BCE Inc. (TSX:BCE)(NYSE:BCE) announced earlier this month that it would be launching Lucky Mobile, a new low-cost carrier that will offer affordable plans for subscribers on a tight budget. Initially the new provider will operate in Ontario, Alberta, and B.C. with talk and text plans starting as low as $20 a month. This is not the first time that Bell has ventured into the low-cost space as it previously operated Solo Mobile which was eventually discontinued.
Bell also owns Virgin Mobile, which is not quite the low-cost carrier that Lucky Mobile is. Instead, Virgin is more of a competitor to Fido and Koodo, which are brands that are owned by Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and Telus Corporation (TSX:T)(NYSE:TU), respectively.
Lucky will more closely compete with Rogers-owned Chatr and Telus-owned Public Mobile. In addition, Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) will also provide competition among the discount brands after acquiring Wind Mobile last year, which has since been rebranded as Freedom Mobile.
As competition in the industry increases it may be more and more difficult for carriers to grow sales, especially if Shaw is able to transform Freedom Mobile into a formidable threat. With sales growth of 5% in its latest quarter and the company continuing to add wireless subscribers, BCE has not yet faced pressure in that segment but that could change very soon.
As interest rates rise and housing costs continue to increase, we could see consumers look for ways to cut down whatever expenses they can. That could result in more demand for cost-effective solutions that brands like Lucky Mobile will be able to offer.
