Risks for SaskTel

June 21, 2016

As was widely reported, last month I was asked “to conduct an analysis of the impacts and risks that the MTS acquisition [by BCE] may have for SaskTel.”

The report was released yesterday [link to press release; link to full report].

As SaskTel reported in its press release, the following are the key risks that are outlined in detail in the report:

  • The possibility that reduced numbers of facilities-based carriers in Manitoba could lead Federal government policy makers to create incentives for additional wireless competition to develop through lower costs for new entrant spectrum or other measures. Such measures could reduce the costs for competitors and increase costs or restrict capacity expansion for SaskTel.
  • The further concentration of the market in Manitoba could see removal of the four carriers objective by the Federal government, possibly enabling Shaw to sell its acquired WIND Mobile business or partner with other telecoms. If Shaw launches a competitive mobile service, there is a risk that SaskTelā€™s consumer communications services will face significant pressure from a second bundled service package in Saskatchewan.
  • There is a risk the establishment of Winnipeg as a western headquarters for Bell could lead to an erosion of SaskTelā€™s share of the Saskatchewan business market.
  • There is a risk that Rogers will look to replace its lost partnership with MTS by developing retail partnerships with cable companies in Manitoba and Saskatchewan. This would improve the competitive positions of Rogers, as well as local cable companies.
  • For the reasons identified in the report, there is a risk that SaskTelā€™s net income will be unable to support the level of dividends that have been returned to the province in recent years.

Here is a collection of media coverage:

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