Globalive's Wind Mobile withdraws from Canada wireless auction

Mon Jan 13, 2014 9:31pm EST
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By Alastair Sharp

TORONTO (Reuters) - Globalive's Wind Mobile has withdrawn from a major Canadian auction of wireless spectrum, dealing a blow to government efforts to spur competition and boosting the prospects of the three big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 VIP.O, decided not to fund its participation.

The move all but assures that the country's biggest telecommunications providers, BCE Inc's (BCE.TO: Quote) Bell, Rogers Communications Inc (RCIb.TO: Quote) and Telus Corp (T.TO: Quote) - 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.   Continued...

WIND Mobile cell phones are displayed at a retail store before the official launch of WIND Mobile, a new cellular service for the Canadian market, in Toronto, December 16, 2009. REUTERS/Mark Blinch