Canada eases curbs on foreign telecom ownership

Wed Mar 14, 2012 7:36pm EDT
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By Louise Egan

RUSSELL, Ontario (Reuters) - Canada's Conservative government said on Wednesday it would loosen curbs on foreign investment in the telecom sector, opting for a cautious approach that only allows non-Canadians to take control of carriers with a market share of 10 percent or less.

Canadian Prime Minister Stephen Harper has long hinted that he wants to lower barriers to foreign investment in the C$40 billion telecom sector to create more competition and provide a wider array of pricing options for consumers. Telecom services in Canada are among the most expensive in the world.

The move could effectively loosen the grip of Canada's Big Three carriers - BCE Inc's Bell Canada, Rogers Communications and Telus Corp - which now control 95 percent of the wireless market.

"This targeted action will remove a barrier to investment for the companies that need it the most," Industry Minister Christian Paradis said at a news conference. The government wanted to assure a fourth carrier offers services in every region of Canada, he said.

In a second step to liberalize the market, Paradis presented rules for a government auction of prized 700 MHz wireless spectrum that cap how much the Big Three will be able to buy. The auction of the low-frequency 700 MHz airwaves - which travels longer distances and penetrate walls more easily than other spectrum - will take place in early 2013.

The combined market share of recent entrants in the sector now hovers at about 4 percent, partly as the result of a provision in a 2008 auction that set aside spectrum for them.

Analysts said the shift may also signal a more open stance in general to foreign investment in other sectors.

"This doesn't just touch telecom," said Carmi Levi, an independent telecoms analyst, referring to the government's announcement on Wednesday. "It certainly sets a precedent for virtually every other sector in which the government has influence."   Continued...

Canada's Industry Minister Christian Paradis speaks during an announcement in Russell, Ontario March 14, 2012. REUTERS/Chris Wattie