June 17, 2013 10:15 am
Things could be getting a bit more interesting in Canada. According to the Globe and Mail this morning Verizon Wireless – the united States carrier that has over 100 million subscribers and quarterly revenues of $20 billion – might make a play into Canadian territory again.
Verizon is the key lead in a story that says they’re looking to set up shop in Canada and create the much talked about 4th national carrier the government desperately wants. Verizon and WIND Mobile have reportedly engaged in “exploratory talks with investors,” but Mobilicity is also a consideration.
The Globe notes that “The game plan would be for Verizon to take over a smaller player such as Wind Mobile and participate in the coming auction of new wireless spectrum to create a strong fourth carrier, said two industry sources familiar with the situation. The most attractive target is Wind, the larger and healthier of the two small operators, but Mobilicity is also an option. ‘They [Verizon] are definitely taking a hard look right now,’ said one source.”
The government changed the foreign ownership rules last year that allows non-Canadian companies to own a Canadian carrier that has 10% market share or less – so WIND and Mobilicity would be a perfect target. WIND Mobile currently has over 600,000 subscribers and Mobilicity has 250,000 subs. AT&T, Vodafone Group and Telenor were also included in the report, but lacking were details of any takeover talks.
The 700Mhz spectrum auction is scheduled to start January 14th, 2014.
Update: We’ve received a note that Scotiabank analyst Jeff Fan sent to his clients stating that he sees the Globe’s report as “noise… like many other headlines over the past few weeks.”
Scotia believes that Verizon taking over WIND is “highly unlikely” because “VZW cannot invest in wireless outside the continental U.S. due to the VZ/Vodafone shareholder agreement and it would be unlikely that VZ would invest in wireless outside of VZW… We do not believe VZ sees Canada’s 4th operator as attractive based on the track record, the lack of spectrum and inferior network. We also believe that VZ does not see the Canadian regulatory environment as stable based on the policies that the Canadian government has put in place to artificially support a 4th operator.”
Update #2: The Globe has responded and confirmed that talks between Verizon and WIND Mobile are happening. According to a post on Twitter, Globe’s telecom reporter Rita Trichur stated “Attention all naysayers on Bay Street and beyond … Verizon CFO confirms the story @globeandmail broke yesterday to the Wall Street Journal.”
The story on the Globe now quotes Fran Shammo, Verizon CFO, as saying “We’re looking at the opportunity. This is just us dipping our toe in the water.”
Of course, talks versus a final deal could be months/years away.