Is Mobilicity falling apart?

**Thucydides1987** · 11-19-2011, 09:05 AM

In the past few week I've been trying to read between the lines after seeing the insane barrage of promos from Mobilicity. They ended the $25 BTS plan, only to bring it back again in like a week. Then I see the 50% off unlimited plans promo. And today I find out that Dave Dobbin was fired. I just can't see all of these things positively...something seems wrong. Are they not making enough money or something? Is the company on the verge of collapsing? What on earth is going on?!

**icemasta** · 11-19-2011, 09:26 AM

I think you should change the title to, are all the new entrants falling apart?

I think without set aside for the next auction and foreign ownership rules updated, we may not see the new entrants in the future by most likely a buyout.

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**droidacolyte** · 11-19-2011, 10:19 AM

Originally Posted by icemasta

I think you should change the title to, are all the new entrants falling apart?

I think without set aside for the next auction and foreign ownership rules updated, we may not see the new entrants in the future by most likely a buyout.

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Common sense would suggest the government would do something to accommodate the new entrants. After all the whole point of setting aside spectrum in the AWS auction was to encourage competition. Is the government really going to squash their initiative to stimulate competition in the Canadian wireless industry? If so, I shake my head at this government. You don't just say "we're going to stimulate competition in the Canadian wireless industry", then half-*** it and then quietly drop the initiative.

I think the new entrants are finished (actually maybe Public Mobile isn't finished. They have been the more conservative with their money and their $45/month for unlimited provincial talk, international text and unlimited EV-DO data isn't desperate. And their promo is reasonable. $30/month for the first 6 months. AND no device subsidies whatsoever. Unlike WIND).

The new entrants find themselves in a Catch 22. They need to gain subs in order to build out their network and provide a return on investment to their investors. But they also need to build out their network and improve network reliability to gain subs. Early adopters are more patient and understand what's at stake. But early adopters alone aren't going to cover the cost of spending hundreds of millions in spectrum purchases.

And Public Mobile find themselves in their own little Catch 22. They want to avoid the race to the bottom. They don't want to go down the path that Mobilicity and WIND went. But on the flip side, you see people online whining that $45/month unsubsidized for their smartphone plan is a rip-off and that $30/month for six months is a crappy promo. What the heck do people want? Public Mobile have a duty to pay back their investors. If Public Mobile want to be the MetroPCS of Canada with lots of metropolitan zones nationwide or possibly go national and be the Boost Mobile (owned by Sprint) of Canada, they're going to need something like a $45/month or $50/month ARPU. MetroPCS is like $40-60/month depending on the package you get. And Boost Mobile is $40-55/month for Androids, $45-60/month for Blackberrys, $35-50/month for dumbphones and non-Android/RIM smartphones. The more seniority you have, the lower your bill. Giving out cheap "for-life" promos would come back to haunt Public as they got bigger. And they need cash flow to pay back their investors (though they are in way less debt than Mobilicity and especially WIND).

**icemasta** · 11-19-2011, 10:27 AM

Originally Posted by droidacolyte

Common sense would suggest the government would do something to accommodate the new entrants. After all the whole point of setting aside spectrum in the AWS auction was to encourage competition. Is the government really going to squash their initiative to stimulate competition in the Canadian wireless industry? If so, I shake my head at this government. You don't just say "we're going to stimulate competition in the Canadian wireless industry", then half-*** it and then quietly drop the initiative.

The next auction should have more rules than just set-aside. The government should implement a spectrum cap or at the very least assume a company with over 10% market share in a region is not a new entrant. I mean Quebecor basically bought all the set-aside AWS spectrum in southern Quebec which is a HUGE market that Wind/Mobilicity would have liked to have.

**Insurge** · 11-19-2011, 11:29 AM

Comparatively, 250K subs and the highest ARPU out of the entrants is pretty good. If Mobi is "failing" then it seems WIND will fall first.

**soultrader** · 11-19-2011, 11:40 AM

Something has to happen...I remember Fido back in 2004...seems they had better network than mobi or wind

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**Thucydides1987** · 11-19-2011, 11:54 AM

Originally Posted by icemasta

I think without set aside for the next auction and foreign ownership rules updated, we may not see the new entrants in the future by most likely a buyout.

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Mobilicity isn't a foreign company, though. If the government is trying to be protectionist and keep foreign telecommunications companies out, should it not be helping Mobilicity?

**jimbobeaver** · 11-19-2011, 12:05 PM

Originally Posted by Insurge

Comparatively, 250K subs and the highest ARPU out of the entrants is pretty good. If Mobi is "failing" then it seems WIND will fall first.

That 250k subs did not include churn losses which are estimated to be in the 90k range.

The timing of Dobbin's axing and Swaris comments smells of a coordinated effort to fence off new spectrum from the incumbents.

The new entrants are not generating the ROI their big investors expected so there will be more turmoil and carnage before we see improved network coverage from all of them.

**Landazar** · 11-19-2011, 12:35 PM

This is exciting!! I wonder whats going to happen next!!

**sable** · 11-19-2011, 05:13 PM

The best scenario is some white knights take over Mobi and we've got to grandfather the existing plans. But I wouldn't bet on it.

The worse case is Mobi go bankrupt and we all lose our numbers.

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**syzuie** · 11-19-2011, 05:19 PM

or another scenario is merger with WIND..

Originally Posted by sable

The best scenario is some white knights take over Mobi and we've got to grandfather the existing plans. But I wouldn't bet on it.

The worse case is Mobi go bankrupt and we all lose our numbers.

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**soultrader** · 11-19-2011, 07:55 PM

Bankruptcy just after one year = Marvelous

**Jonavin** · 11-19-2011, 09:06 PM

Originally Posted by Thucydides1987

Mobilicity isn't a foreign company, though. If the government is trying to be protectionist and keep foreign telecommunications companies out, should it not be helping Mobilicity?

Mobilicity is as foreign and as Canadian as the other two, they all have very similar structures. WIND gets most of their money from Egypt/Russians, Public Mobile has source from China and Mobilicity has American and Dutch sources. Refer to the CRTC ownership review info for each company to see their ownership structure. They are all within a percentage of each other on foreign vs Canadian sources of capital/debt.

**robsaw** · 11-19-2011, 09:15 PM

Originally Posted by jimbobeaver

The new entrants are not generating the ROI their big investors expected so there will be more turmoil and carnage before we see improved network coverage from all of them.

That's the big thing. Who is going to provide further financial backing for bidding on another spectrum auction, regardless of the rules? A quick back of the envelope calculation would seem to indicate that Wind and Mobilicity would need at least 3 times (for any measurable ROI) and perhaps as much as 6 times the current number of subscribers to provide anything resembling a good ROI. It will be extremely difficult for the new entrants to attract more investment $ for future spectrum and network expansion given the long wait for a ROI. It really is a Catch22, unless the gov't simply GIVES them spectrum.

**droidacolyte** · 11-19-2011, 09:19 PM

Originally Posted by Jonavin

Mobilicity is as foreign and as Canadian as the other two, they all have very similar structures. WIND gets most of their money from Egypt/Russians, Public Mobile has source from China and Mobilicity has American and Dutch sources. Refer to the CRTC ownership review info for each company to see their ownership structure. They are all within a percentage of each other on foreign vs Canadian sources of capital/debt.

I knew that Mobi had American backers and Public had Chinese backers (is ZTE backing them financially? Or just building out their network?). But I was under the impression that Globalive had much more foreign ownership. Since the CRTC went after them and not the other two for breaking foreign ownership regulations.