Industry Trend Analysis - Consolidation More Likely Than A Strong Fourth Player - AUG 2017

BMI View: Shaw is boosting its telecoms presence with recent deals, but this will not turn it into the fourth major mobile player in the market. It is focusing on its footprint, as is Quebecor, and we expect they are more likely to follow the MTS route, where they are eventually acquired by one of the three major operators in the market.

Shaw has made two major moves in the market, highlighting its focus on telecoms. It has sold ViaWest, a company providing hybrid IT solutions to Peak 10 for a fee of CAD2.3bn (USD1.74bn). With some of these proceeds, it has acquired a number of licences in the 700 and 2,500MHz bands from Quebecor, in British Colombia, Alberta and Southern Ontario, for a sum of CAD430mn. This reinforces our long-term view that the market is veering towards specialisation, and we still expect that the national players will drive further consolidation of provincial entities (see ' Consolidation And Specialisation Driving Telecoms Market ' , November 24 2015 & ' National Mobile Market Transforming Provincial Fixed Sector ' , May 3 2016).

Q117 data shows that the three main national wireless players - Rogers, Bell and Telus - have a combined market share of 91.4%. Shaw's market share is just 3.6%, and this highlights how difficult it is for provincial players to have an impact in the national market, even if they can leverage their local presence. Shaw had entered the mobile market through its acquisition of Wind Mobile, which it renamed Freedom Mobile, and the acquisition of new spectrum is a reminder that the market has become data-centric, and that operators need to boost their capacity to have any hope of making an impact. With the sale of its IT business, Shaw is clearly focusing on telecoms, but it remains very much limited to its legacy geographic footprint. This means that it will remain very difficult for the company to make headway, as its main rivals will always have the scale and resources to offer better services, as well as the ability for economies of scale. Shaw will, therefore, remain a provincial player.

A Minor Player
Q117 Market Share (%)
Source: BMI, Operators

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