The Canadian cellphone game has a new major player, as Shaw Communications (parent company of Global News) has announced plans to acquire WIND Mobile in a deal valued at $1.6 billion.
The move is likely to shake up an industry largely dominated by three providers — Telus, Rogers and Bell — and potentially impact Canadian pocketbooks.
READ MORE: Shaw Communications buying upstart WIND Mobile in $1.6B deal
“It’s an exciting time in the industry,” said Walid Hejazi, professor of competitiveness at the Rotman School of Management at the University of Toronto.
“I think the best outcome for consumers in terms of prices and quality and in terms of variety as well, I think is a fourth player,” Hejazi said. “This is a good outcome and I think it will benefit consumers.”
Hejazi said there is a monopoly in the Canadian telecommunications industry, and a powerful lobby working to keep it that way.
While only time will tell what impact this will have on the industry, Hejazi said the deal seems to make sense.
“I’m very happy that there will be a fourth player,” Hejazi said. “A company like Shaw should be involved in cellphones as well because of the economies of scale.”
WATCH: Shaw Communications CEO Brad Shaw spoke with Global’s Gord Gillies regarding Shaw’s blockbuster acquisition of WIND Mobile.
READ MORE: ‘Surge’ in cellphone costs prompts tough choices for consumers
The move is good news for consumers, said David Allwright, dean of the Chiu School of Business at Bow Valley College.
“Existing customers will be happy; expanded coverage, more aggressive rate plan,” Allwright said.
“New customers will be happy because that gives them more options in that market.”
There has long been buzz that more competition could ease the high bills Canadians are slapped with every month, which average $62.18. Prices tend to be lower in Manitoba and Saskatchewan due to competition from provincial providers MTS and Sasktel.
Hejazi said for consumers to see real impact, the government needs to step up and implement changes to increase competition in the industry.
“I think the best solution…would be for the Canadian government to announce…all restrictions on foreign entry into the Canadian telecommunication industry will be lifted,” Hejazi said.
READ MORE: What’s the best, cheapest cellphone plan in Canada?
“The Big 3 would have to become so competitive, and their profits would have to fall to a point where international players would say ‘look, that market’s not worth coming into because their prices and profits have come down, and their services have gone up.'”
“There’s no economic justification at all for restrictions on foreign entry,” said Hejadi, calling the current environment an “unfair playground.”
Hejazi said considering the obstacles WIND Mobile has faced over the years, “They have to be commended.”
WATCH: Wind Mobile CEO Alek Krstajic speaks to Global’s Gord Gillies after reaching a deal with Shaw Communications to purchase the company.
WIND Mobile, a six-year-old company with a mission “to bring affordable wireless service to Canadians” touts itself as a provider with low and fair pricing and no hidden fees. It is currently Canada’s fourth-largest provider, with 940,000 subscribers.
The company’s network largely covers Canadian cities, surrounding areas and highways. When customers are outside of those areas they have access to partner networks, which at times has given WIND Mobile a black eye when it comes to network reliability.
Last week, it was announced the carrier had secured $425 million of financing to upgrade its network, and on Tuesday WIND Mobile announced it was expanding its coverage starting in the Greater Vancouver area. The expansion was “necessary” to handle the “surge of new customers” in Western Canada using the wireless provider, a statement read.
Ottawa has worked to give the little guys a boost, and has moved to drastically reduce how much smaller players such as WIND must pay the three big network owners to let customers use their systems when outside home coverage areas.
The Harper government also refused in the past to let Rogers, Bell or Telus gobble up airwave licences owned by Wind, which effectively blocked any sale of the carrier to one of the Big 3.
The deal with Shaw Communications still has to be approved by regulators, but is expected to be finalized in the first half of 2016.
With files from Jamie Sturgeon and Patricia Kozicka
Comments