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Ottawa’s vision of a fourth national wireless operator is overly optimistic given the country’s unique characteristics including its “geographic expanse,” says the CEO of Rogers Communications Inc.
“I’ve never seen how a four-player market can work in a country like Canada. I never thought of it is as a sustainable model,” Nadir Mohamed told financial analysts Wednesday after the telecom, cable and media company reported second-quarter earnings.
Toronto-based Rogers is the parent company of the country’s largest wireless service provider, Rogers Wireless.
“If you think of what’s happened over a period of time consistently in Canada, it’s proven out that this country — it’s difficult enough, frankly, to work with three players,” Mohamed said, adding that the trend globally is to consolidation. “If anything, three players is a norm.”
Former industry minister Christian Paradis has made it clear he favours a fourth facilities-based provider in each region of the country to promote choice, innovation and price competition in the $19 billion wireless market.
A spokesman for James Moore, who took over the industry portfolio in last week’s cabinet shuffle, said: “The government is committed to four operators in each region to encourage competition. We are working to provide Canadian families with access to the latest technology at better prices.”
Ottawa has capped the established operators’ ability to acquire radio wave licences in an auction scheduled for January, and in an effort to prop up competition scuttled incumbent Telus’s bid to acquire financially-strapped Mobilicity.
Canada’s telecom regulator, the Canadian Radio-television and Telecommunications Commission, has also created a Wireless Code to govern service providers that effectively requires carriers to offer cellular contracts of less than three years.
Wireless carriers are introducing two-year options in advance of the CRTC’s December deadline, with Rogers saying it will “go live” with two-year terms on Aug. 9.
While Rogers welcomes competition, Mohamed said the company believes all players should have equal opportunity to acquire smaller rivals and to bid on radio spectrum used to operate cellular networks.
He added that Rogers would support entry of giant U.S. carrier Verizon Wireless, which has said it is mulling over a northward expansion, as long as Ottawa assures “a level playing field.”
“We can’t have a U.S. foreign incumbent be allowed to buy new entrants at depressed pricing by blocking the ability of incumbent Canadian players to do the same,” Mohamed said.
“And the same thing applies with spectrum,” he added. “If we’re going to be restricted to 10 megahertz of prime spectrum, so should everybody else, including very large foreign incumbents. What we’re absolutely against is a tilted or stacked playing field where you have a massive incumbent U.S. carrier that would be given favourable treatment, and frankly better treatment than Canadian incumbents.”
Rogers, meanwhile, reported better than expected subscriber gains in its second quarter on more discounts for smartphones. Operating profit was 96 cents a share versus the consensus forecast of analysts for 97 cents. Net income rose to $532 million or 93 cents a share from $413 million or 77 cents a year earlier. Sales rose 3.4 per cent to $3.21 billion, in line with the consensus.
Average revenue per contract customer fell $1.10 to $67.36 but was above the average estimate. Rogers’ shares rose 2.1 per cent to $43.68 in Toronto.