Wind Mobile Drops Out of 700MHz Spectrum Auction at the Last Hour
Looks like 10 companies remain to bid in the coveted 700MHz wireless spectrum auction, set to take place on January 14, 2014. The Globe and Mail reports Wind Mobile has pulled out of tomorrow’s spectrum auction after its foreign backer, Amsterdam-based VimpelCom decided against funding the wireless startup’s auction pursuits:
VimpelCom decided not to fund Wind’s 700 MHz spectrum purchases because of ongoing conflict over Ottawa’s foreign investment rules which, to date, have prevented it from taking formal control of the small Canadian carrier. The first round of bidding is set to begin on Tuesday; Wind was forced to drop out of the auction as it lacks the time to line up alternate financing.
Industry Canada’s website was updated to reflect the change and VimpelCom notified Ottawa of its decision hours prior. The decision comes as a blow to the Federal Government’s plans to increase wireless competition with a fourth player; Wind Mobile was the only wireless entrant startup to participate. Mobilicity is on the verge of bankruptcy, while Public Mobile was acquired by Telus late last year.
Wind Mobile CEO Anthony Lacavera said in a statement:
“Wireless costs are down almost 20 per cent in markets where Wind operates. It is a sad day for competition and real choice Canadian consumers and businesses that Wind is unable to participate in the 700 MHz auction,”
“Wind has emerged as the fourth carrier in Ontario, BC, and Alberta, but we have need of additional spectrum for LTE. Today’s development leaves us with a spectrum shortfall we must still address.”
VimpelCom spokesman Bobby Leach told the Globe:
We decided that we were not going to sponsor or fund Wind Canada’s participation in the 700 MHz spectrum auction at this time as we remain in discussions with the shareholder with majority voting rights and the government to craft a path forward to develop Wind Canada as a strong fourth player in Canada.
Without 700Mhz airwaves, Wind Mobile’s ability to actually compete with Rogers, Telus and Bell has been hindered as the former lacks spectrum to build faster LTE networks.
Sources tell the Globe Federal officials were said to be concerned a Russian company would control Wind’s infrastructure, hardware built by Chinese-owned Huawei. Despite headquartered in the Netherlands, VimpelCom’s major shareholder is Russian billionaire Mikhail Fridman. Other sources say Ottawa was also reportedly worried about the prospect of Huawei equipment, which is the core of the Wind wireless network.
With one less bidder in the auction, this news comes as a loss for consumers but positive news for the Big 3, as they have one less competitor to deal with. Wireless analysts have reiterated the 700Mhz auction is not expected to increase wireless competition in Canada, despite Ottawa’s aggressive ambitions.