Chatham-based TekSavvy is actively seeking a new owner, amidst a recent surge of acquisitions that has seen several independent internet service providers (ISPs) get swallowed up by bigger telcos.
According to The Globe and Mail, TekSavvy has sought the assistance of bankers and initiated a formal process to solicit bids, according to unnamed sources.
This move by TekSavvy, one of the last remaining large wholesale internet providers, follows the acquisition trend that has seen approximately half a dozen independent ISPs changing hands since early 2022. This shift has been characterized as a response to the challenging regulatory environment by independent ISPs.
The acquisitions spree includes a $139-million purchase of Ebox by Bell, alongside a $335-million buyout of Distributel. Other notable transactions involve Telus, who acquired Altima Telecom and Start.ca, and Quebecor which took over VMedia. Montreal’s Cogeco also joined the trend with a $100-million acquisition of Oxio.
According to Tim Casey, an analyst at BMO Capital Markets, the wave of acquisitions is influenced by the policies established by the Canadian Radio-television and Telecommunications Commission (CRTC). In 2021, the CRTC overturned an earlier decision to lower wholesale rates, leading to higher costs for independent ISPs.
TekSavvy, in a recent submission to the CRTC, criticized the current framework as “broken and in urgent need of relief.” The firm demanded significant regulatory changes to salvage remaining wholesale competition and to restore confidence in the CRTC’s ability to regulate telecommunications pricing fairly.
As for TekSavvy market share, it has declined from 10% in 2019 to a current 6%, with the company losing clients to larger incumbents. The company also increased its prices during the pandemic to mitigate losses and abandoned its plans to enter the wireless market in 2021.
Critics like Bell CEO, Mirko Bibic, have warned that overly reduced rates could impede investment in certain areas, particularly rural communities. As a result, the future of wholesale providers remains uncertain unless a dramatic shift from facilities-based regulation occurs, as per Casey.
TekSavvy did not comment when asked about this story by iPhone in Canada.
Welcome to Canada, where a handful of big players dictate the telecom industry. If you can’t beat ‘em, join ‘em, right? TekSavvy has long been the most vocal opponent against incumbents, so it’ll be interesting to see who wants to gobble them up.
