Canada Needs Foreign Capital to Support Wireless Competition, Says Paradis

by Istvan Fekete on March 27, 2013

The Minister of Industry, Christian Paradis, says Canada’s wireless industry is in need of foreign capital to support competition. When asked if he would prefer a foreign-backed company or one of the incumbents buying Wind Mobile, he said, “What we want is to have more competition. We need foreign capital.”

His comments come hot on the heels of Dutch telecom company VimpelCom considering the sale of its Canadian business, Wind Mobile. As we previously reported, VimpelCom has begun collecting bids, and Wind’s founder Anthony Lacavera has already placed his bid backed by the Egyptian billionaire Naguib Sawiris, the original backer of the Canadian wireless start-up.

But it turns out Lacavera isn’t the only one eyeing up Wind Mobile. According to Huffington Post Canada sources, U.S. players could be interested in bidding on the company. In the case of a successful acquisition, this would be the first American company to own a telecom company on Canadian soil, after years of foreign ownership restrictions.

However, with the Dutch telecom giant VimpelCom becoming the full owner of Wind through its subsidiary Orascom, it shows that restrictions have been relaxed, with a single aim: To boost competition in the market. The upcoming wireless code and scheduled wireless spectrum auction should also help in this regard.

A U.S. telecom company bid would make sense for several reasons: relatively low cost of entry; similar business models; and carriers have previously shown interest in Canada (remember, both AT&T and Verizon held minority stakes in Rogers and Telus, respectively).

However, what the Cannacord Genuity analysts don’t mention is T-Mobile’s recent iPhone 5 launch announcement and a totally new business model, which scraps the two-year contract and replaces it with an attractive offer. This is precisely what the Canadian market currently lacks.

Important information: The deal between Apple and T-Mobile also means that iPhones users buy from T-Mobile will come factory unlocked and compatible with Wind Mobile and Videotron’s AWS spectrum.

Backed by this fact, T-Mobile can easily become one of the bidders interested in acquiring Wind and its AWS spectrum. And yes, this could really boost competition in the Canadian wireless market.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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