The Canadian government has announced the results of its recent AWS-3 spectrum auction, which was held on 3 March and raised a total C$2.1bn.
The auction, which set aside 60% of the 50 MHz tendered spectrum for smaller players and new entrants, saw the…
The Canadian government has announced the results of its recent AWS-3 spectrum auction, which was held on 3 March and raised a total C$2.1bn.
The auction, which set aside 60% of the 50 MHz tendered spectrum for smaller players and new entrants, saw the country’s fourth carrier Wind Mobile increase its spectrum position by 180% after acquiring 30MHZ spectrum in Ontario, British Columbia and Alberta at the combined reserve price of only C$56.4.
“This much-needed spectrum will enable Wind Mobile to launch LTE and help level the playing field against the big three national carriers,” Wind Mobile founder and chairman Anthony Lacavera said.
Wind was able to pay less for the spectrum as bankrupt rival Mobilicity, which has been under creditor’s protection since September 2013, pulled out of the auction at the last minute due to lack of funding.
However, Dvai Ghose, head of research at Canaccord Genuity said that, while Wind has won a lot of spectrum at a bargain basement price, it is not clear who will finance its network upgrades and operating losses, estimating that these will require $1.5bn in financing.
According to RBC Capital Markets analyst Drew McReynolds, Wind Mobile has emerged from the auction as a stronger and recapitalised fourth national wireless player.
Quebecor-owned new entrant Videotron spent C$32m for licenses in Quebec and Ontario, increasing its spectrum position by 65%.
Incumbent telco Rogers did not secure any spectrum, while carrier number two Telus won licenses in British Columbia, Alberta, Manitoba, Saskatchewan, Ontario and Quebec for C$1.5bn, increasing its spectrum position by 16%.
“While this comes as a surprise, given Rogers’ rich spectrum position post the 700 MHz auction in 2014 and relatively high debt leverage, perhaps it is understandable,” Ghose said.
Bell paid C$500m in Atlantic Canada, Northern Quebec, Ontario and the far north, in line with analysts’ expectations.
Ghose believes the auction results highlight the Canadian government’s “inefficient spectrum strategy” as, although after the auction 25% of total Canadian mobile spectrum will be in the hands of new entrants, they only account for around 5% of Canadian wireless subscribers.
In his view, the auction has led to lots of unused or underutilised new entrant spectrum and lost revenue due to set aides for new entrants and caps for incumbents.
In the past few years, the country’s conservative government has tried to fuel competition by challenging the dominance of the three main operators, which hold a combined 90% market share.
Critics of its fourth-carrier policy have argued that it puts off foreign investments.
The country’s 2,500 MHz auction, which does not set aside spectrum for smaller players, is scheduled for April.
