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TORONTO (Reuters) - Small Canadian wireless operator Wind Mobile might have snagged valuable spectrum in an airwaves auction this week at a bargain-basement price, an industry analyst said on Thursday after a report that a rival bidder may have dropped out.
The National Post reported late on Wednesday that Mobilicity, a struggling new entrant in the sector, was likely to have dropped out of the auction as a financing deal it had lined up may have fallen apart just before the auction began.
In a research note on Thursday, Canaccord Genuity's telecom analyst Dvai Ghose said that if the report is accurate, Wind may well have won valuable spectrum in the provinces of Ontario, Alberta and British Columbia that had been set aside for new market entrants for the reserve price of about C$56 million ($44.9 million).
Ghose had expected that Wind would have had to have paid as much as C$272 million to secure the spectrum it wants in those provinces.
Gaining the spectrum would allow Wind to roll out faster data services for their clients.
The results of the AWS-3 spectrum auction are set to be announced Friday. The Canadian government has set aside blocks of airwaves for new players in its ongoing auctions in an attempt to boost competition in a sector dominated by three big companies: BCE Inc (BCE.TO), Rogers Communications RCIb.TO and Telus Corp T.TO.
The way the auction rules are set up, new entrants are only allowed to bid on spectrum in regions where they already have operations. Also, the highest bidder only has to pay the amount bid by the second highest bidder in each market. Wind and Mobilicity were the only two qualified new-entrant bidders in British Columbia, Alberta and Southern Ontario.
If Wind bids in the Eastern Ontario region, which includes the country's capital, Ottawa, it will likely have to top a bid from Quebecor Inc QBRb.TO that is likely to bid on spectrum in that region as it already has some operations there.
Mobilicity and Wind declined to comment on the matter as all parties involved in the process are not allowed to comment until the auction results are announced.
Reporting by Euan Rocha and Alastair Sharp; Editing by Peter Galloway