Flanker brands ramped up promos in March: Barclays

Following a quiet first quarter, wireless companies’ flanker brands stepped up the competition in March, ramping up promotional activity through data increases and handset discounts, according to Barclays Capital. Just ahead of March break, a “growing number” of flanker brands increased activity to “meet subscriber growth targets near quarter-end” by targeting the mid-to-lower end of the market, analyst Phillip Huang said in a Monday note. For the entry-level smartphone users, the focus has been on “adding more data to existing plans to encourage greater consumption,” he said. For example, Shaw Communications Inc.’s Freedom Mobile is offering its 6GB plan for $35, while Rogers Communications Inc.’s Fido brand doubled the data offering in its Pulse Plan to 4 GB, according to Huang. For mid-level smartphone users, promotions focused on handset discounts and came later in the month, Huang said. “We believe the overall discounted handset prices in March appear similar to the prices we observed during the Black Friday weekend, and the level of discounts appear consistent with the prior year in March,” he wrote. Examples of those discounts include Apple Inc.'s 32GB iPhone 7 for $150 and iPhone 6S for $0 from Rogers, Fido, BCE Inc. and its flanker Virgin Mobile, and Telus Corp.’s Koodo, Huang said, adding only Bell and Rogers offered the 128GB iPhone 7 for $200. The promotions come on the heels of strong wireless numbers posted for consecutive quarters by the major carriers last year. Aggressive handset subsidies contributed to that. However, the average cost of a handset for Canadian carriers has increased by $40 to $50 compared to last year due to the weak Canadian dollar, Huang said. “We believe the industry may not be able to fully pass this higher cost on to consumers,” he said. As such, there could be “incremental pressure” on wireless margins this year if the “competitive environment remains relatively stable” compared to last year, Huang added. CLARIFICATION: A previous version of this story stated Fido's Pulse Plan is $45, quoting Huang's note. The pricing on the company's website as of March 28 for the 2 GB plan with two extra GB, in the provinces where the promotion is available, was $65.

Flanker brands ramped up promos in March: Barclays

Brief | March 27, 2017

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Flanker brands ramped up promos in March: Barclays

Brief | March 27, 2017

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