Wind promotion seen as shot against Mobilicity

Wind Mobile's offer of free wireless service to customers of Mobilicity, with unlimited data, text and calls for six months, could be an offensive move to help clear away competition for set-aside spectrum in the upcoming AWS-3 auction, analysts say. A offer on Wind's website says Mobilicity customers can get free service from Wind that features no data caps plus unlimited in-province calling and unlimited cross-Canada texting for six months if they sign up before Jan. 26. A free SIM card is also part of the offer, which Wind spokesman Robert Sauer said usually costs $25 for those bringing their own phone from another service provider. The Wind website said this offer is available to those who want to use their own phones or buy one from Wind. Dvai Ghose, a telecom analyst with Canaccord Genuity, speculated that this could be a sign of consolidation talks between Wind and Mobilicity having gone awry ahead of the AWS-3 auction on March 3. He noted that the auction rules set aside 60 per cent of the available spectrum for “operating new entrants.” Ghose noted that Wind and Mobilicity are the only carriers that qualify as operating new entrants in southern Ontario, Alberta and British Columbia. "Mobilicity, given that it has no other play and is the smaller carrier and has much less spectrum, I assume is basically saying to Wind: 'If you don't buy us out, partner with us, include us in some way, we will bid against you in the auction, and you won't be able to get away with paying the reserve price,' " Ghose said in a phone interview. Qualifying his theory as "conjecture," Ghose added: "You may well have a situation where Wind is saying, 'If that's what you're going to do, we're going to try and obliterate you in the interim.' " Ghose said that, beyond factors related to gaining an advantage in the upcoming AWS-3 spectrum auction, there's little reason for Wind to target Mobilicity instead of major carriers such as BCE Inc., Telus Corp. and Rogers Communications Inc. "Mobilicity only has 150,000 customers and there's 35 million Canadians, so why pick on them?" Ghose said. "The vast majority of customers are with the incumbents." A Nov. 25 report from Ernst & Young Inc., the court-appointed monitor in Mobilicity's bankruptcy protection proceeding that began in September 2013, said Mobilicity had 154,900 active subscribers as of Oct. 31. That compared to 156,300 subscribers two months earlier, according to the previous monitor's report, and 189,239 at the time of the bankruptcy filing, according to the first monitor's report. Wind has most recently reported having 800,000 subscribers. Troy Crandall, a telecom analyst with 3Macs, said in an email that sparring with Mobilicity "is unlikely to spur a massive counter attack or price war like it would if they were to target the Big 3, given Mobilicity’s limited financial resources." Crandall added that "many of Mobilicity’s subscribers are probably now aware of the financial situation of their carrier and might already be worried that one day they could wake up to no cellphone service. If the right offer/deal was presented to them and they felt no worse off, they just might make the leap to a new carrier." He added that the move against Mobilicity by Wind does not necessarily mean efforts to merge the two entities are dead. "In fact, it might help move talks along as it further solidifies the notion they are essentially fighting over the same market and might be better off together,” he wrote. Noting that the deadline for applications in the both the AWS-3 and 2500 MHz auctions is Jan. 30, Scotia Capital analyst Jeff Fan said in an email that "the timing" of Wind's outreach to Mobilicity customers "indicates that Wind wants to reduce Mobilicity’s ability to obtain financing to become an applicant for the AWS-3 and 2500 MHz spectrum auctions." The 2500 MHz spectrum auction is set for April 14. Fan also said: "I think this is a move designed to put pressure on Mobilicity so, ultimately, Mobilicity stakeholders may have little option left but to either inject additional capital or sell to Wind. ... I believe Mobilicity’s spectrum is important to Wind to enable Wind to upgrade to LTE and compete effectively." Greg MacDonald, an analyst with Macquarie Capital Markets, said in an email that Wind's promotion is "almost certainly strategic. Wind appears to be using its competitive advantage (secured operating funding) to help encourage Mobilicity to close the bid-ask spread on a consolidation deal." Wind's goal of luring Mobilicity customers could also been seen in social media. The Twitter account of Wind Mobile on Thursday responded to social media participant who used profanity to describe Mobilicity, and told this user: "If you're looking to make a switch, we have an offer that might interest you," and provided a link to Wind's website where it details the offer made to Mobilicity customers. Several other Twitter posts from Wind to individuals provided links to the web page. Officials from Wind were not available Thursday to discuss the strategy behind the company's offer to Mobilicity customers, and Mobilicity declined to comment. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Wind promotion seen as shot against Mobilicity

News | January 15, 2015

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Wind promotion seen as shot against Mobilicity

News | January 15, 2015

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