No big foreign telecoms in Canada auction, boosting domestics

Mon Sep 23, 2013 3:51pm EDT
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By Randall Palmer and Louise Egan

OTTAWA (Reuters) - Major foreign telecommunications companies have decided against registering for a Canadian wireless spectrum auction, in a setback for the government's plans to introduce more competition into the mobile telephone sector.

The lack of big foreign entrants in a list of bidders that the government published on Monday is good news for the dominant Canadian companies - Rogers Communications Inc, BCE Inc and Telus Corp.

Shares of Rogers, BCE and Telus rose in morning trading. All three stocks had taken a beating in June on reports that Verizon Communications Inc was looking to enter the Canadian telecommunications market. Verizon later said it would not do so.

In all, 15 companies registered to bid on the 700 MHz spectrum in an auction that kicks off on January 14.

The process may last two to seven weeks, based on how long similar auctions have taken internationally.

"We view the list as a key positive for the incumbents and a key disappointment for the government, which wants four carriers in every market," Dvai Ghose, head of research at Canaccord Genuity in Toronto, said in a research note.

The Conservative government has tried to ensure a strong fourth player could challenge the incumbents in each region of Canada, and it eliminated foreign ownership restrictions on small companies to try to attract competition. There are smaller fourth players in some parts of the country.

"Surely now the government realizes that the market will not support four carriers per market and must rethink its failed wireless policy," Ghose said.   Continued...

A pile of signs is pictured after a rally held by the Unifor union to protest against the possible entry of U.S. telecommunications firm Verizon into the Canadian wireless market in Toronto, in this August 30, 2013 file photo. REUTERS/Mark Blinch