BUSINESS

Canadian telecoms ramp up lobbying efforts ahead of Verizon's entry into Canada

08/08/2013 08:24 EDT | Updated 10/08/2013 05:12 EDT
Canada's biggest telecoms are ramping up their lobbying against a set of rules they believe give foreign companies like Verizon Communications Inc. an unfair advantage in the wireless communications sector.

The chief executive of BCE Inc. (TSX:BCE) said Thursday that he's optimistic the Canadian government will rethink rules which, among other things, prevent Canada's biggest wireless carriers from buying up smaller rivals.

"The final decision won't rest with BCE, it'll rest with our government, and I'm hopeful they'll see the unfairness to our shareholders, customers and Canadians in this policy," George Cope told analysts Thursday.

"We will use every avenue we can in a professional way to pursue this."

The complaints come amid reports that U.S.-based Verizon Communications is exploring a move into the Canadian market by purchasing Mobilicity or Wind Mobile, two of the new wireless carriers that launched their services a few years ago.

The rules allow foreign entrants to buy small Canadian wireless carriers with less than 10 per cent of the market share — part of the federal government's effort to increase competition in the sector.

The Canadian carriers are disputing rules that would allow Verizon to use their wireless networks and to bid on more wireless spectrum —the radio waves used by mobile communications devices — than the incumbent carriers at a January auction.

So far, Industry Minister James Moore has stuck by the government's policy, despite lobbying from Canadian wireless carriers.

Telus Corp. (TSX:T) said any changes would need to be made by Sept. 17, which is the last day to file a deposit to participate in the spectrum auction.

With the deadline fast approaching, Telus used its earnings conference call Thursday to ask investors for help.

"Given the current potential for a significantly unfair playing field, we are asking our investors and customers to make their views known," chief executive Darren Entwistle said.

"They can do this by writing letters to the Members of Parliament and by requesting meetings with them to discuss this very important topic for our country and our citizens."

The telecom giants have been stepping up their lobbying in recent weeks.

Rogers (TSX:RCI.B) registered 13 of its board members as lobbyists last month to press for changes to the spectrum auction rules, according to a federal database.

The July 19 registrations indicate board members will be communicating with Industry Canada and the prime minister's office about the "technological and financial implications" of the current policies.

"Our board thinks this is an important issue for Canadians," Rogers spokeswoman Patricia Trott said in an email.

Previously, Rogers Communications had only one active entry in the registry, under the name of the company's president and chief executive Nadir Mohamed, although several dozen employees were registered to perform lobbying duties under that listing.

Trott said Rogers had to register each of its board members separately because not all of them are company employees.

BCE also registered its board members as lobbyists earlier last month, bringing it to 19 active listings in the registry. Telus has 17 active entries in the federal lobbyist registry.

Telecommunications was the subject of 39 monthly communications reports in June, according to statistics from the Office of the Commissioner of Lobbying of Canada.

Earlier Thursday, BCE reported slightly higher operating revenue, but a decline in profits compared with the second quarter of last year, when the media and telecom company's bottom line was helped by a favourable tax item.

The Montreal-based owner of Bell, CTV Inc. and other major Canadian media and telecommunications operations said it earned $571 million attributable to common shareholders or 74 cents per common share in the second quarter. That was down from $732 million or 94 cents per common share a year earlier.

BCE's adjusted earnings also fell, dropping to $594 million or 77 cents per common share — down from $747 million or 97 cents per share in the second quarter of 2012.

BCE boosted its wireless subscribers by 3.5 per cent from a year ago to 7.9 million, while TV subscribers grew by 5.3 per cent to 2.4 million. High-speed Internet subscribers grew by 1.5 per cent to 3.1 million.

Last month, BCE closed its $3.4-billion purchase of Astral Media.

The broadcast regulator signed off a revised version of the deal on the condition Bell sell a number of Astral's English and French specialty TV channels, including the Cartoon Network, Disney DX and Teletoon, along with some of its English-language radio stations.

Meanwhile, Telus said Thursday it earned $286 million in its most recent quarter, down from $299 million a year ago, as revenue grew six per cent.

The telecommunications company said the profit amounted to 44 cents per share for the quarter ended June 30 compared with a profit of 46 cents per share a year ago.

After factoring out certain items — including restructuring costs and income tax adjustments — earnings per share were 54 cents, up from 48 cents a year ago.

Operating revenue improved to $2.83 billion, up from $2.67 billion.

The company attributed the increase in revenue to growth in both its wireless and wireline business helped by new subscriber additions and higher average revenue per unit.

The company added 100,000 net new postpaid customers, partially offset by a loss of 21,000 prepaid subscribers for net additions of 79,000 compared with 86,000 a year ago.

Total wireless subscribers were up 3.5 per cent from a year ago at 7.7 million.