TORONTO - If 2008 was a dramatic year for Canada's two biggest telecom companies, then 2009 is going to be quite the doozy, rife with questions about the impact of the recession, and whether new competitors will actually revamp the sector as we know it.
The final weeks of the year delivered shockers to both companies, with the failure of the $52-billion takeover bid for Bell parent company BCE Inc., and the death of Ted Rogers, who founded Rogers Communications.
In a sense, both announcements put the companies into a state of limbo as executives met behind closed doors to discuss their approach in the new year.
BCE says it's aiming to focus more on paying dividends to shareholders than repaying debt, and will invest millions on upgrades to its wireless technology.
Rogers is in self-described "transition period" before it announces the successor to Ted Rogers, who remained the company's president and chief executive until his final months. The succession announcement is expected in January.
"We're just in a period of extreme change," said Eamon Hoey, a business strategist at Hoey Associates Management Consultants Inc.
"The telecom industry is being altered indelibly. The real question that both of these companies have is how they're going to adapt."
Also knocking on the doors of both companies are potential new wireless competitors who are suiting up for entry into the market as soon as 2010. Earlier this year Ottawa held a wireless spectrum auction that opened the doors for new telecom companies.
Montreal-based Quebecor is aiming for highly populated areas, having spent nearly $450 million to purchase wireless spectrum in Quebec and $100 million in southern Ontario.
Others planning to beef up their positions include Globalive, Shaw Communications and Quebec's Videotron.
That means time is running out for the big guys to prepare for a potential price war as the new names work to steal away customers.
However, the threat of serious new competitors has probably been far exaggerated because some of them are having trouble even getting their plans off the ground, hindered by recessionary fears and troubled credit markets.
The new companies are "out there currently trying to raise capital. But in this market if you're looking for anything over $500 million you're dead plain out of luck," said Hoey.
"But the mere threat of entry into the wireless market is certainly going to affect how (the telecom companies) behave."
Both Bell and Rogers have focused on bundling their offerings to minimize the churn rate, which are the number of customers who cancel their services.
The approach has proven successful in recent quarters, with Rogers especially noting that more wireless customers are ordering their cable or Internet services, or vice versa.
Rogers Communications vice-chairman Phil Lind says he's confident that his company will retain its customers, and that new carriers are going to be disappointed if they're expecting to just scoop up market share.
"We'll make sure that our pricing is as good as it can be, and that (customers) are signed up to one-or two-year contracts," he said.
Rogers continues to move ahead, despite the absence of Ted Rogers, who known as an active leader in the company until his health issues forced him to relinquish his position about a month before his death.
"Ted had a tremendously powerful push and ever though he's not here we're still pushing along as though he was here," Lind said. "We don't have any hesitancy at all."
Similar optimism is coming from the ranks at Bell Canada, where Wade Oosterman heads the company's wireless business.
He says that despite the privatization falling through Bell is focused on restructuring the organization for the better.
"We're quite cash-rich, we have a very healthy balance sheet so our ability to invest in the opportunities as we see them are second to none," Oosterman said.
Bell says it has already spent about $2.5 billion on capital, with more than 70 per cent going to plans of expanding its wireless broadband network.
The company committed to upgrading its network in a partnership with Telus, under which Telus will pay about $750 million of the costs.
Telus, once considered a potential buyer of BCE, is working on boosting its own presence. In 2009, the company predicts its sales will grow as much as 6.5 per cent to $10 billion.
