- Category: Economic
- Published Thursday, December 17, 2015
- CTV News
Shaw Communications says its proposed $1.6-billion takeover of Wind Mobile will provide an affordable entry into the wireless industry and an expansion beyond Western Canada where it has its customer base.
Company president and chief executive Brad Shaw told analysts that it has been clear that Western Canada's largest cable company needed to be a player in mobile communication but the costs were too high until recently.
He says the acquisition of Wind Mobile will give Calgary-based Shaw a ready-made wireless operation with more than 900,000 customers, mostly in Ontario, Alberta and British Columbia.
Shaw (TSX:SJR.B) has its main customer base in Alberta and British Columbia, providing residential cable TV and Internet services as well as some complementary home phone service. Its main competitor has been Telus (TSX:T).
Shaw also operates one of Canada's two national satellite TV services, business-oriented data centres and the Global television network, which has a significant presence in parts of Ontario where Wind operates.
The proposed deal requires a number of regulatory approvals, including the Competition Bureau and the Ministry of Innovation, Science & Economic Development but Shaw expects the transaction to close next summer in the third quarter.
The purchase puts Shaw in line with competitors BCE (TSX:BCE), Rogers and Telus in offering the entire slate of popular bundled services -- wireless, television, home phone, and Internet.
Shaw scrapped its previous plans to introduce a mobile network in 2011, and two years later signed a deal to sell the spectrum -- which would've been the foundation of that network -- to Rogers (TSX:RCI.B).
That Shaw-Rogers spectrum deal didn't close until this year, after a number of inter-related regulatory hurdles were overcome with the approval of the former Harper government.
Since 2011, the Harper government and the Canadian Radio-television and Telecommunications Commission made several changes to the rules for wireless competition which lowered roaming fees for carriers and customers.
Among the beneficiaries was Wind Mobile, which was one of the companies that emerged as competitors to Canada's three national mobile companies -- part of the Harper government's goal of pushing down prices while encouraging innovation.
Shaw chief operating officer Jay Mehr said on Wednesday after the deal was announced that there's no plan to shift from Wind Mobile's low-cost packages or hike prices.
"This is a winning strategy that's been created, and our plan is to continue on that winning strategy," Mehr said.
Wind Mobile CEO Alek Krstajic and his executive team plan to stay with the company.
Wind Mobile, which became the first of the new wireless networks to begin operating six years ago this week, ran into financial problems. A change in its ownership structure last year cleared the way for it to raise funds.
Last week, Wind Mobile said it had secured financing of $425 million from a syndicate of major Canadian banks to upgrade from 3G to a higher-speed LTE network, which would give it more capacity for the growing popularity of streaming video and music on mobile phones.
Mehr said Shaw still plans to roll out LTE across Wind Mobile's network by the end of 2017.