Verizon Interested in Entering the Canadian Wireless Market

by Istvan Fekete on June 18, 2013

Verizon Wireless could be one of the few possible new entrants that can revive hopes of competition in the Canadian wireless market. According to a report from the Globe and Mail, the federal government views Verizon as the most likely foreign investor option to save its ambitions for a fourth wireless player in the country.

The Canadian mobile market is at a crossroads: each of the wireless startups have been put up for sale, with Public Mobile being the luckiest of them. It was recently acquired by two investment firms for an undisclosed amount.

But the other two — Mobilicity and Wind Mobile — remain in limbo: Ottawa has scrapped Telus’ plans to acquire Mobilicity, saying it won’t allow any wireless spectrum transfer to an incumbent until the original deadline of five years. As a result, Mobilicity is back on the auction block.

Although Wind Mobile’s Anthony Lacavera said the company’s initial offer for Mobilicity is still timely, the fate of Wind Mobile is also uncertain: Ottawa is delaying VimpelCom’s takeover of Wind, citing national security issues. The government’s main issue is that Wind has used a Chinese telecom company, Huawei, to build its core market, which makes Canadians vulnerable to Chinese spies, Ottawa claims.

This is the current setup of the Canadian wireless market and Verizon could be the knight in shining armour that could save the government’s initial plans if it acquires Wind Mobile or Mobilicity, or both.

However, any player interested in entering the Canadian mobile market should be ready to write a large cheque: Wind Mobile’s sale price is $500 million, but VimpelCom’s chief executive said he expects it would cost roughly $1 billion to push Wind to a point where it is not bleeding cash. This amount, however, is put by Cannacord Genuity analysts at $2 billion when wireless spectrum purchase costs are added.

Verizon, on the other hand, has the financial power to bring real competition to Canadian soil: it has massive buying power for smartphones, could compete on speed, and could change Wind’s gear to solve the national security issues cited by Ottawa.

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

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