TORONTO – Bell and Telus could be the winners when the 700 MHz wireless spectrum hits the auction block, predicts one industry analyst.
Responding to Cartt.ca’s report that Industry Minister Clement may accelerate the 700 MHz mobile spectrum auction in Canada, Canaccord Genuity managing director and head of Canadian research, Dvai Ghose, told investors Monday that the two big telcos appear to have an advantage over Rogers because they share spectrum, while Rogers does not have a national spectrum sharing partner.
“We also believe that the 700 MHz auction poses a key risk to cash flow and dividend growth for new (wireless) entrants like Shaw and Quebecor as 700 MHz spectrum could be quite expensive as it is ‘beach front’ (desirable) property”, he wrote.
Ghose elaborated that the spectrum is attractive to incumbents and new entrants alike because signals travel further at lower frequencies like 700 MHz, meaning less cell sites are required to cover a particular geography, and that lower frequencies also tend to offer superior in-building penetration which lessens the need for microcells and femtocells.
“However, what will be vital is the rules associated with the 700 MHz auction – in particular will it be, 1) a free for all, in which case incumbents with their large balance sheets will likely buy all the spectrum; 2) partially set aside for new entrants (a la the AWS auction where 40 MHz of the 105 MHz that was auctioned was reserved for new entrants); or, 3) only open to new entrants through the reintroduction of spectrum caps for the incumbents?”, he continued.
Ghose also urged investors not to “underestimate political risk for the incumbent wireless operators”, noting that “this Government has made it clear that they want more competition, lower prices and greater innovation from the Canadian wireless sector.”
– Lesley Hunter
