Xplore Mobile Inc., the Manitoba wireless carrier that launched after BCE Inc. BCE-T spun off some of its wireless business as part of an acquisition, is shutting down at the end of August, citing regulatory delays that the company says have made it no longer financially viable.
The company said in a statement on its website that while it successfully tackled challenges that included vigorous competition and issues related to the pandemic, it was unable to overcome the “cloud of uncertainty” created by delays to the implementation of the Canadian Radio-television and Telecommunications Commission’s new wireless framework.
In April, 2021, after a lengthy review of Canada’s wireless market, the CRTC ruled that BCE, Telus Corp. T-T, Rogers Communications Inc. RCI-B-T and SaskTel must sell wireless network access to eligible regional competitors. However, the telecom regulator is still reviewing the terms and conditions of service proposed by the large carriers.
Xplore Mobile’s closing reduces the number of wireless choices in the Manitoba market just as the Competition Bureau weighs whether to approve a deal that would allow Rogers Communications Inc. to complete its contested $26-billion takeover of Shaw Communications Inc. by divesting Shaw’s Freedom Mobile wireless carrier to Quebecor Inc. QBR-B-T
Xplore Mobile was launched in 2018, after Xplornet Communications Inc. acquired 24,700 wireless customers, a handful of wireless licences and six retail stores from BCE Inc., which owns Bell Canada. Bell agreed to divest those assets to address competitive concerns stemming from its $3.9-billion takeover of Manitoba Telecom Services Inc. (MTS). (BCE sold another chunk of wireless subscribers and retail stores to Telus for $300-million.)
However, consumer advocates and researchers have said the creation of Xplore Mobile did little to stimulate competition in Manitoba’s mobile market. Xplore Mobile currently has fewer than 7,000 customers, the company said in an e-mail. That’s less than a third of the number of accounts it acquired from Bell.
Ben Klass, a telecom researcher and PhD candidate at Carleton University, said the shutdown of Xplore Mobile five years after its launch proves that the divestitures, which were part of what’s known as a merger remedy, were ineffective at tackling the hit to competition caused by Bell’s takeover of MTS.
“In retrospect, I think [Xplore Mobile] was doomed to fail from the beginning. The price of the service that they offered has never been competitive, and as a result they’ve predictably gone out of business,” Mr. Klass said in an interview.
“This shows that the Competition Bureau is correct to be skeptical of these proposed remedies,” he added, referring to the watchdog’s opposition to the proposed merger of Rogers and Shaw.
Canada’s Commissioner of Competition is attempting to block the merger of the country’s two largest cable companies, saying the takeover would lead to poorer service and higher prices, particularly for wireless customers. To address those concerns, Rogers has struck a deal to sell Freedom Mobile, Canada’s fourth-largest wireless carrier, to Videotron Ltd. owner Quebecor Inc. for $2.85-billion.
Freedom Mobile has about 1.7 million customers in Ontario, Alberta and B.C., and has been credited with driving down wireless prices in recent years.
Earlier this year, Rogers held talks with Xplornet Communications, a rural internet provider, and its owner, New York-based global private equity firm Stonepeak Infrastructure Partners, about potentially acquiring Freedom Mobile, The Globe has reported.
Xplore Mobile was hived off from its parent when Stonepeak acquired Xplornet in June, 2020, in a deal that The Globe reported was worth about US$2-billion, including debt.
At that time, Xplornet’s owners split their wireless and home internet divisions into two separate businesses and tried to run a separate sale process for the wireless unit, but ended up holding on to it, The Globe previously reported.
Xplore Mobile said in a statement that fewer than 15 employees in its retail operations team will be affected by the decision to wind down operations.
The company said in a notice to its customers that Koodo, a wireless brand owned by Telus, has developed an offer exclusively for Xplore Mobile’s customers.
“This was a difficult decision. We set out to provide Manitoba consumers with the option of obtaining mobile services in a simple, fair and transparent way,” the company said in a statement, adding that it was the first in Canada to offer plans that allow customers to roll over their data and spearheaded a push for mandated seamless roaming to reduce dropped calls.
The Globe first reported Xplore Mobile’s shut down on Friday morning after obtaining an internal company memo. “We are extremely proud of what the team accomplished,” the memo reads.
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Alexandra Posadzki