WIND: “There needs to be consolidation among the new entrants”

There is no doubt the new-entrants are causing a stir in the Canadian wireless market, handset prices have dropped and so have monthly price plans. Wind Mobile, Public Mobile and Mobilicity have been operating for over a year and have and RBC estimates a combined total subscriber base of 359,000 (Mobilicity with 94,000, Public with 59,000 and WIND now has 300,000). The Big Three (Rogers, Bell and TELUS) have built their networks over several years but to put these numbers in perspective: Rogers has 8,977,000 subscribers, Bell has 7,242,048 subscribers and TELUS has 6,971,000.

With the announcement of AT&T en route to buy out T-Mobile in the United States for a whopping $39 billion, Bay Street analysts are saying that a telecom merger in Canada is likely. The much talked about Bell/TELUS merger is one that comes to mind but one analyst says that “In telecom, scale matters” and that “there is growing probability that the minors (will) consolidate to get themselves more market power and access to capital”.

These minors are the new entrants and WIND Mobile Chairman Tony Lacavera agrees that something needs to happen. In an interview with the Financial Post he stated that “There needs to be consolidation among the new entrants”.

When the Industry Minister announced the 2008 AWS Spectrum Auction he stated that “Our government’s intentions are clear: to achieve lower prices, better service and more choice for consumers and business. We believe in relying on market forces to the maximum extent feasible because competition benefits consumers, and consumers benefit most when markets are as competitive as they can be.”

So if a consolidation happened… who do you think would consolidate and would the Governments original intentions still be intact with say 4 main carriers rather than 5 or 6?