SaskTel Seen as Next Target for Possible ‘Big 3’ Buyout
Manitoba and Saskatchewan have been immune from high wireless prices due to regional carriers MTS and SaskTel, but that is expected to change, especially with the recent sale of MTS to Bell.
Now, some believe the next wireless battleground in the Prairies will turn to Saskatchewan, with crown corporation SaskTel ripe to be sold, reports Bloomberg.
Ken Rasmussen, professor at the Johnson Shoyama Graduate School of Public Policy in Regina, believes Premier Brad Wall’s conservative Saskatchewan Party is inclined to sell SaskTel, providing they can convince voters, saying “If there’s any time to do it, now would be the time.”
SaskTel’s basis of supports is rural Saskatchewan, where the company provides service for farming and small towns, which Rasmussen says may not be profitable enough for a private company to service.
Premier Wall has stated putting SaskTel up for sale would be out of the question without a referendum or election first, with a current “risk assessment” underway to determine how the sale of MTS to Bell would affect SaskTel, as both companies have roaming agreements in place.
Manitoba Premier Brian Pallister hinted last month prices going up may be a price to “get what you pay for”, as the Bell MTS deal would extend wireless and other services in the province.
Greg MacDonald, an analyst with Macquarie Group Ltd., told Bloomberg the sale of SaskTel would be “desirable” for a ‘Big 3’ incumbent, as it would allow the latter to extract more profit from the business by integrating with existing services and cutting costs.
SaskTel’s market value was pegged at $2.1 billion CAD in 2013 by the Frontier Centre for Public Policy. The company had 618,000 wireless subscribers and saw $1.26 billion CAD in revenue in 2015, numbers which eclipsed MTS’ $995 million and 491,000 wireless users, suggesting the Saskatchewan carrier may be worth more than the $3.1 billion CAD Bell paid for the Manitoba carrier.
Pressure to sell SaskTel may come from the province’s sluggish economy, which has declined over the past two years due in part by low oil prices and weak worldwide demand for potash fertilizer, two major exports for the province. Just this week, the government announced its deficit will be $434 million CAD for this fiscal year.
Manitoba and Saskatchewan residents are able to obtain exclusive wireless plans, such as the coveted $48/5GB offer, which Canadians outside these provinces are willing to do what it takes to acquire, by going through third party sellers.