The Canadian mobile landscape is about to change, and most of us will love it: Verizon has placed a $700 million opening bid for Wind Mobile and is in talks with Mobilicity, people familiar with the matter told the Globe and Mail.
Last week, the company’s chief financial officer publicly admitted that Verizon is dipping its toe in the water, but today’s news reinforces earlier rumours claiming the red US carrier is interested in entering the $19 billion Canadian wireless market.
However, the bill for entering the market won’t be small: analysts estimate the amount to be between $1 billion and $2 billion, which is the total bill for acquiring two struggling wireless startups — Wind Mobile and Mobilicity — and a possible participation in the federal government’s auction of wireless licences scheduled for next year.
Verizon’s re-entrance onto Canadian soil — it held 20% of shares in Telus in the company’s early days — could save the government’s efforts to establish for a fourth wireless player in each province, a condition wireless startups couldn’t meet for lack of financial power.
“We think Verizon remains very interested in the Canadian market as a potential growth opportunity. Benefits to the company include the opportunity to acquire an asset at a steep discount to book value, to acquire 700-MHz spectrum contiguous to its U.S. spectrum, to leverage existing Verizon products in the Canadian market and to achieve net roaming savings,” Greg MacDonald, a telecom analyst with Macquarie Capital Markets Canada Ltd., said in an e-mail.
The buying power of Verizon would reignite the much-needed wireless competition on Canadian soil, as it could acquire the latest smartphones at prices that potentially undercut the incumbents, and with the participation in the upcoming spectrum auction, it could create a much-needed national network.
However, it is unclear whether the deal will go though, as the U.S. wireless player is weighing up its options, but its entrance would certainly make many Canadian subscribers happy.
