Credit crisis may delay Canada wireless plans

Mon Sep 22, 2008 12:27pm EDT
 
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By Wojtek Dabrowski - Analysis

TORONTO (Reuters) - Tight debt and equity markets mean that newcomers to Canada's wireless sector could be delayed in launching services to compete with the country's Big Three carriers.

Privately held Globalive Communications, as well as publishing and media group Quebecor Inc and other potential new entrants, won wireless spectrum in this summer's C$4.25 billion ($4.10 billion) government auction.

However, obtaining financing for creating a network could prove difficult because of the meltdown in the U.S. financial services sector and its related fallout.

"It's a scary time to be looking for financing in any field, let alone telecommunications, especially when you're looking at a multibillion-dollar price tag to build out your network," said Carmi Levy, an industry analyst at AR Communications.

"The outlook today is much darker than the outlook was even a month ago," Levy said.

If newcomers have trouble obtaining the required funds to create a new network, one of the key aims for the government's spectrum auction could go unfulfilled: increased competition.

Canadians have long complained of expensive service plan prices and while the Big Three -- BCE Inc, Telus Corp and Rogers Communications Inc -- claim that competition is fierce, users often decry what they see as a monopolized market.

Globalive -- best known for its Yak discount long-distance service -- has said it wants to roll out service in the second half of 2009. It has spectrum across Canada except in the province of Quebec, where Quebecor was a big winner during the auction.   Continued...