Our Canadian correspondent, Tattva, writes:

At a cool C$1.4 billion Fido is one expensive pooch! On the other hand, this pooch is a significant player – albeit a struggling one - in the Canadian wireless telecommunications industry. Both Telus and Rogers Wireless are sniffing around Fido. Telus offered a paltry C$1billion so who can blame the board for cocking its leg in response to this offer. Fido (wireless brand of Microcell) seems keen to hump Rogers’ leg, bidder of the C$1.4 billion.

Why the bid?
Contrary to what one may hear during a tender moment, it appears that:

(a) size does matter: If the deal gets approved then Rogers Wireless becomes the biggest player in the Canadian market with more than 5.1 million customers;

(b) not every one likes a Virgin: The bearded maestro Richard Branson and his Virgin brand is teaming up with Bell Mobility to target Canadian teens (note Bell and Rogers are arch-rivals in the Canadian cable/satellite and wireless markets). Rogers however, don’t want their potential young customers to be touched for the very first time by this competitive duo;

(c) penetration is important: Canada has a wireless penetration rate of 46 per cent, which is low compared to the over 100% in Sweden and Japan (editor: who needs more than one cell phone?) So there still appears to be long-term potential in the Canadian wireless market. But will it be Rogers or Bell who rises to the occasion?

(d) younger is better: A recent report from Solutions Research Group of Toronto revealed that 12 to 29 year olds represent C$1.5 billion of Canada's C$8 billion wireless market. This market is expected to grow twice as fast as the overall market in the next three years.

Consumer Groups Unhappy
There are mixed feelings about whether wireless rates will rise as a result of the takeover. Michael Janigan, executive director of the Public Interest Advocacy Centre, said there is a good chance rates would rise. "We've seen where there is an effective duopoly now in broadband between the two local telephone companies that there's not much difference in the service price; both seem to follow each other in tandem."

Tattva says “Who do these consumers think they are? If you want cheap wireless rates move to India. Cell phone service is so cheap that even the rickshaw drivers are busy chatting with their homies.”

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