By Ben Dummett
TORONTO--Canadian mobile phone startup Wind Mobile said Monday
it pulled out of the upcoming government auction for
next-generation wireless spectrum, representing another blow for
the country's effort to drive down consumer pricing for mobile
services.
Currently, Canada's big three wireless phone companies--BCE Inc.
(BCE), Rogers Communications Inc. (RCI) and Telus Corp.
(TU)--dominate the market, with about 95% share collectively. The
Canadian government was hoping its planned auction, starting
Tuesday, to sell blocks of its coveted 700 megahertz band wireless
spectrum would attract bidders from new entrants and foreign
telecommunications companies to generate more competition.
The government was counting on Wind, as one of Canada's largest
new startups, to be among those bidders. But Wind was forced to
pull out of the auction because its major shareholder, VimpelCom
Ltd. (VIP), a big Russian telecommunications firm, decided against
funding Wind's participation in the auction, Anthony Lacavera,
Wind's chief executive, said in an email.
"Wind needs more wireless spectrum so it is very unfortunate
Wind is unable to participate in the 700 Mhz auction," Mr. Lacavera
said.
Wind's decision comes after Toronto-based private-equity firm
Birch Hill Equity Partners Management Inc. in October pulled out of
the planned auction. Meanwhile, no big foreign carriers are
participating in the auction to challenge the Canadian
companies.
A Canadian government representative couldn't be reached for
comment.
Wind's decision also likely signals total auction proceeds for
the government will be even less than some already dour predictions
from analysts.
Before Wind's announcement, Canaccord Genuity forecast the
auction would raise about 2.5 billion Canadian dollars for the
government ($2.29 billion), down from the C$4.25 billion the
government collected from the last spectrum auction in 2008.
The 700 Mhz wireless standard facilitates the carriage of
signals over longer distances and makes it easier for signals to
penetrate walls and structures. It also allows carriers to offer
subscribers more bandwidth hogging movie and music streaming
services.
Write to Ben Dummett at ben.dummett@wsj.com
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