Rogers looking for more wireless spectrum sharing deals to compete with Telus, BCE

Rogers Communications Inc. said it aims to improve its competitive position against BCE Inc. and Telus Corp. through more wireless network sharing agreements, though analysts do not yet see potential for Rogers to expand those deals from coast-to-coast. Rogers announced a spectrum sharing deal with Quebecor Media Inc.'s subsidiary Videotron Ltd. in Quebec last month, and on Thursday, said in a release that it extended a similar agreement with Manitoba Telecom Services Inc. to cover the roll out of fourth-generation LTE technology in Manitoba. The deal means MTS and Rogers will halve their costs as they roll the LTE wireless network over the next five years, which according to the release will cover 90 per cent of Manitoba’ population. “It makes economic sense to do these types of partnerships because it’s a way to expand the network footprint and it’s a way to deliver it in a more capital efficient and operating efficient manner,” Ddin Morbi, Rogers’ general manager of wholesale and domestic roaming, said in an interview. “We’ll continue to evaluate other opportunities that make sense.” The Rogers-MTS deal expands a 2009 agreement through which the companies share the cost of an HSPA+ wireless network in the province, and complements the LTE network sharing deal for Quebec that Rogers signed with Videotron. Morbi said Rogers is “evaluating all opportunities” for more agreements and will “move forward” with any that make sense. He said the company is looking for a number of network sharing agreements to counter Bell and Telus’ national one. “It’s kind of like what Bell and Telus have done. They have a national sharing arrangement. There isn’t another natural, national sharing partner, so for us we would naturally be looking to do partnerships with other players the likes of MTS and Videotron,” he said. Canaccord Genuity analyst Dvai Ghose said in a telephone interview that the deal puts Rogers on more level playing field with rival incumbents BCE and Telus, which have signed a series of network sharing agreements since 1999. “They’re trying to emulate the Bell-Telus deal to the best of their ability, but it’s very difficult to do,” Ghose said, adding that Rogers does not have as good a partner as Bell and Telus' for a national network sharing agreement. “Basically the main problem is that Bell and Telus is a match made in heaven.” Bell and Telus are ideal partners because they were previously regional incumbent telephone providers—Bell in the East, Telus in the West, with similar size and scale—allowing them to build a national network together while maintaining leadership positions in their home regions, he said. Rogers' deals with MTS and Quebecor cover only 25 per cent of the Canadian population and it will be hard for Rogers to strike similar agreements elsewhere, Ghose said. Shaw Communications Inc. is not a potential partner because it chose not to build out a wireless network. Troy Crandall, a media and telecom analyst with MacDougall, MacDougall & MacTier, said Rogers could seek a partnership with Atlantic Canada cableco Eastlink, operated by Bragg Communications Inc., but not likely for at least another two years. Eastlink, which launched its own wireless service in February, must expand its network before Rogers could benefit from a network sharing agreement, Crandall said. “Right now, Eastlink isn’t bringing a lot to the table, so to speak,” Crandall said in an interview. “If Eastlink is able to build and grow at the rate at which Videotron was, it might be something we consider happening two years from now.” Rogers could also partner with new entrant carriers Wind Mobile, owned by VimpelCom Ltd., or Dave Wireless Inc., operating as Mobilicity, Crandall said, though that would be more beneficial to the new entrants, whose future are uncertain as they are accepting offers. “You don’t want to go sign an agreement with Mobilicity and find out three months later that they don’t exist anymore,” he said. As part of the deal announced Thursday, Rogers will allow MTS’ Manitoba customers to roam on the Rogers network in other parts of the country. MTS could also take advantage of Rogers’ scale and bargaining power to negotiate supply agreements for smartphones, such as Apple Inc.’s iPhone, Ghose said in a research note. Morbi said the new LTE agreement has a five-year term and can be renewed for another five years. In all likelihood, he said, it will be extended after that point since neither company will want to walk away from the shared network in 10 years’ time. “These types of network sharing arrangements, the term lengths are almost irrelevant,” he said. “The terms are usually there because the lawyers want them there.” Kelvin Shepherd, MTS’ president, said in an interview that he expects the agreement to save the companies' capital expenditures and operating costs, though he declined to estimate a dollar figure. “We think this is a win-win,” Shepherd said. “Both of us are saving money, both of us are being cost-effective.” LTE technologies afford faster speeds with more spectrum capacity, and Shepherd said the spectrum sharing agreement will permit MTS to double the speed of its LTE network—now available in Winnipeg and Brandon, Man.—from up to 75 Mbps to a high of 150 Mbps. Rogers said it will launch LTE in Winnipeg, Brandon, Victoria Beach and Grand Beach, Man., on June 17, and later this summer in Portage la Prairie, Selkirk, Steinbach and St. Anne, Man. RBC analyst Drew McReynolds said in a research note Thursday that the deal is “directionally positive” for MTS, which is facing more competition in Manitoba from Bell. “his arrangement should boost capital efficiency at MTS (and Rogers) and enables MTS to deliver a better quality of service sooner to its wireless customers,” he wrote. According to data released in the CRTC’s most recent Communications Monitoring Report, MTS had a 53 per cent share of Manitoba’s wireless market at the end of 2011, followed by Rogers with a 32 per cent, Telus with nine per cent, and Bell with a six per cent. Average revenue per user, averaged across all wireless providers, was $55.73 per month on Manitoba wireless bills in 2011, the data said, slightly below the national average of $57.98. —With reporting by Nicholas Kyonka and nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca --- CORRECTION: A previous version of this story incorrectly stated the date of the first network sharing agreement between Bell and Telus.

Rogers looking for more wireless spectrum sharing deals to compete with Telus, BCE

News | June 13, 2013

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Rogers looking for more wireless spectrum sharing deals to compete with Telus, BCE

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