Speculation rose yesterday of Mexican-based America Movil interest into opening a Mobile Virtual Network Operator (MVNO) in Canada. There are no carrier agreements in place yet but UBS analyst Phil Huang said the company has been interested for “some time now” and might want to start offering unlimited talk and text plans.
That was yesterday. Today is a different day and analyst Jeff Fan of Scotia Capital believes that “we believe AMX’s interest in entering Canada as a MVNO is valid, but the story ends there”. In a note to clients Fan explains that AMX is always interested in looking for new opportunities (mainly because of their cash flow cash) and have also been interested in Serbia and Poland, but “believe its attempt to enter Canada as a MVNO will encounter significant barriers”.
Rogers, Bell and TELUS “would be the ideal potential partners based on network coverage”, but Scotia believes AMX already failed at getting Rogers on board and selling minutes to AMX would “cannibalize” its Chatr brand. As for Bell and TELUS’ CDMA network, both are currently seeing an average of $0.12 – $0.15/minute voice revenues. A new MNVO like AMX will probably enter the market with a $30 unlimited plan (like the new entrants WIND and Mobilicity) and Fan believes a partnership like this will put “additional pressure on its own voice revenue… for TELUS and BCE, we believe giving up its CDMA minutes by wholesaling to AMX would do more damage than the incremental revenue/return it can generate”.
So there you have it. Scotia’s take on America Movil entry into Canada… “probability is low”. We have lots of carriers to choose from in Canada… the prices just need to come down.