Telus shares sunk by rival Shaw's move on Wind

By Alastair Sharp
TORONTO, Dec 17 (Reuters) - Cable company Shaw
Communications Inc SJRb.TO gutpunched its main telecom rival
with a surprise offer to buy wireless operator Wind Mobile,
sinking shares in Telus Corp T.TO on Thursday amid competition
fears.
Telus fell to its lowest since early 2014 as analysts
cheered Shaw's move, which if completed, would give Wind more
financial heft to expand its network and provides Shaw with an
established wireless product to bundle with its Internet,
television and landline services.
"For Shaw, what was attractive was not having to go through
the initial stages of building a greenfield network and going
through the pain points of getting that up and running," Dave
Heger, a telecom analyst at Edward Jones, said in a telephone
interview.
Shaw calculated in 2011 that building a wireless network in
Alberta and British Columbia would cost it at least C$2 billion.
It said on Wednesday it had agreed to pay C$1.6 billion for
Wind, which serves almost 940,000 customers in major cities in
Alberta, British Columbia and Ontario. Three-quarters of its
customers are in Eastern Canada.
Shaw stock also fell, however, as investors calculated the
company would take an initial hit by acquiring loss-making Wind
and could dilute the value of existing shares by using an equity
offering to finance the deal.
The deal, if closed, ends a seven-year experiment created by
the former Conservative federal government to stoke wireless
competition by making some airwaves only available to new
entrants and blocking their takeover by the three national
wireless players: Telus, Rogers Communications Inc RCIb.TO and
BCE Inc BCE.TO .
Wind was the last man standing among independent operators
who first acquired spectrum in 2008, with Mobilicity bought by
Rogers in June and Public Mobile acquired by Telus in 2013.
While all three sought to win market share by undercutting
the incumbents on price, Wind had more recently sought to
attract higher-value customers while playing up the simplicity
of its unlimited call, text and data plans.
Analysts and consumer groups said they did not expect Shaw
to aggressively cut prices to grow the business.
"We expect Wind under Shaw's ownership to remain a
disciplined fourth wireless player with a focus on balancing
growth and profitability," RBC analyst Drew McReynolds wrote in
a note.
Telus was last down 6.9 percent at C$37.80, Shaw lost 7.6
percent to C$24.93. Canada's wireless leader Rogers shed 5.2
percent to C$47.65 and BCE Inc fell 2.7 percent to C$53.38.
($1 = 1.3928 Canadian dollars)