Too early to fear for the future of SaskTel: analyst
Lawrence Surtees says the independent review only had hypothetical risks
Telecommunications consultant Lawrence Surtees says the only possible risks to SaskTel are hypothetical at this point, after an independent review found SaskTel at risk of reduced profits following the proposed sale of Manitoba Telecom Services to Bell.
Bell has agreed to buy MTS in a friendly deal valued at $3.9 billion. This prompted the risk assessment of Saskatchewan's telecommunications crown corporation. The assessment found "there is a risk that SaskTel's net income will be unable to support the level of dividends that have been returned to the province in recent years."
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Surtees says his biggest takeaway is always the same when he looks at another player trying to acquire something new or merge.
"The onus is on them to execute," he said. "Bell can buy MTS or go to the North Pole for all we care, but by itself that doesn't mean anything unless they're able to execute on their strategy. And that's where the shadow looms."
Surtees says Bell has been trying to strengthen its position in Western Canada for almost 20 years.
He says Saskatchewan shouldn't make any "knee-jerk reaction" to the Manitoba deal, but the risk assessment was still valuable. He hopes both consumers and the province recognize how valuable SaskTel is.
"We've long known that by virtue of Crown ownership the provincial government has been able to use SaskTel as sort of a vehicle for both economic development in Saskatchewan, and to try to keep phone rates lower than might otherwise be in the private ownership situation," Surtees said.
Surtees and others in the industry track how much carriers spend every year on new technologies, and SaskTel's annual spending on its network is well above the national average.
"For every dollar of revenue that SaskTel brought in last year, they spent 24 cents on new technologies, both for wireless and the fibre project," he said.
With files from CBC's Saskatoon Morning