TORONTO – Scotia Capital analyst Jeff Fan told investors on Wednesday what many had already expected: None of Verizon, AT&T, Sprint, or T-Mobile USA have submitted applications to take part in the 700 MHz wireless spectrum auction here, he wrote in a note to clients, after speaking with officials at each company.
This is good news for Canadian telecom shareholders. “We believe the absence of a large US operator removes a threat for the Canadian wireless carriers,” he wrote. “We believe their decisions to not enter is due to their focus on the domestic market, the lack of attractive return in entering Canada, the potential regulatory backlash in the U.S. (for VZ and AT&T), and Canadian regulatory uncertainty. Although there is still speculation about other large global operators being involved, we do not believe they would have the same impact on Canada as the U.S. carriers.”
We’ll all find out just who is interested on September 23 when Industry Canada is supposed to publish the list of applicants. Wind and EastLink have publically announced they are in. However, when it comes to Wind “we believe there are still uncertainties related to its funding, especially given Vimpelcom's primary intent to exit Canada. Some financial players may have submitted applications given the low refundable deposits required, but we believe the limited transferability of the licenses increases the risk and lowers the value they place on the spectrum licenses,” concluded Fan.
Even that list is not a final lineup of bidders, since any of them can pull out, even at the last minute before the January 14, 2014 auction start, and have their deposits refunded.
– Greg O’Brien
