Verizon in Talks to Acquire WIND Mobile, Enter Canadian Wireless Market

According to a report from The Globe and Mail, Verizon is looking to enter the wireless market in Canada and in Ottawa’s eyes, could be that elusive ‘fourth carrier’ the federal government wants to increase competition:

Ottawa, which is weighing alternatives as it seeks to preserve its plan for enhanced wireless competition, views Verizon as the most likely foreign option. Verizon has held exploratory talks with investors in Wind Mobile – one of two struggling new entrants in the wireless market – in recent weeks, but those discussions are still at an early stage. AT&T Corp. of the U.S., Vodafone Group Plc of Britain and Telenor Group of Norway are other names circulating within the telecommunications industry as possible investors, sources said.

The report notes Verizon has held early talks with WIND Mobile, but AT&T, Vodafone and Telenor are other big wireless names being named as possible investors, say sources. Ottawa recently changed federal rules to allow foreign companies to own a Canadian wireless carrier as long as it has less than 10 per cent or less of marketshare.

The plan would be for Verizon to acquire a smaller wireless startup such as WIND Mobile and then engage in the upcoming new wireless spectrum auction to create the much-needed ‘fourth carrier’ notes two industry sources, with one saying “They [Verizon] are definitely taking a hard look right now.” Mobilicity is also being mulled as an option but WIND is seen as being the largest and healthiest startup carrier.

Verizon has a history in Canada and is familiar with the wireless market here as up until 2004, the carrier was a major investor and shareholder of TELUS.

It won’t be cheap to create a fourth carrier in Canada as one Dvai Ghose, telecommunications analyst at Canaccord Genuity, predicts it would cost close to $2 billion to bring WIND to a point where it is profitable–that figure includes spectrum acquisitions, network enhancements and consolidation costs.

Verizon is seen as a player with deep pockets as in the first quarter of this year the company generated close to $20 billion US in wireless revenue alone from its almost 100 million subscribers, which benefited from the company’s massive buying power for smartphones, offering aggressive prices for customers.

Early concerns of Ottawa delaying a WIND Mobile deal due to national security concerns over Huawei equipment would be eliminated as Verizon would replace that wireless gear with its own faster LTE hardware.

Back in March, the Huffington Post reported Verizon and AT&T were interested in acquiring WIND. It’ll be interesting to see what happens to WIND Mobile. Regardless of what happens to the company, a fourth carrier in Canada will have an uphill battle to climb to make up ground against Rogers, TELUS and Bell.