Bell, Telus set to face off in Manitoba
Branding experts, consumer advocates expect a tough slog to win over customers
The signals are hard to miss — sixfigure cheques for charities, earnest introduction letters in local papers, a new name for the Winnipeg Jets’ home ice.
Telecom giants BCE Inc. and Telus Corp. are laying it on thick to woo customers and build their brands in Manitoba on the heels of Bell’s $3.9-billion purchase of Manitoba Telecom Services, a deal that catapulted both from bit players to leading roles in the province’s wireless market.
Before the acquisition, regional carrier MTS dominated with about half the wireless market share, followed by Rogers Communications Inc. with about a third, and Bell and Telus with about 10 per cent each. Regulators approved the deal in February on the condition the newly formed Bell MTS divest a chunk of subscribers to Telus and, eventually, a smaller subset to Xplornet Communications Inc.
Manitoba is home to more than 900,000 wireless subscribers, according to CRTC data, pulling in more than $650 million annually, based on average revenue per user. Both Bell and Telus updated their annual financial guidance to reflect the additional revenue.
But as the two telcos expand their presence — Bell MTS’s market share is about 40 per cent and Telus’ will double to about 20 per cent — branding experts, consumer advocates and Telus expect a tough slog to win over clients who don’t get to choose whether to stay with Bell MTS or switch to Telus.
This may be tough given the legacy of MTS, which offered notably lower price points for unlimited data packages than the Big Three carriers in other provinces.
Regardless, the transition is a massive undertaking. Last week, Telus started migrating about 100,000 Bell MTS customers to its network and kicked off an extensive marketing campaign. The Vancouver-based provider will triple its distribution points and invest $1 million on charitable activity in the province this year.
While some customers are keen to switch, others aren’t happy given Telus’ historically poorer network quality in the province.
“Prior to this deal we always struggled in the province because of that low market share and honestly our network quality wasn’t on par with what we’re used to,” Kevin Banderk, Telus’ vice-president of mobility marketing, said in an interview.
But the deal — Telus paid Bell about $300 million for the customers — comes with significant network investment and a network sharing agreement with Bell. Telus guarantees customers will have the same or better network quality as they had with MTS, though Banderk said it will take time and effort to change perceptions.
“We’re almost a new entrant in the province of Manitoba … you want to make sure you get that as right as you possibly can,” he said.
Customers will be moved in waves so customer service agents can better help them through the process, which involves swapping SIM cards and potentially unlocking phones. People will get at least a $60 credit for their trouble, Banderk said.
Once they’re transferred, customers can switch carriers anytime they like, he added, although they will have to pay any remaining device subsidy. But he hopes Telus, which leads the industry in customer service, convinces them to stay with a great switching experience.
Gloria Desorcy, executive director of the Manitoba branch of the Consumers’ Association of Canada, said her organization is starting to hear customers disgruntled about the switch. “They’re feeling they’re losing their consumer choice. They haven’t had the opportunity to choose this company,” Desorcy said in an interview.
While she was pleased to hear customers can switch back anytime, she expressed concerns that could dilute the Competition Bureau’s attempt to level the playing field. “For Manitobans, the competition in the marketplace has helped to keep prices lower than in other provinces,” she said. “We’re hoping for the sake of Manitobans that we’ll be able to maintain good strong competition.”
Both Bell MTS and Telus have promised to keep prices and packages the same for at least a year.
For Bell, tacking on its brand to the MTS name is a “very large and substantial” piece of work, Bell Canada president and chief brand officer Wade Oosterman said in an interview.
In the past two weeks, Bell MTS announced donations worth $700,000, including $500,000 to the University of Manitoba’s agriculture program and $200,000 to support indigenous youth mental health. It also officially renamed the NHL hockey arena the Bell MTS Place.
“The name change is reflective of what we’re trying to do, which is to combine the best of Bell’s national scope and scale and the MTS management team’s local knowledge and nuance,” Oosterman said.
Bell MTS will invest $1 billion in the province over the next five years, an investment Oosterman contends MTS could not have done on its own.
While the big spend will “maybe” lead to price increases, Oosterman said people value higher quality networks, much like the popularity of expensive iPhones and Samsung smartphones proves low prices aren’t everything.
“What I know for sure is the product is going to be much better,” he said, adding the price will remain appealing to consumers. “If they don’t answer, ‘Yes, I’m in,’ we will have wasted $1 billion in Manitoba. That’s not something we’re looking to do.”
Within the next nine months, Bell MTS will transfer an additional 24,700 to Xplornet, which is starting from scratch in the wireless market.
This involves a “great deal” of behind the scenes work to ensure its network, customer care, operations and billing systems are functioning, but spokesman James Maunder said it’s on track to launch by February 2018.
In an era where consumers prize choice, it’s “very unusual” to see customers subject to an involuntary switch, University of Manitoba marketing professor Fang Wan said in an interview.
Wan sees Telus as the biggest winner in this transaction, given the Competition Bureau’s stipulation resulted in a “lottery win of this huge chunk of customers.” (It reminds her of China, she said, in the sense that the government played a huge role in shaping competition.)
It will be critical for Telus to reach out to customers and maintain high service levels, a big task given the growth is sudden rather than organic and MTS was seen “almost like this older brother.”
“The biggest story is let’s see whether Telus can live up to expectations and use this interesting transition to rebuild itself.”