The CFO of Verizon Communications has confirmed the incumbent is weighing up entering Canada’s wireless market.
Speaking at a conference in Washington DC yesterday, Fran Shammo said his company was looking at the opportunity. The comment followed a…
The CFO of Verizon Communications has confirmed the incumbent is weighing up entering Canada’s wireless market.
Speaking at a conference in Washington DC yesterday, Fran Shammo said his company was looking at the opportunity. The comment followed a report on Monday that Verizon had held exploratory talks with challenger brand Wind Mobile, valued at more than C$500m.
Canada’s government is determined to encourage the formation of a viable nationwide fourth player in the country’s wireless market and has made clear that it will not allow the three dominant operators to buy spectrum from the country’s smaller carriers.
Wind Mobile shareholder VimpelCom has previously considered exiting the telco, while fellow new entrant to the market Mobilicity is in serious financial difficulty after industry minister Christian Paradis effectively blocked a sale to Telus.
Meanwhile Public Mobile has been bought by two investment firms looking to capitalise on potential consolidation of the smaller operators. Videotron and Shaw Communications have also agreed to sell spectrum to Rogers, but if the government follows through on its words then it looks unlikely those transactions would be allowed to close meaning the frequencies may also be available for Verizon to buy, should it choose to enter the market.
Equity analysts in the country have doubted whether the returns are there for an outside player which would have to buy up smaller operators and invest in spectrum and networks. However, Verizon would be coming into a welcoming regulatory environment, and significant synergies could be created due to it being majority owner of the largest US wireless operator, Verizon Wireless.
A regulatory change last year means a foreign investor such as Verizon is now allowed to take full control of Canadian telcos, as long as the target has 10% market share or less. Should the Canadian telco grow its market share beyond that threshold at a later stage the foreign investor would still be allowed to own 100% of the company.
