The spectrum auction due to begin today in Canada has been hit by the last-minute withdrawal of Wind Mobile, the largest of the country’s new operators.
The principal backer of Wind, VimpelCom, decided to not fund a bid for spectrum in the 700MHz frequency, according to an email from Wind CEO Anthony Lacavera, cited by Bloomberg.
The withdrawal of Wind will do little to help the Canadian government’s efforts to boost competition in a market dominated by the ‘big three’ operators, Rogers Communications, BCE and Telus.
Efforts to boost competition include limiting each of the dominant operators to one block of airwaves in the auction. The 700MHz frequency airwaves being auctioned are suitable for streaming large amounts of data in densely populated areas.
According to analyst David Heger, without Wind’s participation there is a risk there could be no bidders for a fourth spectrum block in some markets, including British Columbia and Ontario.
The government previously tried to stimulate foreign investment in the country’s mobile market, ruling in 2012 that telecom carriers could have full foreign ownership if they had a market share of less than 10 per cent.
Verizon Communications expressed an interest in acquiring Wind and conducted talks with another Canadian start-up Mobilicity, but said in August last year it would delay its potential acquisitions of Canadian operators until after this month’s spectrum auction.
Shortly after, it emerged that no foreign operators registered interest in taking part in the process.
Despite the lack of a foreign bidder, Industry Minister James Moore said in a statement that the government’s policies have already increased competition and lowered prices. He added that this trend will continue “as a result” of the spectrum auction.
VimpelCom is understood to be looking to sell its stake in Wind, which may explain why it is unwilling to invest in the operator, despite additional spectrum potentially boosting its value.
Wind, which had more than 729,000 connections at the end of the fourth quarter of 2013, according to GSMA Intelligence figures, said the decision leaves it with a shortfall in spectrum that it must address.
In March 2013, VimpelCom apparently indicated that its Canadian operation was not part of its core business and was looking for an exit. The Amsterdam-based operator group subsequently dropped a bid to take control of Wind.
According to GSMA Intelligence, Rogers had 9.5 million connections at the end of Q4 2013, with BCE and Telus both having around 7.9 million. With just 28.7 million connections in the whole of Canada, the three operators hold 88 per cent of the market.
Wind Mobile and Mobilicity both launched their services in 2008, but have failed to break the stranglehold of the big three.