Friday, 18 December 2015

Shaw Communications purchases Wind Mobile for $1.6 Billion - makes Wind 4th larges wireless player in Canada and catching up




Toronto Star article summarizes Shaw's purchase of of Wind Mobile.  Shaw will continue to offer Wind as a discount model to the big three providers, Bell, Telus, and Rogers.  Now there is a reason that Wind is a discount to the big three, Wind has primary coverage for the big cities in Canada.  If you look at their coverage map, that is basically what it is, you go far away from the big cities, and you run into dropped calls or roaming onto someone else's network.  Now you think, why is that great, who would want that?  Well Wind offsets that with unlimited talk and data within the city boundaries.  This has been well received by consumers, making this 6 year provider the 4th largest provider of cell phones in Canada.  Now everyone think of their plan and now consider Wind can give you unlimited data for $40 a month, talk and text is included.

Last week, Wind also secured $425 Million from a  group of banks to upgrade their 3G network to a higher LTE network.  This new LTE network is planned to roll out across the Wind Network by the end of 2017.

Before Shaw, there was no serious inroads or competition scare for the big 3, why would there be any? The big three control the Canadian landscape.  But to see how serious this Shaw/Wind deal is, the next day on the stock market, Bell, Rogers and Telus sharply dropped.  With Telus dropping the most in 1 day in 2 years.  It looks like the big 3 heard the announcement, well at least the investors.

Wind is the 4th largest provider but only controls 3% of the market.  At the end of the 3rd quarter, Wind had 940,000 customers, compared to market leader Rogers with 9.8 million and 8.4 million for Telus.

Shaw plans to bundle their internet and cable services with existing cell customers and increase their footprint beyond B.C. and Alberta where the majority of their customers are.

All positive happenings for both Shaw and Wind, expect to hear more from both in the upcoming year. With that I leave you with the following stat.

Average revenue per wireless user

Bell Canada $65.37

Telus $64.22

Rogers $61.02

Wind Mobile $38

Industry average $61

Sources : company reports, Bank of America, Merril Lynch, Toronto Star