Javier Mena, a WIND mobile customer, speaks with Evangelia Massosa at a WIND mobile store in Toronto on December 15, 2010.JENNIFER ROBERTS
Canada's wireless upstarts are set to take as much as one-third of new subscribers signing up for cellphone plans in the current fiscal quarter, according to recent figures and analyst calculations.
The fourth-quarter surge for companies such as Wind Mobile and Mobilicity follows a splurge in advertising and marketing during the holiday gift-buying season. The success also comes despite well-funded efforts by giants Rogers Communications and BCE Inc. to steal new carriers' momentum with discount brands of their own.
On Friday, Mobilicity said it had already gained 50,000 wireless subscribers in the quarter. And in an interview with The Globe and Mail on Wednesday, Wind Mobile chairman Anthony Lacavera said he would be "well north of 200,000" subscribers by the end of the year. Dvai Ghose, an analyst at Canaccord Genuity who crunched the numbers, estimates that by the end of the current quarter Wind will have grown by 75,000 subscribers, Mobilicity by 70,000, startup Public Mobile by 40,000 and Quebecor Vidéotron Ltée by 35,000.
"We're seeing great take-up on data, absolutely fantastic take-up on data. That's proving to be a real strength," Mobilicity president and chief executive officer Dave Dobbin said of the company's smart phone sales.
Of course, new subscriber figures tell only part of the story. Many of the subscribers Mobilicity and Wind are adding are joining on steeply discounted promotions that erode their profitability to the startup companies. They also generally pay much cheaper rates than customers on larger carriers, and analysts expect them to be more likely to leave (though the new wireless companies, which are private, are not forced to disclose their "churn" numbers).
Bell, Rogers and Telus are still expected to take the majority of the new subscribers - roughly 465,500, according to Mr. Ghose - but they are also focused on upgrading existing subscribers to smart phones, where they benefit from the added revenues generated by wireless data plans.
The incumbents' reactions to new competitors have also sparked unwelcome government attention: The Competition Bureau labelled Rogers' advertising "misleading" and launched a $10-million lawsuit against the carrier. And, after numerous complaints, Industry Canada has undertaken a departmental review of how big companies are mandated to share infrastructure with new entrants.
Analysts say one-third market share for new entrants is impressive in a sector famous for having 95 per cent of customers on three providers, though some industry insiders believe the releasing of numbers could constitute a sort of public preening before widely expected consolidation among new entrants, or to boost chances of securing additional financing in a tough capital market.