC: Wind and investors in Wind have a lot of options in front of them in terms of how to achieve certain goals. Again, from a philosophical point of view, I think it makes total sense if you talk about (the spectrum assets of) Vidéotron, Shaw, anything can happen. It’s just that when you get into the execution of these deals… the devil is in the details – and we have a lot of details in those M&A deals. I wouldn’t really hold my breath on any of those deals, let me put it that way.
GOB: And Mobilicity is still out there in the mix as well, looking for a buyer.
PC: You know what? I really don’t know what they’re looking for because I don’t understand. I agree with you, they’re certainly waiting for something to happen, but I don’t know what they’re waiting for, in all honesty. So, we’ll see.
GOB: You compete against the big three providers who offer bundles of wired internet and television. Is there any way or is there any interest by Wind to try and put together some kind of video package or bundle or to partner with certain people who are able to give you that?
PC: I’d say no, not at this time, at all. We have other priorities at Wind. I think we have a path to success that is not mixing media content with carriers. We know what we can do and we should be humble about that and we’ll pursue our own objectives. The structure of the Canadian market is very unusual because the vertical integration of our competitors is unheard of and it’s certainly not practicable in any other market that I know of. But that’s the way it is, and we certainly will not go in that direction.
GOB: What are your further LTE and spectrum plans? There are going to be some more announcements on spectrum coming from the government this week on AWS-3, 3500 MHz, maybe even AWS-4.
PC: Well, I think the sequence of events would be AWS-3 auction, then the 3500 auction. And then they are starting to talk about the 600 MHz as well right?
I think there is a clear understanding from all regulators all over the world that eventually the demand for spectrum will increase because data consumption will increase, so people are now starting to plan ahead. We’ll need to take one step at a time and the imminent steps are the two auctions in March, so we’ll focus on those. Then we’ll see whether it makes sense to go and look at other spectrum when it becomes available.
In an ideal world… clearly you should get spectrum when it becomes available, because you might not use it today but will use it tomorrow, not in two years, you know what I mean? Technology now is so fast that they’re already working on the specs and on the standards for the 5G generation. Again, it’s not tomorrow, but it’s not going to be in 10 years, it’s going to be two, three years away.
