By Nirmala Menon
OTTAWA--The Canadian government said Wednesday it raised a
record 5.27 billion Canadian dollars ($4.76 billion) from an
auction of coveted next-generation wireless spectrum--money that
could help it achieve its goal of attaining a budget surplus in
2015 in time for the general election.
The amount raised was more than double preliminary market
estimates of around C$2.5 billion, and surpassed the C$4.25 billion
generated from the last national spectrum auction in 2008.
The auction, for blocks of 700-megahertz band wireless spectrum,
drew bids from BCE Inc., Rogers Communications Inc. and Telus
Corp., the three big wireless phone companies in Canada, and
several smaller regional players. Unlike the 2008 auction, the
government didn't set aside spectrum for new entrants. It did so
last time in an effort to foster greater competition in the sector
and to hold down prices for consumers.
Eight out of 10 bidders won a total of 97 licenses, the
government said. Rogers paid the most--C$3.29 billion--for 22
licenses. Telus paid C$1.14 billion for 30 licenses, and BCE paid
C$565.7 million for 31 licenses.
Quebecor Inc.'s Videotron unit won seven licenses, paying
C$233.3 million.
The 700 MHz wireless standard allows signals to be carried over
longer distances and to penetrate walls more easily. It also allows
carriers to offer subscribers more bandwidth-hogging movie and
music streaming services.
"This wireless spectrum auction is a clear win for Canadians,"
Industry Minister James Moore said in prepared remarks. "At least
four wireless players in every region of the country now hold
high-quality spectrum."
Ottawa had hoped that the auction would attract bids from
startups and foreign companies to generate more competition. But no
foreign players or startups participated in the auction.
Some potential bidders pulled out even before the auction kicked
off in mid-January, including Wind Mobile, a startup that entered
the market after the 2008 auction. Wind Mobile Chief Executive
Anthony Lacavera said last month that the firm was forced to pull
out because its major shareholder, VimpelCom Ltd., a big Russian
telecommunications firm, decided against funding its participation
in the auction. Private-equity firms Birch Hill Equity Partners
Management Inc., and The Catalyst Capital Group Inc. also didn't
participate despite initial interest.
There will be another auction in April 2015, this time for the
2,500 MHz spectrum, which would help companies deploy
next-generation networks to customers on their smartphones or
tablets.
The Canadian government last week unveiled a federal budget that
contemplates a narrower deficit of C$2.9 billion this fiscal year
and a surplus of C$6.4 billion in the year starting April 2015.
Write to Nirmala Menon at nirmala.menon@wsj.com
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