Although some deny this, the Canadian wireless market is not competitive. Incumbents control 94%+ of the market, with the remaining 6% divided between struggling wireless start-ups, which by the way are for sale. In other words, the government’s years-long effort to create competition in the Canadian mobile market will shortly become a failure.
But wait! There is someone ready to spend hundreds of millions of dollars to save the federal government’s strategy of having four wireless players in every regional market: Newton Glassman, co-founder and managing partner at the Catalyst Capital Group, Inc.
In an interview with The Globe And Mail, Glassman said he wants Ottawa’s policy to succeed and he appears to be convinced that he can make money doing what others – such as Mobilicity, Wind and Public Mobile – have failed to do. Furthermore, he is prepared to invest hundreds of millions of dollars into the idea of a viable fourth wireless carrier.
In fact, he now has the advantage of the latecomer: he can pick up any of the struggling start-ups at a discount. This is what he has done, as he holds 30%+ share in Mobilicity’s senior secured notes and he has recently bid on Wind Mobile.
His chances for a successful takeover aren’t known, but the incumbents want to take over the struggling start-ups. What needs to be considered is this: Ottawa has laid down the rule that there will be four wireless players in each region last year, when they decided the fate of the upcoming wireless spectrum auction.
Now, from what we have learned from the interview, Glassman’s entrance into the wireless market depends on his (undisclosed) terms being accepted by Ottawa. As the government was relying on the presence of wireless start-ups and didn’t count on their sale, it may be tempted to accept them to preserve the myth of a competitive market, and not to accept a failure.
What do you think? Does Glassman have a chance to enter the market?