In a second anniversary interview, the chairman of the wireless startup says he’s certain other new entrants will come to him next year in the lead-up to the next spectrum auction

Lacavera sure Wind will be a consolidator in 2012
Wind Mobile passed its second anniversary on the weekend with some 400,000 subscribers, well short of its goal of having 1.5 wireless customers by the end of next year.

That hasn’t stopped chairman and CEO Anthony Lacavera declaring – again – that his startup will the only one standing when the wireless wars are over.

“There is going to be consolidation activity between new entrants” in 2012, he predicted in an interview Monday. They cannot continue the way they are now.”

“We are uniquely positioned with the scope of our financing and our capacity for financing with our partners and be the lead consolidator.”

Actually, to be more accurate, Lacavera predicts that Wind will be the only national carrier to survive.

That’s a crucial condition because Wind is the only one of the new entrants that bought spectrum in 2008 that says it wants to be a national carrier. Videotron is centred in Quebec, Public Mobile in the Toronto and Montreal. Mobilicity has spectrum in many major cities west of Ottawa, — as does Wind — but calls itself an urban, not a national, carrier. Bragg Communications, which owns Eastlink cable, will launch its Maritimes-based service next year.

So, arguably, Lacavera has set up a straw man by saying his will be the only national carrier when others don’t aspire to the title.
To that he replies that most major cities can only support one new entrant. In Vancouver, Calgary and Edmonton there are eight brands fighting for business. In Toronto, he notes, there are nine brands – Wind, Mobilicity and Public Mobile, and the incumbents and their flanker or discount brands (in brackets): BCE Inc.’s Bell Mobility (Solo/Virgin), Rogers Communications Inc. (Chatr) and Telus Communications Co. (Koodo).

Something’s got to give, Lacavera argues.

Perhaps he’s right, because in the next 12 to 18 months there will be an auction for the prized 700 MHz spectrum (perhaps for 2500 MHz spectrum as well), with industry and financial analysts certain that participants will pay billions for. Where will new entrants (except for cash rich cablecos Videotron and Eastlink) get the money after just shelling out for new networks and hundreds of millions of dollars for spectrum in 2008?

So there’s logic that before the next auction there might be a merger/acquisition. It’s also logical that if spending gets stratospheric there might be a deal made during the auction, if not immediately afterwards.

Lacavera continues to press Ottawa to ensure that the next auction has a set-aside for new entrants, and not a cap on the anmount of spectrum a bidder can buy. Only with a set-aside can new entrants gain the confidence of potential investors, he said.

2011 was in many was a good year for Wind. With the help of its major investor, Amsterdam-based VimpelCom, it launched broader service in southern Ontario (in Kitchener-Waterloo, Cambridge, Guelph, London, St. Catherines and Welland) in B.C. (from Abbotsford to the U.S. border) and expanded in Calgary and Edmonton. New antenna sites are being built in Halifax, Winnipeg, Saskatoon, Regina and on the lower half of Vancouver Island.

Wind also changed directions from selling mainly pre-paid plans and full-priced handsets to post-paid plans with subsidized Android and BlackBerry smart phones. (To some degree so have Mobilicity and Public Mobile). As a result, Lacavera said, churn (the number of people who leave) has dropped, and average revenue per user is up.

On the other hand there was the departure of CEO Ken Campbell in the middle of the year. To some it was a sign that targets weren’t being met. That is true, Lacavera said, but it wasn’t the cause of Campbell’s leaving. Rather, he said, it had to do with Lacavera wanting to be in control as he merged Wind with his long distance and Internet companies Yak Communications and OneConnect. That will allow Wind to offer bundled services with wireless, he said.

As for those missed subscriber and financial targets, Lacavera said when Wind’s business plan was being formulated before the 2008 auction it didn’t contemplate other new entrants winning spectrum.

A certain amount of price slashing hasn’t helped. Wind, he emphasized, only engages in promotions – for example, a $29 a month plan for the first 12 months, which then goes to $45 a month.

“We anticipated the incumbents would go crazy with the flankers,” he said,  “but we did not anticipate the level of irrational behavior by other new entrants.”

He maintained that Wind is on track to be profitable in 2014.

Lacavera’s sprightly defence of his company is no different from the heads of other new entrants. At a holiday party earlier this month for press and analysts, Mobilicity president Stewart Lyons was no less dismissive of his competitors and certain of his company’s future.

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