Wind Mobile has withdrawn from the 700 megahertz spectrum auction, something observers suggest is a blow to the Harper government's efforts to establish a fourth major wireless carrier throughout most parts of Canada.
The auction starts tomorrow for the much coveted 700MHz spectrum – considered prime real estate for wireless.
But Globalive Wirless Management Corp. which operates in Canada as Wind Mobile, announced today (January 13) it has withdrawn from the auction, after VimpelCom Ltd., the Amsterdam telecom that is the company's major shareholder, decided against funding the acquisition of more spectrum.
Meanwhile, financially troubled Mobilicity did not even participate in the spectrum auction, as it is under creditor protection, while it tries to find a prospective buyer.
One of those prospective buyers is Telus Corp. (TSX:T), which has tried to buy the financially troubled company, only to be have the bid rejected by the federal government, which is trying to avoid the overconcentration of spectrum among Canada's big three telecoms.
Wind Mobile CEO Tony Lacavera tweeted that, despite the withdrawal, "It is business as usual at Wind - we do need more spectrum so I am not happy we had to withdraw from 700 but onwards and upwards for here!"
The prices that the government expected to fetch from the spectrum auction were already predicted to be lower than originally anticipated after Verizon Communications Inc. (NYSE:VZ) made it clear it had no plans to enter the Canadian market.
Ottawa stands to make about $800 million less from the sale of wireless spectrum than it might have generated had some large player, such as Verizon or AT&T (NYSE:T), entered the Canadian wireless market, according to a Scotiabank Capital Inc. analysis. Wind's withdrawal from the auction could put even more downward pressure on that estimate.
"It's a huge benefit to the incumbents, no question," said telecom consultant and analyst Mark Goldberg. "And it's going to dramatically reduce the amount of money that the federal government raises from the auction because there's going to be less bidding."
He added it calls into question the Harper government's telecom policies, including its rules around foreign investment in the Canadian wireless space.
As he points out, Vimpelcom-Wind was the only new entrant in the Canadian wireless space that already has spectrum and the financial wherewithal to acquire more.
"These guys have spectrum, they have an opportunity to be the only new entrant bidder in Canada's three most prosperous provinces and yet they can't make the business plan work to continue investing in Canada."
He said Wind's withdrawal should be "a wakeup call" that Canada's telecom policies aren't working.
