Rogers Communications Inc. confirmed on Wednesday the existence of a new, discount cell phone brand called Chatr to complement its Rogers Wireless and Fido services.
The new brand, with unlimited talk and texting, will target the low end of the wireless market and those people who want just these services, as opposed to data-intensive browsing, video-streaming and other pricier services common to the other two brands.
It will launch this summer, the company said, right in time for the intensely competitive back-to-school season.
Rogers declined to comment on the brand on Monday, after months of speculation, but issued a release on Wednesday afternoon confirming that it exists. Details of the service, such as a launch date, price plans and handsets, will appear over the coming weeks.
What is known, currently, is that it will be an unlimited service.
"We've been watching this niche but growing category closely and it's clear that some Canadians want to use their handsets for voice and text only but want a network they can trust," John Boynton, Rogers' executive vice-president and chief marketing officer, said in a release.
Analysts suspect that the brand will toss confusion into the crowding Canadian marketplace by adding yet another new option in addition to the three new entrants and four existing budget "flanker" brands owned by the incumbent wireless carriers. BCE Inc., for example, owns both Solo Mobile and Virgin Mobile Canada, while Rogers' already owns Fido, and Telus Corp. has Koodo Mobile.
There is also a sense that Rogers will use the brand only in places where the company faces fresh competition from new entrants - such as Wind Mobile, Mobilicity and Public Mobile, and later cable companies launching wireless services - and not in areas where it would simply be providing consumers with a lower-cost option to its existing services.
"Judging from the roughly 5 per cent decline in Rogers' share price over the past week, investors will likely assume Rogers is either more concerned about new entrants than they let on or that the new entrants have taken considerable share in the last quarter," wrote National Bank Financial telecom analyst Greg MacDonald in a research note. "We would not draw those conclusions - at least not yet."
Analysts, of late, have grown slightly more cautious on big telecom stocks, as the threat of increasing competition among incumbents, new entrants and cable companies launching wireless services has raised the spectre of price wars, regional fragmentation in the market, and deep discounting that would erode wireless service revenues.