FINALLY, A CANADIAN, PUBLICLY traded wireline telco has made a real commitment to the future, despite what the country’s financial community thinks.
MTS Allstream has been absolutely crucified in the markets this month for daring to cut its quarterly dividend in order to try to properly prepare the company for what’s next by launching a $125 million fibre to the home overhaul. Good for Pierre Blouin and his team for deciding that if the company is to continue in the wired communications game and gain a real competitive advantage in its service areas, it had to make the fibre-to-the-home switch, no matter the consequences in the financial markets, which are mostly interested in short term, quarterly, goals.
The company has witnessed a 10% drop in its share price over the past two weeks, but it wasn’t exactly a market darling anyway as that price has dropped 30% between today’s close of $25.18 and its 52-week high of $35.39.
The fact I agree with its fibre plans doesn’t mean I think the company isn’t in a tough spot. It had a poor quarter, missing even its own conservative targets. It’s a full-service telecom provider in its home province only (Manitoba), losing thousands of wireline voice customers – and can offer business customers some cut-rate packages in other limited places around the country through its national Allstream division.
And on the wireless side, with its CDMA network in Manitoba, it’s facing a difficult challenge against the HSPA-powered national competitors Telus, Bell and Rogers (and their sub brands).
But MTS has done very well in Winnipeg and a few other areas in the province with its quad-play offer (it is closing in on 100,000 digital TV subs) – something no other competitor can touch in its home market. When it launched MTS TV a few years ago, it ate Shaw Cable’s lunch in Winnipeg for quite a while before the big Calgary-based cableco responded with better VOD, more HD and lower prices.
But Shaw’s offering still can’t touch the functionality and flexibility MTS TV can provide to its customers with its Microsoft-based platform.
Shaw, on the other hand, has a speed edge over MTS’ network on the broadband side, a problem which will be more than solved for MTS with its move to go fibre deep.
And just from a marketing standpoint, being able to go to Manitobans with an FTTH offer, MTS will look just that much more modern than other options.
Simply, and despite the financial market’s opinion, MTS did the right thing for its customers and employees (if not for its shareholders, in the short term) by jumping into FTTH with both feet.
