Rogers strikes new network sharing deal with MTS
Rogers strikes new network sharing deal with MTS
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Christine Dobby
Thursday, Jun. 13, 2013
Rogers Communications Inc. signage is displayed at a retail store in Toronto, Ont. Rogers said it reached an agreement to deploy an LTE network in Manitoba and share the building and operating costs with MTS Inc. Brent Lewin/Bloomberg
Rogers Communications Inc. has struck another network-sharing deal with a regional wireless provider in an effort to counter an alliance between its two biggest rivals.
The Toronto-based company, still the country’s largest wireless provider, said Thursday it reached an agreement to deploy an LTE network in Manitoba and share the building and operating costs with MTS Inc.
The deal to work together on the next-generation network builds on a previous agreement the two signed in 2009 to jointly deploy an HSPA+ network in the province.
Rogers struck a similar deal with Videotron, the wireless division of Quebecor Inc., two weeks ago and plans to roll out a shared LTE network in the province of Quebec and Ottawa.
Dvai Ghose, head of research at Canaccord Genuity, said the move is largely positive for Rogers, but BCE Inc. and Telus Corp.’s agreement to share network access nationally is still formidable.
“While the deal should lower Rogers’ LTE deployment costs in Manitoba significantly and the LTE sharing deal with Videotron in Quebec may also save capital, Rogers still faces a significant disadvantage when competing with Bell Mobility and Telus Mobility,” he said in a note to clients Thursday.
While Rogers formerly enjoyed a unique advantage in that Apple Inc.’s iPhone only worked on its network, that changed in late 2009 when Bell and Telus switched on a modern HSPA network the two companies had worked jointly to build across the country.
The two continue to compete on a retail level but have made huge strides in market share since that time and Rogers has looked for ways to counter the advantages they enjoy on capital costs.
While the Videotron arrangement included set amounts for the companies to pay each other with Rogers set to net $107-million over 10 years, Thursday’s MTS announcement did not disclose financial terms.
On top of building and managing a joint LTE network, the agreement provides for roaming for MTS customers on Rogers’ network when outside Manitoba.
Mr. Ghose noted that the advantages to MTS of both this deal and the 2009 agreement are not immediately clear as it effectively cedes the coverage advantage it had in the province over Rogers, its largest rival in terms of market share.
“In our view MTS has to sign such deals as it lacks the scale to procure iconic devices like the iPhone and other wireless products without partnering with a national carrier like Rogers,” he said.
MTS has just under 500,000 subscribers while Rogers has 9.4 million nationally.
“We question if MTS is really in a position of strength when it comes to negotiating with Rogers Wireless,” Mr. Ghose said.
In Manitoba MTS had 53% of the wireless market at the end of 2011 compared to 32% for Rogers while Telus and Bell had 9% and 6%, respectively.
Posted in: FP Tech Desk Tags: MTS Inc., Rogers Communications Inc., Telecom, Wireless Telecommunications