Canadian operator Bell has acquired 100 percent of leading Canadian MVNO, Virgin Mobile Canada, in a bid to bolster its standing in the country’s increasingly competitive discount mobile market. In a statement, Bell said that its mobile arm, Bell Mobility, has bought the remaining 50 percent of Virgin Mobile Canada that it did not already own for CAD142 million (US$122 million). “This initiative will allow Bell Mobility to be uniquely flexible in the competitive wireless marketplace, maximising network, handset, distribution and global roaming efficiencies, and enhancing the growth of the No. 1 youth brand in Canadian wireless,” said George Cope, president and CEO of Bell. Virgin Mobile Canada, which uses Bell Mobility’s network for its MVNO offering, will continue to operate independently with distinct branding and its own distribution channels. However, Bell said that both Bell and Virgin products would be actively sold next year via The Source, Bell’s newly acquired electronics retail chain.
According to Bell’s first-quarter results, announced yesterday, operating revenues at its mobile unit grew by 3.5 percent to CAD1,079 million (US$923 million), but “aggressive pricing in the discount segment” was cited for a CAD0.80 drop in ARPU to CAD51.52. Rivals Telus and Rogers Wireless have both launched discount brands recently – a factor that commentators believe may have prompted Bell’s decision to acquire Virgin. “It’s a smart move,” Greg MacDonald, an equity analyst at National Bank Financial told Canada’s Financial Post. “It takes away the potential for a competitor to underprice you. And wireless pricing rationality is very important right now.”