Verizon Communications (NYSE:VZ) is considering jumping into the Canadian wireless market and could purchase upstart Wind Mobile in order to do so, Verizon confirmed. However, the company said it has not yet taken any firm steps to get into the market.
"We're looking at the opportunity" to get into Canada, Verizon Communications CFO Fran Shammo said in an interview with The Wall Street Journal. "This is just us dipping our toe in the water."
Shammo declined to comment on any specific talks with Canadian carriers. However, Verizon spokesman Bob Varettoni later confirmed in a statement sent to multiple news outlets that buying Wind Mobile is one of many options the company is considering. "We constantly evaluate a wide variety of business opportunities, and this is one of many," he said. "We have no further comment."
Earlier this week the Globe and Mail reported that, according to unnamed sources, Verizon held exploratory talks with Wind Mobile investors. The report also named AT&T (NYSE:T), Vodafone and Telenor as potential investors. Wind Mobile also has been approached by suitors from Canada and elsewhere, Bloomberg reported.
Verizon's entrance into the market would likely be encouraged by the Canadian government, which is trying to stimulate more competition in the wireless market, but Shammo warned that unspecified regulatory issues could present an obstacle. In 2008 the Canadian government held a spectrum auction in which Wind Mobile and fellow new entrants Mobilicity and Public Mobile purchased spectrum. While the new entrants have helped put some downward pressure on prices, they have struggled against incumbent carriers Telus, BCE's Bell Mobility and Rogers Communications. The big three players control around 90 percent of the market, according to Bloomberg,
Canada plans to hold an auction of 700 MHz spectrum in January, which could potentially align with Verizon's holdings. Verizon Wireless uses 700 MHz Upper C Block spectrum for its LTE network.
Analysts, however, are skeptical that Verizon will take the plunge. "We continue to believe that the chances of Verizon buying a wireless new entrant and funding spectrum auctions, consolidation and network upgrades remain low," Canaccord Genuity analyst Dvai Ghose wrote in a research note to clients, according to the Globe and Mail.
"The key question is whether the capital and time commitment is worth the prize," RBC Capital Markets analyst Drew McReynolds told Bloomberg. "At this juncture, we are not convinced the prize is big enough."
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