The Canadian government has taken a decisive step towards opening its telecoms market to foreign investors by lifting foreign ownership restrictions on telcos with a 10% market share or less.
The foreign ownership rules – which state that Canadians…
The Canadian government has taken a decisive step towards opening its telecoms market to foreign investors by lifting foreign ownership restrictions on telcos with a 10% market share or less.
The foreign ownership rules – which state that Canadians must hold at least 80% of an operator’s voting rights and board positions – will remain in place for larger telcos.
In a speech yesterday, Canadian industry minister Christian Paradis also said that the government would be setting caps in its upcoming auctions of spectrum in the 700MHz and 2500MHz bands, which would mean that four or more players would win the spectrum in each licence area.
“This will enable new entrants to acquire this valuable spectrum and improve their ability to compete,” Paradis said.
The minister said that the 700MHz auction will take place in the first half of 2013, while the 2500MHz auction will follow within a year.
Companies with access to more than one block of spectrum, either through winning spectrum in the auction or through spectrum sharing, will need to deploy “new advanced services” to 90% of people in the coverage area within five years.
The government said in a separate statement that there would be measures in the 700MHz auction to ensure that people in rural areas would have access to the same “advanced services” as other Canadians.
The Canadian telecoms market is currently dominated by three players: Bell, Rogers Communications and Telus.
A set of smaller players entered the market in the country’s last major spectrum auction in 2008.
Disquiet over the spectrum rules
The relaxation of the foreign ownerships has been widely anticipated among market observers.
Speaking to TelecomFinance in February, Frost & Sullivan analyst Ronald Gruia speculated that America Movil and Vimpelcom could be two of the potential foreign players to move into the market.
Vimpelcom already has an indirect stake in the market through its shareholding in Wind Mobile.
Yet the new rules reportedly drew a mixed reaction in the Canadian telecoms community yesterday.
The Canadian newspaper Globe & Mail reported that Wind Mobile CEO Anthony Lacavera had criticised the new rules on spectrum, which he suggested would starve new entrants of frequencies.
Reuters reported that Lacavera had said that, given his understanding of the auction plan, his company would not bid for new frequencies, as the proposed 10MHz blocks on offer would not be enough for his company to deploy an LTE network to compete against the larger telcos.
