* Wind's main backer opts not to fund its participation in
* Canada's biggest 3 telecom firms set to benefit
* Move will hurt govt efforts to boost competition
By Alastair Sharp
TORONTO, Jan 13 Globalive's Wind Mobile has
withdrawn from a major Canadian auction of wireless spectrum,
dealing a blow to government efforts to spur competition and
boosting the prospects of the three big players that dominate
the country's telecom sector.
Wind, a recent entrant to the Canadian market, on Monday
said it quit the auction due to start the next day after its
main backer, Europe' Vimpelcom Ltd, decided not to fund
The move all but assures that the country's biggest
telecommunications providers, BCE Inc's Bell, Rogers
Communications Inc and Telus Corp - will take
the lion's share of the prized spectrum at a lower price than
they might have otherwise expected to pay.
The 700 MHz spectrum is particularly prized for its ability
to carry a signal over long distances and to penetrate thick
walls, making it useful for both urban and rural deployment.
Canada's Conservative government had hoped the auction would
support its broader strategy of having four strong mobile phone
service providers in every region of the country, fighting for
consumers and lowering prices in the process.
Instead, it faces the prospect of strengthened incumbents
and a much lower take from an auction it wanted to boost its
coffers heading into next year's federal election.
Canaccord Genuity analyst Dvai Ghose said proceeds from the
auction would likely fall below his initial C$2.5 billion ($2.3
billion) forecast, with one of the four prime blocks of spectrum
now lacking an obvious buyer in Ontario and Western Canada.
"This clearly puts a question mark around the government's
stance," said Ryan Bushell, a portfolio manager at Leon Frazer,
which owns shares in all three of the Canadian majors.
"This leaves the government between a rock and a hard place,
so I'm not quite sure what they will do. As an investor it makes
me a bit nervous because desperate times call for desperate
measures," he said, suggesting further federal regulation was
As part of a "pro-consumer" strategy aimed at winning votes
ahead of the next election, Ottawa has recently forced the
shortening of cellphone contracts and introduced more forceful
rules on the sharing of cellular towers.
A spokesman for the industry minister declined to comment
directly on Wind's decision to withdraw, but said the additional
airwaves would help Canadians regardless of who owned them.
"The outcome of the auction will be positive for consumers
because high-quality spectrum will soon be available across
Canada, providing Canadians with dependable, high-speed wireless
services on the latest technologies," James Moore's press
secretary Jake Enwright said in a statement.
NEW ENTRANTS STRUGGLE
The withdrawal puts Wind, which has 650,000 customers mostly
in the provinces of Ontario, Alberta and British Columbia, in a
difficult spot as operators gobble up the airwaves needed to
support booming demand for mobile data such as video streaming.
While Wind is Canada's fourth-largest operator, it trails
far behind the top three. The widening gap in its airwave assets
exacerbates the challenges it faces as it will be unable to
upgrade to the latest networks.
"In order to continue offering real choice for Canadian
consumers and businesses long term, Wind needs more wireless
spectrum which is the real estate of our business, so it is very
unfortunate Wind is unable to participate," Globalive Chief
Executive Officer Anthony Lacavera said in a statement.
Globalive is owned by Vimpelcom and Lacavera. The CEO
maintains voting control after the federal government blocked
Vimpelcom's request to take control of the company.
The Conservatives sought to usher in more wireless
competition via a previous auction in 2008 in which some
airwaves were set aside for new entrants.
While prices have since fallen, new entrants such as Wind
have failed to win much share away from the biggest players.
One of the startups from that auction, Public Mobile, has
since been bought by Telus.
Another, Mobilicity, is under creditor protection as it
seeks a buyer. Ottawa has twice blocked Telus from acquiring it,
and Wind is the only other company that has publicly expressed