OTTAWA – Less than a month after registering as a bidder for the country's 700 MHz wireless spectrum, private equity investor Birch Hill Equity Partners has pulled out of the auction.
Industry Canada updated the list of bidders on Tuesday, noting that Birch Hill, which registered under the name BH Wave Acquisition Corporation, had withdrawn.
Dvai Ghose, Managing Director/Head of Research for Canaccord Genuity, speculated that the company may have declined to participate “because Birch Hill had no way of financing auction payments or perhaps Birch Hill realized that the Government is unlikely to allow new entrant buyers to flip spectrum to the incumbents anytime soon”.
“While Birch Hill’s exit is not overly material, it reinforces the incumbents’ strength, lack of interest in new entrants and the fact that auction proceeds may be very disappointing for the Government and encouraging for the incumbents”, Ghose wrote in a note to clients on Wednesday. “In our view, the market has failed to fully recognize the extent of the victory for the incumbents and is overly focused on relatively small regulatory issues like roaming fees.”
Ghose also wondered who will buy the fourth prime block of 700 MHz spectrum in Ontario, British Columbia and Alberta, noting that each incumbent can only buy one block and that “there are no other obvious bidders in these markets, with the possible exception of Wind, if it can actually secure financing.”
