‘Ottawa’ ‘They’re Right on Our Doorstep’: SaskTel Orders Risk Report After Bell Buys MTS
SaskTel’s president is downplaying the risk analysis the company is conducting in the wake of BCE Inc.’s planned takeover of Manitoba Telecom Services, even as Saskatchewan’s premier expressed concerns about the Crown corporation’s ability to compete should it end up as the sole regional telecom provider in the Prairies.
SaskTel took the unusual step of hiring an independent consultant to conduct a risk analysis after Bell announced plans in early May to buy similarly-sized MTS for $3.9 billion. Such assessments are typically done internally and included in annual reports, not called for by the premier and shared with the public.
But the risk assessment is merely to keep customers fully informed about changes to the marketplace, SaskTel President Ron Styles said Wednesday, the day after Premier Brad Wall repeated calls for the analysis and insisted there are no plans to privatize the company.
None of the major telecoms has approached SaskTel with similar acquisition offers, Styles said. Still, he said the MTS deal could impact SaskTel’s operations in the short term – it has roaming and reciprocity agreements with both MTS and Bell – and make Bell an even tougher competitor in the long term.
“They’re essentially right on our doorstep,” Styles said. “That’s not new… but they’re going to be closer, they’re going to be larger and they’re going to have larger economies of scale.”
SaskTel expects to hire a consultant this week and release the risk analysis to the public by the third week of June.
Gerry Wall, president of Wall Communications, called the risk assessment a smart idea for a company that needs to take stock of whether it can continue its low wireless prices if it wants to make capital investments to compete with larger players.
MTS and SaskTel’s low wireless prices are an anomaly in Canada, but MTS got out of the game when it couldn’t compete with capital investments by Bell, Telus or Rogers, Wall said. Any of those players would “absolutely” be interested in buying SaskTel, which he estimated would fetch north of $2 billion, but he said political hurdles make that an unlikely short-term outcome no matter what the risk analysis concludes. (Premier Wall promised not to privatize the company without a referendum.)
Carleton professor and communications researcher Dwayne Winseck agrees it’s prudent to do a risk analysis in case the MTS deal goes ahead — it still needs regulatory approval in a process expected to take a year — but said the ramifications lie in how the government deals with its fourth carrier policy going forward.
MTS and SaskTel share an identity as two significant independent players in an industry dominated by the Big Three, and have battled regulators on rules regarding roaming agreements, spectrum policy and access to programming rights, Winseck said. The extra competition they bring to the market is the reason residents of Manitoba and Saskatchewan enjoy lower prices, he argues.
“With MTS out of the equation, SaskTel will be a more isolated voice on the national scene when it comes to pushing for these kind of things,” he said.
“If the feds give Bell the green light, that fourth carrier policy is fractured and loses coherence.”