The head of Wind Mobile says he will take another look at buying Mobilicity if U.S. telecom giant Verizon puts off buying his company and its struggling, small competitor.
CEO and chairman Anthony Lacavera says his AAL Group will rethink the possible purchase of Mobilicity since there could be one less bidder for it, according to a story in Thursday's Globe and Mail.
Verizon has postponed its decision on buying either Mobilicity or Wind Mobile until next year, according to the Globe and Mail, and will instead focus on whether to take part in January’s much-anticipated auction of the 700 MHz spectrum.
Verizon touched off a storm of controversy when it said it might enter Canada by buying Wind Mobile or Mobilicity, young upstarts that have struggled under the dominance of the country’s biggest telecom companies, Bell, Rogers and Telus.
Ottawa says more competition will be good for consumers while the Big 3 have cried foul over what they say is preferential treatment of a foreign competitor. They are running a massive ad campaign aimed at swaying public opinion against Verizon and Ottawa.
Verizon may have changed tactics
Companies have until Sept. 17 to sign up for the spectrum auction, which will begin Jan. 14.
Verizon may have lost interest in Canada because of the furor, or may have changed tactics, according to a note from Dvai Ghose, head of Canadian research at Canaccord Genuity.
Going to auction after buying a company would force Verizon to purchase 700 MHz spectrum "almost regardless of valuation," or be stuck with Wind and Mobilicity’s current, less desirable AWS spectrum, Ghose wrote.
"We wondered why Verizon would want to acquire Wind and Mobilicity ahead of the auction and thereby potentially become a ‘hostage’ to the auction," he added.
The auction and the available blocks of "prime" 700 MHz spectrum — radio waves needed to operate cellphone networks — are potential game-changers for mobile operators. It is the most significant sale of wireless airwaves since 2008.
Verizon, one of the largest mobile service providers in the world, would nonetheless face significant challenges in Canada, according to Ghose, including possible regulatory red tape, lack of distribution and costly upgrades to operations at Wind and Mobilicity.
Shares of Canada's big three surged following word of Verizon's reported change of direction. By mid-afternoon Telus was up 4.6 per cent to $32.19 on the Toronto Stock Exchange, while Rogers rose 4.5 per cent to $42.25. In New York, Bell was up 1.9 per cent to $41.27.
Verizon stock was down less than one per cent to $48.49 US.