Telus was hardest hit when its stock fell 6.7 per cent on speculation that the deal could open greater competition in Alberta and British Columbia. Rogers Communications Inc. dropped 5.6 per cent on fears of more competition in Ontario but BCE Inc.’s shares slipped just 1.5 per cent.
Shaw is offering $1.6 billion for Wind. That’s could be considered a steep price for a company that was valued at under $300 million a year ago.
But Shaw stands to gain Wind’s valuable spectrum licenses and mobile network that serves some 940,000 customers in Alberta, B.C. and Ontario. That’s still customer based when compared to the customer base of the Big Three – Bell, Rogers and Telus.
However, if the deal is approved (regulatory and government approvals are expected to come within the first half of 2016) a Wind purchase would enable Shaw to eliminate the sidestep the costs and risks associated with building its own mobile network while providing it an opportunity to offer bundled services that include Internet, home phone, television and now wireless service to its suddenly larger customer base.
Such a scenario could effectively turn a Shaw-Wind partnership into a fourth major player in the Canadian mobile market. That’s something that consumer watchdogs and the federal government have been looking for.
For years, Canadians have been paying some of the highest prices in the world for mobile services. Lack of competition in the market has been blamed for it.
In recent years, the government has introduced a series of legislation that favour new entrants like Wind, Public Mobile and Mobilicity such as allowing them to purchase broadband from the incumbents at wholesale prices and allocating spectrum for the smaller players to purchase.
Still it has been a perpetual uphill battle for the smaller players. Wind continues to struggle while Mobilicity was bought by Rogers and Telus snapped up Public Mobile.
Whether Shaw will retain Wind’s lower prices is still up in the air, according to, David Christopher of OpenMedia.
“We’ve campaigned for years for a greater choice in our broken telecom market and today’s move should mean a viable fourth option for all Canadian consumers,” he said. “However given Shaw’s poor record as Canada’s most expensive Internet providers, we’re not holding our breath for lower wireless prices.”
For new entrants to be able to enter the mobile market, the government and the Canadian Radio-television Telecommunications Commission need to ensure a level playing field, said Christopher.
Shaw’s move, he said, illustrates that new “further action” need to be done to provide new entrants cost-based access to wireless networks.
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