WIND Still Picking Up Speed

By Angus Gillespie

Prior to WIND Mobile Chairman and CEO Tony Lacavera taking centre stage as a keynote speaker at the recent Canadian Telecom Summit, a brief video was played from the same event five years earlier, which had a panelist from that day predicting the future with a great degree of accuracy. In the video from 2009 was a panel of three executives representing the newer telecom companies. In the video, they were discussing their trials and tribulations of trying to make headway in a very competitive industry, dominated for decades by Rogers, Bell and Telus.

The biggest complaint then, and now, has been what the newcomers have long felt is an uneven playing field when it comes to government rules and regulations. One of the panelists that day, Alek Krstajic, former President of Public Mobile, who was sitting alongside former President of Mobilicity, Dave Dobbin, and the aforementioned Lacavera, made the following comment on camera that day.

“Here’s the reality,” Krstajic began. “Take a good look at the three of us. Two of the three will not be at the next telecom summit.”

It may have taken a bit longer than expected, but Krstajic’s statement nonetheless ultimately was proven correct. The only man left from that group in the same position is Lacavera, who also serves as Chairman and CEO of Globalive Group.  Mobilicity remains under court protection with an uncertain future at best after the federal government denied Telus from acquiring its assets. Conversely, Public Mobile was acquired by Telus late last year, with a number of conditions demanded by Industry Canada. Telus was legally permitted to purchase the assets of Public Mobile because the G band isn’t subject to the same restrictions for AWS spectrum owners, which prevents its spectrum from being bought by an incumbent carrier, namely Telus.  However, as part of the acquisition, Telus was told it must continue to provide Public Mobile’s existing plans until the end of this year. About four months ago, Public Mobile customers were informed that the existing CDMA network would be shut down by August, meaning that customers wanting the service beyond that would need to buy phones compatible with Telus’ 4G network.

In his opening remarks at this year’s event Lacavera bemoaned the fact Krstajic’s ominous prediction came true, which really was no surprise to most industry observers. While WIND has managed to solider on, it certainly hasn’t been easy.  But Lacavera’s company continues to impress and now has more than 735,000 customers nationwide at last count.  In the Regulatory Blockbuster panel discussion, WIND’s Simon Lockie told the audience that WIND added about 26,000 new subscribers in the last quarter, while Rogers and Bell cumulatively lost 75,000 subscribers.

WIND has firmly established itself as a legitimate fourth wireless carrier in Ontario, B.C. and Alberta, but there is still a void in many other parts of the country, which the federal government has been trying desperately to patch. In his discussions with a number of Canadians, Lacavera says people want transparency and customer experience that takes away the headache.

Primary investor, Vimplecom recently applied to take control of WIND Mobile and after a protracted dialogue with the Canadian government subsequently withdrew its application, which was not approved. Based on the rules set out by Ottawa, WIND cannot sell its AWS spectrum even beyond the five-year moratorium.  Additionally, Vimplecom is not permitted to take full control, which is why they have backed out as the primary fund provider for WIND amongst all the uncertainty.

“This control and ownership uncertainly has adversely affected funding and investment in WIND for two years and continues today,” Lacavera says. “But despite these circumstances, we are posting record results. It has been an incredible 12 months.”

Lacavera also touched on the Verizon threat of 2013, when it appeared the massive U.S. telecom company would be coming north of the border, and likely would have had a larger international opportunity not come forth.

“It caused a spectacular and frankly embarrassing reaction by the incumbents,” Lacavera says. “It demonstrated just how badly the Big Three want and need to maintain their cosy oligopoly.”

As Lacavera also notes, the CRTC has implemented a code of conduct that many in the industry believe was long overdue.

“The government has taken steps and clear action to ensure the wireless industry makes significant progress on the critical issues of LTE structured availability for new entrants, roaming and tower sharing,” Lacavera continues.

It certainly appears that the Canadian marketplace is benefitting from additional competition in the wireless industry, and the voices for change are becoming louder all the time.

There has been a lot of speculation about WIND Mobile’s financial situation and by extension its future. Lacavera addressed that topic head on, saying his company is on a very solid operational footing.

“We posted record sales in both April and May,” he notes. “In May alone we had gross additions of 43,000 and net additions of over 21,000.”

WIND is operating on a break even rate on run-rate sales of about $350 million combined and $275 million run-rate service revenues. It’s expected WIND will post a small lost this year and be in the black in 2015.

Many customers who have remained loyal to WIND often indicate the telecom company does meet and exceed expectations, but if there is a murmur of discontent that could soon erupt into a louder chorus of unrest, it will likely be centred on the fact WIND has yet to provide its customers with the new Long-term Evolution spectrum, when it failed to get into the bidding for the 700MhZ spectrum auction earlier this year.  WIND had hoped to be part of the process, but had to withdraw due to a lack of funding.

“We must secure more spectrum for an LTE rollout,” Lacavera flatly admits. He also gives credit to the government in saying it has forced the incumbents to play by the rules, which will give the new players a fighting chance at success.

Both Videotron and Shaw have unused spectrum in certain operating markets, while Mobilicity deployed its spectrum but failed to reach critical mass and are now involved in a very slow-moving creditor protection process that will very soon determine the company’s future.

In terms of geographic coverage across Canada, WIND covers about 14 million potential customers, and hopes that will increase to 15 million by next year.  One of the biggest setbacks is that it has poor coverage once a subscriber heads out of major urban centres, with less than adequate tower coverage in bordering rural areas, which is often where people need their communications devices to work just as efficiently.

Without additional spectrum, and specifically LTE, he and the rest of the telecom industry realize it will be a very tough road ahead, although it is true that the vast majority of customers to this point have still not made it a major issue.  The 2015 spectrum auction will see the 2500 MHz band up for bids along with 600 MHz and AWS-3.  Realistically, the fastest and most economical way to roll out any type of LTE network would seemingly be with a partner such as Videotron, Shaw or Mobilicity, all of which have control over a certain amount of AWS spectrum.

It’s expected WIND will soon be offering an unlimited Canadian roaming option, and is looking to offer LTE roaming in the United States by the end of the year.