Shaw Communications Inc. says its deals to sell off a data-centre business and acquire much-needed mobile airwaves prove that its wireless ambitions go beyond simply buying and running Wind Mobile, a scrappy startup with a small share of the market.
The Calgary-based cable operator announced a series of transactions this week that will see it sell Colorado-based ViaWest Inc. for $1.675-billion (U.S.) and purchase a treasure chest of spectrum licences for $430-million (Canadian) from Quebecor Inc., a fellow new entrant in the wireless game that also hopes to benefit from Shaw's push.
Shaw's moves, combined with its plans to spend $350-million deploying the most valuable swath of those airwaves – the 700-megahertz frequency spectrum that can travel long distances and penetrate deeper into buildings – show the company is "committed to doubling down on wireless," Shaw president Jay Mehr said on Wednesday.
"What you are hopefully seeing now is that our aspirations go well beyond the original Wind business plan," he said at an investor conference hosted by TD Securities in Toronto, making reference to the carrier Shaw acquired in 2016 and later renamed Freedom Mobile.
"Fundamentally, Shaw is a cable company … but the future of our business is to be a powerful player in wireless with millions and millions and millions of subscribers," Mr. Mehr said. Freedom Mobile, which operates in Ontario, British Columbia and Alberta, had just fewer than 1.1 million subscribers by the end of February.
Quebecor chief financial officer Jean-François Pruneau said on Wednesday his company might have been able to get a higher price for its spectrum licences if it waited for a point in time when the Big Three national carriers – Rogers Communications Inc., Telus Corp. and BCE Inc. – were permitted by the government to bid on the spectrum.
But the company sold now because, "We liked the certainty of having the cash in the bank account," Mr. Pruneau said at the TD conference. He also liked the idea of selling to a new entrant, he said, noting Canadian consumers could benefit from lower prices.
"But there's also an indirect benefit to us," Mr. Pruneau added. "Shaw's competitors are the same as our competitors, so if we strengthen Shaw by giving them access to our spectrum, I think there's an indirect benefit to us as well."
Quebecor's Videotron Ltd. wireless business took on the Big Three in Quebec and earned 13 per cent of the market there by the end of 2015, but has said it wants to eventually claim 25 per cent of wireless customers in the province.
"I think we're absolutely as bold in our aspirations as that playbook," Mr. Mehr said when asked if Shaw would set a similar target.
He said the company is putting the "building blocks" in place right now. It is still working on its LTE (fourth-generation) network and waiting for more handsets that are compatible with the frequency band that network runs on to become available.
Mr. Mehr said Samsung's Galaxy S8 now works on Freedom's LTE network and said he expects all the manufacturers will eventually make devices compatible with that band. "Nobody underestimates the importance of Apple and the iPhone to the business," he said.
He remained non-committal for a timeline on when the company plans to unveil wireless services under its own Shaw brand name and more aggressively bundle it with home Internet and television.
Telus, Shaw's biggest rival in the west, says it is prepared for that day, whenever it does come, and had always assumed Shaw would acquire low-band spectrum eventually.
"We fully expect that [Shaw's] going to be hard at work deploying a quality network and come after a number of our subscribers in the west. We've been planning for that ever since they bought Wind," David Fuller, president of Telus consumer and small-business solutions, said on Wednesday.
He said Shaw still faces a number of hurdles, including the steep cost of acquiring new customers – who expect expensive subsidies on premium smartphones – and building up distribution channels.
"That won't be done overnight no matter how good a company you are," Mr. Fuller said.
Canaccord Genuity analyst Aravinda Galappatthige similarly warned that Shaw still has a long way to go despite the improved outlook on wireless. The spectrum benefits will take time to materialize, he said, adding, "We suspect that Freedom would be met with targeted competitive countermoves by the incumbents, particularly early on as they start to gain traction."