Bell-MTS deal could pose regulatory risk for SaskTel: report

The biggest risk to Saskatchewan Telecommunications Holding Corp. in the wake of BCE Inc.’s proposed $3.9-billion takeover of Manitoba Telecom Services Inc. is the potential changing of the regulatory landscape, according to a provincially-commissioned analysis. The risk assessment and subsequent report, released Monday, was completed by Toronto-based Mark H. Goldberg and Associates Inc. and keys in on the reduction of facilities-based carriers, possibly leading to the federal government stepping in and incentivizing new entrants to the wireless market. This could include cheaper costs for new-entrant spectrum, the report suggested. “Such measures could reduce the costs for competitors and increase costs or restrict capacity expansion for SaskTel,” the report said. “The first manifestation of this risk could be in establishing the rules for the 600 MHz band in the next 12 months.” While the majority of what the report identifies are long-term risks, there are short-term risks as well, such as the acquisition proposal leading to “increased intervention in the telecommunications marketplace with unpredictable impact on SaskTel,” regardless of whether it’s approved or not. “The impact could be felt immediately in all regulatory decisions and policy determinations from the CRTC and the federal department of Innovation, Science and Economic Development,” the report said. There is also the chance that “the special case afforded by SaskTel operating as the ‘fourth carrier’ in the province can be overlooked by federal agencies in creating broader national policy and frameworks,” it added. SaskTel’s hold on the wireless market could also be put in jeopardy if the Bell-MTS deal is successful, the report said, which cited the Crown corporation’s 68-per-cent market share as of the end of 2013. According to the report, Shaw Communications Inc. could get rid of recently-acquired Wind Mobile if the federal government dropped its push for four national carriers and get into the wireless game by partnering with someone else, thus creating a competitor for SaskTel, whose revenues in 2015 were 40-per-cent wireless derived. Shaw does not currently hold any spectrum in the province, as SaskTel purchased Wind’s holdings last year. “Even without the elimination of the four carriers objectives, there is an immediate risk that will look to replace its lost partnership with MTS by developing retail partnerships with cable companies in Manitoba and Saskatchewan,” the report said. “This would improve the competitive positions of the national wireless company as well as the local cable firms.” The report suggested that a combined Bell-MTS entity could also lead to a hit worth “a few million dollars” to roaming revenue that SaskTel collects from an agreement with Rogers and MTS, since the Manitoba company’s users could migrate over and benefit from the network reciprocity deal SaskTel has with Bell and Telus Corp. In a press release, SaskTel said the analysis of the risks set out in the report will “become part of the strategic planning process that SaskTel undertakes annually. As part of that process, the Corporation also develops strategies to mitigate identified risks.” Ron Styles, SaskTel president CEO, said in the release that it was “also worth noting that some of the risks in the report are not new to the corporation; however, those risks may increase due” to the Bell-MTS acquisition. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Bell-MTS deal could pose regulatory risk for SaskTel: report

News | June 20, 2016

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Bell-MTS deal could pose regulatory risk for SaskTel: report

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