Canada offers more wireless airwaves to spark competition

Mon Jul 7, 2014 1:51pm EDT
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By Alastair Sharp and Euan Rocha

TORONTO (Reuters) - 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 VZ.N had considered a move into Canada, and decided against it.

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 carrier.