Bell buying MTS could be a sign of things to come

Regulator and government approval, if granted, could kick off a new wave of acquisitions.

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Bell Buying MTS:

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Bell announced on Monday it is buying MTS, Manitoba’s largest telecommunications services provider, for nearly $4 billion. Aside from giving Bell approximately 500,000 more customers in wireless, 200,000 in internet and 100,000 in TV, the deal is also a potentially ominous sign for consumers of what else is to come.

It’s a veritable surety that wireless and internet prices will go up for Manitoba residents if the deal goes through. Bay Street analysts figure wireless prices are 30 to 40 per cent lower in Manitoba than the rest of Canada thanks to MTS being a fourth competitor to Bell, Rogers and Telus.

All MTS internet plans also deliver unlimited usage, something Bell charges an extra $15 for next door in Ontario.

The deal will have to get approval from the Competition Bureau. To that end, Bell is splitting up MTS’s wireless subscribers in a side deal with good buddy… ahem, fierce rival Telus.

Bell chief executive George Cope is confident regulators will approve the acquisition. “The market will remain just as competitive and maybe even more as a result of this,” he said to analysts Monday morning.

Doubtlessly, Bell will point to the following stats to show just how little of an impact the acquisition will supposedly have on Manitoba’s wireless market. MTS, otherwise known as “other” in the chart below, currently has the lion’s share of the province’s subscribers:

crtc, wireless market share

The Competition Bureau has made a habit of looking at such basic market share numbers without considering the real consumer-level impact, so Cope may very well be right. In that case, blocking the deal would likely fall to a higher power.

If that’s so, Bell’s CEO might also know something everybody else doesn’t… or rather he might know something that everyone else suspects.

Having four wireless carriers in every province was Stephen Harper’s idea. When it comes to Justin Trudeau, he has so far shown more interest in cuddling pandas and explaining quantum computing. Telecommunications has yet to appear on his radar, or on that of Innovation, Science and Economic Development Minister Navdeep Bains.

Indeed, the only interest the Liberal government has shown at all in the whole field is limited to meeting with Bell’s lobbyists at what looks to be a record pace:

bell, lobbying

If Bell’s deal gets rubber-stamped – I’d say the odds are pretty good – it could open a new wave of consolidation where the big telecom giants swallow up the remaining smaller players. Cable providers such as Eastlink, Cogeco and perhaps even Quebec’s Videotron come to mind.

Long-anticipated mergers between Rogers and Shaw and even Bell and Telus could also eventually end up on the table.

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4 Comments on Bell buying MTS could be a sign of things to come

  1. Let’s start by clearing up a misconception. It was actually Telus that caused Manitoba rates to be low. They had extremely limited coverage here to the point your cell phone lost service as you crossed over Winnipeg city limits. The low rates from MTS were just trying to compete with what Telus needed to offer to attract customers.

    The other misconception is that MTS offers unlimited wireless data. It goes back to advertising from them about three years ago that claimed that. In reality what it is is 15 GB data at normal speeds then a throttled back speed that makes dial up seem blazing faster for the balance of your bill cycle in place of a data overages charge.

    In terms of a sale of MTS to Bell, one has to wonder if the CRTC might make a transfer of all wireless operations to Shaw/Wind Mobile to maintain four wireless companies in Manitoba.

    • Peter Nowak // May 2, 2016 at 1:56 pm // Reply

      My mention of unlimited internet above was in reference to wired broadband plans, not wireless. In regards to the CRTC, I don’t think they’ll get much say in this deal. This one is more in the Competition Bureau’s purview.

      • True. Having only been an MTS broadband customer I forget those plans are subject to data caps.

  2. Sigh. Gobbling up the little guy to raise prices for all. So crappy.

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