Small Canadian company gets foreign investment

Toronto-based, Public Mobile, one of the new entrants to the Canadian cell phone carrier market announced yesterday that they received a $350 million investment from the Export-Import Bank of China. The money is intended to be used to build a wireless network throughout southern Ontario and in to Quebec. If Public Mobile will have a legitimate chance to compete with the big companies in Canada (Rogers, Bell and Telus) then, this step is absolutely essential. This part of the country, especially the Greater Toronto Area is the most populated and most lucrative for any cell phone carrier.

Public Mobile is not the first of these new entrants but since all of the newcomers are relatively small and still developing their infrastructure, an investment like this can put some space between them and the others. Wind Mobile was the first of these entrants and only recently have they begun to make some indent in the industry, although still a drop in the ocean. For the most part, the big three juggernauts in Canada have been untouched in terms of loss of business. At first they were somewhat concerned about the impact they would have on their customer base, but because these new companies don’t have anywhere near the marketing budget or infrastructure in place it was very difficult for people to jump ship.

There is no doubt that most Canadians dislike Rogers, Bell and Telus with a passion, but Canadians have seen small, new entrants try and fail in the past (even though all of them in the past were actually owned by the big companies). Their main reason for failing was poor reception and coverage. The same problem is plaguing all these new companies, which is why this investment is so important. Hopefully, they can build their network quickly so that they are reliable and have a broad coverage area that people can count on.

For the Chinese firm, this can turn out to be a very good investment and give them an important stake in Canada. This investment is also meaningful for Canada because this is a sector that Canada has traditionally been very protective of. This protectionism is one of the main reasons that Canadians have had such awful service and lack of competition which has put them among the last in terms of usage and pricing from all advanced nations. Although, we are still very early on in this phase of opening the industry up to new competitors, this investment in Public Mobile should be looked upon as a positive step for all Canadians.