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| Cheap Chinese loans fueling Canadian competition |
| Written by Dave Burstein |
| Tuesday, 07 February 2012 17:09 |
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Interest rate < 5% at Public Mobile. Reserving spectrum for new entrants in the last auction brought down prices dramatically in Canada. Public Mobile, Mobilicity, Wind and Quebecor-Videotron have jumped in. Prices are down something like 20% as a three company cartel is fraying at the edges. Public Mobile finished 2011 with 199K subscribers, with net adds of 17K/33K/40K/45K the last four quarters according to Merrill Lynch. France, Canada, almost all Europeans have set aside spectrum and effectively brought down prices.
Public Mobile has been able to offer great prices partially because capital has been very inexpensive for a new company. Chinese manufacturer ZTE is the primary supplier and with the Export-Import Bank of China is providing low cost financing. That allows them to offer plans from $19 through Walmart and expect profitability despite an ARPU of $27. Vendor financing is back big time, with Alcatel, Nokia Siemens, and the Chinese financing customers in some parts of the world. Nokia and Ericsson are actually building networks in India at their own expense and collecting a share of the revenue from the operator. Alcatel has been resisting financing but felt they had to offer it is exit some important Asian markets. Sprint in the U.S. is believed to have been offered a very attractive deal, including financing, for their LTE network. Government stepped in and blocked the deal, with some behind the scene pressures that probably broke the trade rules. AT&T, with House Republican support, is is threatening to sabotage the U.S. auction to prevent similar in the U.S. |