(Adds industry and analyst comments, market background, details
on the auction)
By Alastair Sharp and Euan Rocha
TORONTO, July 7 The Canadian government said on
Monday it will auction more wireless spectrum early next year,
with more than half the airwaves set aside for newer players
that have struggled to win business from the country's three
dominant telecom companies.
The Conservative government hopes the auction of the
high-frequency spectrum, known as AWS-3, will encourage
investors to pour money into some of these smaller players,
which include Wind Mobile and Mobilicity. This would help them
better compete against the big three: BCE Inc's Bell,
Rogers Communications Inc, and Telus Corp.
Wind, Mobilicity and others entered Canada's wireless
market after a 2008 auction of very similar airwaves that were
also set aside for the purpose of stoking competition.
But they have struggled to make inroads. Mobilicity is
looking for a buyer while under creditor protection. Wind is
barely breaking even, with backer Vimpelcom Ltd writing
off its investment in the company.
Analysts and investors said the new auction could encourage
investors to inject capital into a fourth national operator via
the purchase of Wind or Mobilicity, or both, and perhaps
bundling other available spectrum.
There is speculation that regional operator Quebecor Inc
could play that role, while it's possible an
international operator could step in, or a financial investor.
Last year, sources said U.S. operator Verizon Communications
had considered a move into Canada, and decided against
Quebecor, Vimpelcom and Verizon declined to comment.
Quebecor's new chief executive said last month the company would
consider buying small players to become a national wireless
FREEDOM TO ROAM VITAL
Shares in Rogers and Telus fell more than 1 percent on
Monday. BCE also slipped, while Quebecor rose. But some
investors and analysts expressed skepticism about how much the
policy move would change the telecom landscape.
"Quebecor needs to have roaming figured out. Then it needs
to buy subscribers via buying Wind, Mobilicity or both," said
Ryan Bushell, a portfolio manager at Leon Frazer, which owns
shares in all of Canada's big three telecoms. "Then it needs to
build out its network with LTE (long-term evolution) technology
and then needs to attract subscribers. And that's all not going
to happen overnight."
Iain Grant, managing director of telecom consultancy
Seaboard Group, said that more important than the auction for
small operators is to be guaranteed reasonable access to the
networks of the established operators to enable more extensive
domestic roaming for their customers.
Of the 50 megahertz of spectrum being made available in each
region of the country, a single block of 30 megahertz will be
set aside for purchase by small players in regions where they
already operate, the government said.
Quebecor's Videotron currently offers wireless service in
Quebec and recently bought spectrum in other provinces.
The AWS-3 auction results will be known before an auction of
2,500 MHz frequencies scheduled for April 2015, the government
The same frequencies are being auctioned off in the United
States later this year and will likely raise $10 billion. The
huge size of the U.S. market should encourage handset makers to
quickly develop compatible devices.
(With additional reporting by Ashutosh Pandey in Bangalore;
Editing by Jeffrey Hodgson and Peter Galloway)