In meetings with financial analysts last month, Public Mobile revealed some promising subscriber numbers, reporting the company is at the 200,000 mark, having added 45,000 net subscribers in the fourth quarter of calendar 2011.
With that bit of scale, the company is looking to boost its rock-bottom pricing, the company told the analysts, from $15 to perhaps $19 a month at the bottom end.
“Combined with other new entrants' and Koodo's recent price increases, we believe this is a relief from a price intensity perspective. However, the gap in U.S./Canada ARPU and Canadian incumbent-new entrants ARPU will continue to pressure voice ARPUs,” wrote Scotia Capital telecom analyst Jeff Fan in his research note to clients after the meetings.
“We believe PM is in no rush to consolidate and the company believes Wind-Mobilicity consolidation will likely take place in 2012. We believe this will likely only occur in (the second half of fiscal 2012), after auction rules are released and foreign ownership rules are eased (if at all),” he added.
“PM has been a pleasant surprise with respect to sub adds and cost control. While PM has had its growing pains like Mobilicity and Wind, the management team's strategic focus remains consistent and the sub trends appear to be moving in the right direction.”
As of February, Public boasts an average revenue per subscriber (ARPU) of about $25, reports Fan, which will only grow when price increases are phased in. Fan estimates that growth at Public Mobile was better than that of Mobilicity as well. “We believe PM ended 2011 higher than Mobilicity (estimated 180k-200k subs) and lower than Wind (estimated at 400k-420k).”
While Public Mobile’s network covers fewer cities than either of Wind or Mobilicity, it now covers approximately 9.3 million in Ontario and Quebec. Plus, its capex spending has been lower than the other two new wireless companies and has accumulated operating losses of about $166 million, “which it believes is the lowest amongst the independent new entrants,” adds Fan.
As for future growth, Public will rely on Sprint to provide something of a road map, since the U.S. company is the only other carrier to use the same G-band frequency Public uses. In fact, wrote Fan, Public Mobile executives believe “there is no need for 700 MHz spectrum unless it is at an attractive price.”
