The Canadian wireless business was reshaped over the past two years as new entrant carriers were sold off one by one, but there could be a period of renewed competition ahead as Shaw Communications Inc. invests in its cellular business and prepares to do battle with the national players.
In Canada's latest wave of wireless consolidation, Telus Corp. bought Public Mobile in 2013, Rogers Communications Inc. bought Mobilicity in 2015 and Shaw – which didn't have a wireless business until now – bought Wind Mobile (now known as Freedom Mobile) in a deal that closed in early 2016.
BCE Inc. also got into the game in 2016 with a $3.1-billion deal to buy Manitoba Telecom Services Inc., the largest wireless carrier by far in its home province. (The companies are still seeking approvals from the Competition Bureau and the federal government on that one and hope to close the deal in the first quarter of 2017.)
Looking ahead, analysts say growth rates at BCE, Rogers and Telus could come under pressure as Shaw puts capital into its new wireless business to build out an LTE (fourth-generation) network and also connect customers to its constellation of WiFi hot-spots in Western Canada.
It won't happen overnight, but Shaw's hope is that toward the end of 2017, Freedom Mobile – which operates in large urban centres in Ontario, British Columbia and Alberta – will be able to offer a much-improved network experience with a number of new handsets.
"We believe Freedom has always been held back by its network quality from being truly competitive with the incumbents, a dark cloud that should progressively dissipate over the year," Scotia Capital Inc.'s Jeff Fan wrote in a year-end report.
Desjardins Securities Inc. analyst Maher Yaghi warns that an amped-up Freedom Mobile could pose a threat to revenues at the incumbents, noting, "We forecast that growth will slow in 2018 on increased wireless competition from Shaw."
While it will be some time before Calgary-based Shaw fully unveils its wireless strategy, it plans to introduce a renewed television product earlier in 2017 as it begins to launch new set-top boxes powered by U.S. cable giant Comcast Corp.'s X1 platform. That will allow it to better compete with Western rival Telus, which has stolen market share with its more appealing Optik TV (which is Internet protocol television or IPTV) product for years.
In Eastern Canada, BCE has been doing the same with Fibe TV and Rogers also plans to adopt the Comcast platform after its recent decision to take a writedown of up to $525-million on its in-house program to develop IPTV. Rogers won't be ready to roll out the X1 technology until early 2018, however, giving BCE another year of breathing room.
Amid those fights for television customers, telecom companies across the country are investing in network upgrades that will also help boost their broadband Internet offerings. Telephone companies such as BCE and Telus have more to invest as they spend billions of dollars bringing fibre to customers' homes, but cable players such as Rogers and Shaw are also investing in next-generation upgrades to their networks.
Cable operators have been shedding television customers for the past several years, but Mr. Fan says their network improvements and improved television products should "help curb overall subscriber losses and lead to growth in average revenue per account [ARPA] in 2017."
On the regulatory front, Canada's biggest telecom companies have some reason to hope 2017 will be a good year as the five-year term of Jean-Pierre Blais, the chairman of the Canadian Radio-television and Telecommunications Commission, comes to an end in June.
It's possible the federal government could renew his term, but Mr. Fan believes the Liberals would rather put their own candidate in the role.
"We believe his departure will be a positive relief for the industry," he said. "Mr. Blais was viewed by many as very pro-consumer, with a populist agenda, usually at the expense of the incumbents."