Canada has raised C$755.37m (US$627.77m) from its 2,500 MHz spectrum auction, with cellcos Telus and Videotronspending the most.
The federal government’s provisional auction results show Telus, one the country’s top three cellular carriers, spent…
Canada has raised C$755.37m (US$627.77m) from its 2,500 MHz spectrum auction, with cellcos Telus and Videotronspending the most.
The federal government’s provisional auction results show Telus, one the country’s top three cellular carriers, spent C$479m on 122 licences – more than 40% of the total licences sold – covering a population of 33 million.
Barclays analyst Phillip Huang said in a note to investors that this has significantly narrowed the spectrum holding gap between Telus and its two major rivals: Bell Mobility and Rogers Communication.
Meanwhile, Videotron, which is looking at expanding nationally, shelled out C$187m for 18 licences covering a population of 21 million in its home market of Quebec, as well as in Ontario, Alberta and British Columbia.
Analysts agree that Videotron’s purchase of the 2,500 MHz airwaves, considered ideal for providing broadband services in rural areas, has strengthened its hand in a potential tie-up with Wind Mobile.
Huang said Videotron clearly has designs on becoming the country’s fourth national wireless player.
“By acquiring more key spectrum across Canada, Videotron is effectively increasing its bargaining chips to negotiate a partnership with Wind in the future, in our view.”
Similarly, RBC Dominion Securities analyst, Drew McReynolds commented: “With the company’s current spectrum holdings, a likely suitable wholesale roaming rate regime in place and what we believe is strong desire to find a workable partnership structure and business model, we expect the company to pursue partnership discussions with Wind.”
Bell and Rogers, which had already reached the spectrum cap in most markets, spent C$29m and C$24m for 51 million and 41 million licences respectively.
However, it was rural broadband provider Xplornet Communications which increased its total spectrum by the greatest percentage – 62% – during the auction. The New Brunswick-based company paid C$25m for 42 licences covering Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Alberta and British Columbia.
Last year, Xplornet, which has about 280,000 subscribers, announced plans to offer high-speed broadband internet services to 100% of rural Canadians by July 2017.
Other winners were CCI, TBayTel, Eastlink and MTS. Wind Mobile and small rural broadband provider SSi Micro participated in the auction but did not secure any frequencies.
McReynolds said his team believe the auction results reinforce its thesis that a stronger, recapitalised fourth national wireless player is likely to emerge this year or next.
