Rogers CEO: Keep U.S. carriers out of Canadian market

Rogers Communications (NYSE: RCI) CEO Nadir Mohamed wants the same opportunity to acquire new Canadian wireless companies as U.S. carriers that are allegedly sniffing around the market.

Nadir Mohamen, Rogers Communications

Mohamed (Image source: Rogers)

Rogers, which started as a cable company but expanded into the wireline voice, data and wireless businesses with a quadruple play offering, has always been a bit feisty in defending its competitive role. It would welcome the opportunity to compete on level ground with intruders from the U.S., Mohamed said.

"We're absolutely against a tilted or stacked playing field where you have a massive incumbent U.S. carrier that would be given favorable treatment, and frankly better treatment than Canadian incumbents," Mohamed said during a second quarter earnings call with analysts yesterday. "We can't have a U.S. foreign incumbent be allowed to buy new entrants at depressed pricing by blocking the ability of incumbent Canadian players to do the same. So it's about parity."

The Canadian government has indicated that it wants to increase competition among carriers in the country and is not looking favorably on existing wireline carriers swallowing up any smaller wireless players. As such, the government already blocked Telus from acquiring Mobilicity.

This policy has opened the door for the likes of Verizon (NYSE: VZ), which has been said to be interested in acquiring Wind Mobile and perhaps Mobilicity. Verizon CFO Francis Shammo touched on the carrier's preliminary interest during a conference call with analysts after the company announced second quarter earnings last week.

"This is really an exploratory exercise for us," Shammo said, noting that at least part of the interest is based on spectrum the Canadians are auctioning in January. "We continue to just look at this market. If you look at the population of Canada, about 70 percent of that population is between Toronto and Quebec. That's adjacent to Verizon Wireless properties."

Shammo, too, acknowledged that the regulatory situation could be prickly for a carrier like Verizon to move into Canada. Still, he said, the prospect of purchasing spectrum or moving into Canada has piqued the carrier's interest.

"We're looking at all of these, but obviously some of the cautions here are the regulatory environment, a foreign investor coming into the Canadian market and what does that mean," Shammo said. "(We're) cautiously looking at it, not ready to make any announcements today. And we continue to explore and have discussions, but at this point it's just really just an exploratory exercise."

Mohamed, in his comments, made it clear he wasn't in favor of that sort of exploration if a Canadian carrier wasn't invited along on the trip.

"We welcome competition, frankly, it's in our DNA," Mohamed continued. "Those that know the history of the Rogers company would know that our company has been built on taking on telcos. We always took on the big phone companies and we thrive on competition."

Encouraging a giant U.S. carrier to enter the market, however, would unbalance the competition.

"We can't have it stacked against us and we don't see how a government policy would make sense that the Canadian government would favor a U.S. player. Frankly, we'd never be able to get the reciprocal rights that are being offered. So our view is very straightforward: we can't have a U.S. foreign incumbent be allowed to buy new entrance at depressed pricing by blocking the ability of incumbent Canadian players to do the same."

Mohamed emphasized that his objections carried beyond a company purchase into Verizon participating in the spectrum auction.

"If we're going to be restricted to 10 megahertz of prime spectrum, so should everybody else, including very large foreign incumbents," he concluded.

For more:
- Seeking Alpha has this Rogers earnings call transcript
- and this Verizon earnings call transcript

Related articles:
Canada's new spectrum transfer rules could open door for Verizon
Reports: Verizon makes $600M-$800M bid for Canada's Wind Mobile