OTTAWA (Reuters) - Birch Hill Equity Partners Inc, a Canadian private equity fund, has registered to lobby Ottawa over investment in wireless carriers, lending credence to the idea it wants to buy two small wireless firms and elbow aside a possible move into the Canadian market by Verizon Communications Inc VZ.N.
Sources have tipped Birch Hill as a possible bidder for controlling stakes in small players Wind Mobile and Mobilicity, two newcomers in the market, with financial help from market leader Rogers Communications Inc RCIb.TO.
Birch Hill registered with the federal Registry of Lobbyists (link.reuters.com/hym42v) on August 8 with plans to lobby the prime minister's office and the Industry Department on the topic "Telecommunications Policy Framework with regard to investment in wireless carriers in Canada".
The Toronto-based fund was not available to comment on Wednesday.
Canada’s Conservative government and the Big Three Canadian phone companies - Rogers, BCE Inc BCE.TO and Telus Corp T.TO - are embroiled in an increasingly nasty and public dispute over telecom sector rules that the government says are designed to boost competition and the companies say favor Verizon’s entry.
Verizon has declined to comment in detail on any plans for Canada, but sources familiar with the matter have said the U.S. company has offered to buy Wind Mobile for $600 million to $800 million, and is in talks to acquire Mobilicity.
Under current rules, the Big Three are not allowed to acquire the two small players’ spectrum, as it was intended for new entrants.
Also, in an auction of spectrum next year, Rogers, BCE and Telus are each limited to bidding on one of four prime blocks of spectrum, whereas new entrants, including Verizon, may bid for two.
In a high-profile lobbying and advertising campaign, the three companies say the rules will cost Canadian jobs, and BCE board member Anthony Fell said on Tuesday that new Industry Minister James Moore had been disrespectful in allocating only half an hour apiece to talk with the phone company bosses.
“To be frank, there is an arrogance about both the ministry and the department, which I believe is inappropriate,” he wrote in an open letter to Prime Minister Stephen Harper.
In response, Moore accused Fell of engaging in "misinformation," and blasted "dishonest attempts to skew debates via misleading campaigns". (link.reuters.com/sym42v)
The companies say they have no plans to stop their lobbying.
“We think this is an important issue for Canadians. We’ll continue to work to make sure they understand the consequences of current government rules, which give an unfair advantage to large foreign players,” Rogers spokeswoman Terrie Tweddle said.
But it is far from certain that the government would approve any bid from Birch Hill, given Ottawa’s focus on trying to drum up new competition to force the three dominant players to lower cellphone fees.
The Globe and Mail newspaper said on Wednesday that Verizon and Canadian officials held “exploratory talks” in Ottawa on May 21 about wireless opportunities, and the phone companies say Canadian officials also went to New York to court Verizon.
Asked for comment, Moore’s spokeswoman, Jessica Fletcher, would say only that departmental officials regularly meet telecom representatives.
Additional reporting by Alastair Sharp; Editing by Janet Guttsman and Peter Galloway