Sprint, T-Mobile won't participate in Canadian 700 MHz auction
Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) confirmed Thursday that they joined follow U.S. company Verizon Communications (NYSE:VZ) in declining to participate in Canada's 700 MHz spectrum auction, set for January.
According to Reuters, AT&T (NYSE:T) declined to comment on whether it had submitted an application for the auction, which will start Jan. 14, 2014; it is unlikely AT&T will bid. While it's not exactly surprising that Sprint, T-Mobile and Verizon won't bid--the carriers likely are gearing for the upcoming 600 MHz auction in the United States--the news means that Canadian incumbents Bell Mobility, Telus and Rogers Communications will be in the driver's seat for the Canadian auction.
Following its $130 billion purchase of Vodafone's 45 percent stake in Verizon Wireless, Verizon said it would not enter the Canadian market. That boosted the stock prices of the Canadian incumbents, which control around 90 percent of the market there.
The Canadian government will publish a list of bidders for the auction on Monday, following Tuesday's deadline to submit an application and a refundable deposit, Reuters noted.
Analysts think private equity firms could try to consolidate the three, closely-held small operators that entered the industry after a 2008 AWS spectrum auction: Wind Mobile, Mobilicity and Public Mobile. Wind and Public have said they will participate in the 700 MHz auction, but Mobilicity has not confirmed whether it will.
"Recent private equity investments have been made in Public Mobile and Mobilicity, while Accelero remains an interested bidder for the Wind assets," Macquarie analyst Greg MacDonald told Reuters. "We have also heard that larger telco-focused private equity firms have remained interested in the event that Verizon does not invest."
Under existing Canadian rules, any new entrant could potentially bid in the 700 MHz spectrum auction for two of four prime blocks of the spectrum up for bidding, while the incumbents can only bid for one block each.
Meanwhile, the Globe and Mail reported that despite comments from Verizon Communications CEO Lowell McAdam earlier this month that Verizon never seriously considered a move into Canada, the company did make a serious push for Wind and Mobilicity.
According to the report, which cited unnamed sources, Verizon made a $340 million preliminary offer for Mobilicity over the summer in addition to a $680 million initial offer for Wind. The report said Verizon also looked at another way of entering the market that would not require it to buy spectrum, but would involve leasing space on an existing network. The report added that Verizon spent months studying the merits of both deals, an effort that included a large staff.
Verizon spokesman Bob Varettoni declined to comment but did confirm to the paper that the company did not file application papers for the 700 MHz auction.
- see this Reuters article
- see this Globe and Mail article
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