Shaw wants Wind in its sales.

Shaw Communications is sailing into the dangerous waters of the big three telecommunications companies in Canada. It is acquiring Wind Mobile for a bargain price of just $1.6 billion. Shaw is joining Bell Canada, Rogers and Telus in what some refer to as the pillaging of Canadian consumers. In a country with the second highest mobile telephone rates in the world, there is lots of money for the taking.

Wind Mobile is supposedly the value brand in the cell-phone business and it draws its customer base from the more cost conscious consumers. That will give Shaw a chance to increase the profitability of the business without having to charge the rapacious rates of its competition.

Shaw can also compete with the big three by packaging its Internet, cable or satellite service with Wind Mobile service. There is a lot of growing to do as Wind’s position as a new kid is about three per cent of the Canadian market. Sales to-date have been in British Columbia, Alberta and Ontario. The base band widths have lots of room for growth but Shaw will have to upgrade the network to compete head to head with the big three. It will have rolled out a high-speed LTE network allowing Wind to provide streaming video and music to its mobile phones before the end of 2017.

What synergies, Shaw will gain for its television network are obviously still to be looked at. The more interesting conjecture is the potential on how Shaw can link its mobile services to its Canadian satellite services.

It is generally assumed that the Trudeau government, through the Canadian Radio-Television, Telecommunications Commission (CRTC), will approve the sale of Wind to Shaw as there has been a constant effort by governments to create more competition in the mobile market. More competition is, in theory, supposed to cause lower prices but this has never seemed to be the case in this market.

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Copyright 2015 © Peter Lowry

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