Username: Remember me
Password:
    Forgot your password?
 
Home
About SeaBoard
News
Publications & Presentations
SeaBoard Subscriptions
Contact Info
Sitemap

       
    Crossing lines  
   

Andy Holloway

 
    Canadian Business Magazine  
   

Despite some big mergers, the telecom field in Canada remains crowded

With more than $3 billion in mergers and acquisitions in Canada's telecom sector during the past three months, one can be forgiven for believing a grand consolidation scheme is underway. Or, worse, with the potential elimination of three of the largest competitive carriers--Allstream, GT Group Telecom and Microcell Telecommunications--that we're returning to the bad old oligopoly days that deregulation in 1992 sought to remedy. Rest easy, industry analysts advise. "Each of the individual deals is not driven by some sort of global trend-setting," says Iain Grant, managing director of SeaBoard Group, a Montreal telecommunications analyst. "It's merely business as usual, taking advantage of opportunity."


Individually, the deals make a lot of sense for growth-strapped incumbents. Telus's hostile intentions to take over Microcell in a $1.1-billion deal would eliminate an annoying competitor and make Telus the largest wireless company in the country. Bell Canada's US$205-million acquisition of the Canadian assets of 360networks (Group Telecom) helps it more quickly penetrate western markets. And Manitoba Telecom Services' merger with Allstream is an attempt to find growth outside of its provincial stronghold.


Not only are the incumbent telcos stretching into each other's traditional turf, there are still dozens of viable alternatives for customers who want to avoid dealing with them. Want cheap long distance? Try Call-Net (a.k.a Sprint Canada), Primus or Yak Communications. Internet access? Rogers, Shaw and hundreds of small ISPs offer consumer or business high-speed service. "The competitive landscape has seemingly dramatically changed, because we've lost a lot of the big players, but there still exists robust competition underneath all of it," says Mark Quigley, research director at the Yankee Group in Ottawa.


And the industry's not done yet. One wild card could be SaskTel. While it's the only provincially owned telco left, SaskTel is an innovative company that has managed to deliver high-speed broadband access to every community across Sas-katchewan with more than 200 residents. It's also one of the big suppliers of voice over Internet protocol (VoIP) technology to transmit phone calls. "SaskTel is the one providing all these little startups who are trying to make life difficult for Bell and Telus, giving them the arms and ammunition, and teaching them how to do it," says Grant. In one fairly wild scenario, Grant imagines SaskTel merging with MTS-Allstream and Microcell to create Prairie powerhouse MicroSaskManStream.


Aside from existing telcos merging, the potential is there for plenty more competitors to enter the market. A decade ago, getting into the telecom game would have cost at least $30 million in equipment--a significant barrier to entry, says Grant. As a result of high capital costs, yesterday's players almost all went into bankruptcy protection. Those that emerged are now being bought. But today, just about anyone can be a long-distance provider or in the local telecommunications business--without spending a dime on equipment until customers are found by partnering with existing companies and using new technologies such as VoIP.


At the same time, cable and utility companies are looking to use their existing networks to provide phone services. At Rogers' annual general meeting in May, the communications giant reiterated its intention to enter the local telephone market next year using the Internet. And utilities such as Hydro Ottawa have formed telecom divisions to see if they can use their existing fibre networks for phone service. The only thing that is certain in the telecom game is that the wheeling and dealing will continue.

 

 


Search our site!

 

Friday, 22 February 2019

SeaBoard Group © 2013 All rights reserved