A profit-buoyed Bell Canada announced today it has fully acquired Virgin Mobile Canada for $142 million.
Virgin previously operated in Canada by leasing network infrastructure from Bell, reselling air time to its subscribers. Bell previously owned 50% of Virgin.
The deal makes Bell the sole owner of Virgin’s operations in Canada, and grants Bell a long-term lease on the Virgin brand name.
“Bell Mobility’s acquisition of Virgin Mobile Canada supports our strategic imperative to accelerate wireless, a core component in Bell’s overall strategy to achieve our goal, to be recognized by customers as Canada’s leading communications company,” said George Cope, president and CEO of Bell and its parent company BCE, in a statement. “This initiative will allow Bell Mobility to be uniquely flexible in the competitive wireless marketplace, maximizing network, handset, distribution and global roaming efficiencies, and enhancing the growth of the number one youth brand in Canadian wireless.”
Bell already has a discount mobile offering with its Solo brand. While Cope said Bell is looking to harmonize Virgin with its existing mobile operations and may someday “consider moving to one flanker brand versus two,” Virgin will initially operate separately from Bell Mobility and Solo.
“There’s a really strong commitment from the Bell team to keep this brand intact and separate,” Virgin Mobile’s chief marketing officer Nathan Rosenberg told Marketing. “What’s exciting for us is access to Bell’s entire handset range, the ability to get onto its new [3G] network relatively soon after it launches, access to distribution in The Source—which is another 750 stores—and a further investment in brand.”
Bell recently acquired The Source, a national electronic retail chain, for an undisclosed sum.
The move precedes the emergence of at least two new mobile competitors. Public Mobile (formerly BMV Holdings) and Globalive are readying new mobile services for launch this year after winning a share of Canada’s wireless spectrum in a government-run auction last year.
Virgin will continue working with its own advertising agencies, and recently completed a competitive review. Rosenberg said he could not disclose the winners’ names until next week. Toronto agency Zig was incumbent, holding the business for the past three years.
As opposed to using a single agency going forward, Virgin will have multiple agencies to choose from for different assignments.
“A creative collective will be formed, but we’re still getting a single agency for lead ideology support,” he said. “The other guys will join us in the next couple of months.”
This model is similar to the one adopted by Bell last year when it ended its exclusive relationship with Cossette, adding Zulu Alpha Kilo, Jam, Leo Burnett and LG2 to its roster. However, Rosenberg said the new model was not adopted in anticipation of the Bell deal.
“We’ve not had any cross-discussions with [Bell] at all,” Rosenberg said. “In fact we wanted to include one of their agencies in our review process and weren’t able to because they considered us a competitor.”
Bell announced its Virgin acquisition following the release of its quarterly financial report this morning. The telecom’s net earnings were $377 million on quarterly revenues of $3.62 billion, a decline of 0.5% from last year.
Bell’s wireless division reported revenues of $1.08 billion, a 3.5% increase year-over-year.
