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Thread: Ottawa nixed SaskTel-Wind Mobile spectrum deal, sources say

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    Ottawa nixed SaskTel-Wind Mobile spectrum deal, sources say

    http://business.financialpost.com/20..._lsa=eb48-e9c3

    A proposed transfer of unused spectrum between two of Canada’s small wireless carriers was recently rejected by Ottawa, marking the latest transaction in the telecommunications sector that failed to win Industry Canada’s blessing.

    The Financial Post has confirmed that a deal that would have seen Saskatchewan Telecommunications Holding Corp. purchase two 10-year licences to wireless airwaves in Regina and Saskatoon from Toronto-based Wind Mobile Corp. was vetoed by Industry Canada officials weeks before the federal government’s AWS-3 spectrum auction on March 3.

    The proposed transaction between SaskTel, whose 630,000 subscribers account for almost 70% of Saskatchewan’s wireless customers, and Wind, which does not operate in the province, was estimated to be worth at least $20 million.

    According to sources, the deal was verbally communicated to government officials, but a written submission was not filed because of the negative response received from Ottawa at the time. Under the terms of the two licences, ownership can be transferred “in whole or in part” and “in both bandwidth and geographic dimensions,” subject to Industry Canada’s approval. The licensee is required to submit a transfer request in writing to Industry Canada for consideration.

    Officials from SaskTel and Wind declined to comment.

    “This is not something I’ve seen either company confirm publicly, and I’m not going to comment on a rumour or speculative deal,” Jake Enwright, spokesman for Industry Minister James Moore, told the Post when reached for comment.

    “The government will not approve spectrum transfer requests that decrease competition in the wireless sector,” Mr. Enwright added, noting that Ottawa wants four wireless competitors in every region.

    SaskTel has among the lowest data rates in Canada according to information filed with the Canadian Radio-television and Telecommunications Commission, although it has among the highest customer data usage rates in the country. The wireless provider sought out Wind’s two unused regional licences, which were acquired during the 2008 AWS spectrum auction, in the hopes Industry Canada would bless the deal between two small players — SaskTel as a regional fourth player and Wind as a new entrant and viable national fourth carrier — as fulfilling the objectives of the government’s policy.

    Sources familiar with the transaction said there are plans to resurrect the deal, especially now that SaskTel was shut out of the recent spectrum auction and its percentage of cellular airwaves in the province has decreased. “It’s obvious that others have more spectrum than SaskTel and the only unused licences are with Wind and Shaw,” said a source familiar with the situation. “Something is going to happen to that spectrum. It is now obvious that the fourth carriers will be the competition in that province.”

    Other potential deals are already being shopped around. Sources say Wind, which operates in British Columbia, Alberta and Ontario, has already made discreet overtures to unload other assets in its portfolio of unused spectrum in areas where it hasn’t deployed a network — namely Winnipeg, Brandon, Cape Breton, all of New Brunswick and Newfoundland and Labrador. The dormant licences were part of a package of licences acquired in the 2008 auction, which cost Wind $442 million. The company’s chairman Anthony Lacavera has said the upstart carrier will need to generate at least $300 million to build out an LTE network in the three provinces where it operates.

    Still, few telecom executives appear willing to upset Ottawa — at least until after the next spectrum auction on April 14. “It’s more of a timing issue,” said the source, adding that once those results are final, the government will have a clear picture of who owns what spectrum and where, allowing Industry Canada to make informed decisions about which transfers it will or won’t approve.

    Last year, the government blocked attempted transfers of spectrum, including the sale of dormant licences owned by Calgary-based Shaw Communications Inc. to Rogers Communications Inc. and the transfer of 83 spectrum licences owned by NextWave to a joint-venture of Rogers and Bell Canada. Last summer, Industry Canada rejected plans by Mobilicity, currently operating under court-supervised creditor protection, to transfer its spectrum to Telus Corp. for $350 million.

    During a press conference last week, Mr. Moore boasted that Ottawa’s policies have increased spectrum by 60% since early 2014. The concentration of spectrum owned by the three incumbents — Rogers, Telus Corp. and BCE Inc. — has decreased to 90% from 98% in 2006 and it’s expected the new entrants will account for 25% of the country’s cellular airwaves licences after next month’s auction.
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    This is exactly what I suspected WIND would do. Unload all their spectrum holdings outside their 3 core provinces and then use those funds to bolster the network.

    It's too bad that they couldn't take a different route and have a network sharing agreement instead the same way Videotron-Rogers created one.

    But maybe they couldn't care less because the government is probably going to make roaming rates so cheap that its better to just MVNO the rest of the country...

    Overall I am happy with the new management team. I hope we can see solid results by Q4 2015

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    It's disappointing, but not surprising, that WIND doesn't intend to be a player in Saskatchewan.
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    Quote Originally Posted by PhotoJim View Post
    It's disappointing, but not surprising, that WIND doesn't intend to be a player in Saskatchewan.
    Even Rogers doesn't want to be a player in Saskatchewan - it's the only province they don't even bother competing in.

    My guess is that the crown corporation status of SaskTel discourages others from investing

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    Quote Originally Posted by joeforshow View Post
    Even Rogers doesn't want to be a player in Saskatchewan - it's the only province they don't even bother competing in.

    My guess is that the crown corporation status of SaskTel discourages others from investing
    It sure seems that way, although it wouldn't take much for Rogers to be quite an effective player here. (Their new extended coverage solves this problem nicely, but not the way that I think they ought to have had to solve it.)

    SaskTel may be a Crown but they cover the province about as well as private companies are covering other provinces (Alberta has better coverage; Manitoba is similarly covered considering its large lakes; Atlantic Canada has better coverage but not massively better). Remember, even Fido came to Saskatchewan and put up a reasonable network (Regina + Saskatoon + Highway 11) quite quickly.

    Clearly SaskTel is it now (or use a different carrier that uses SaskTel), which means everyone will be sharing the same limited coverage in most parts of the province.

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    What ever happened to the Shaw spectrum that was/wasn't sold to Rogers? Will that deal ever close or are they waiting for a more opportune time, such as a regime change, to attempt finalising everything?

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    Quote Originally Posted by Mann Incognito View Post
    What ever happened to the Shaw spectrum that was/wasn't sold to Rogers? Will that deal ever close or are they waiting for a more opportune time, such as a regime change, to attempt finalising everything?
    The government doesn't want to give set aside spectrum to the big 3. I'm certain Wind or another small player could buy it
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    Yeah well there goes any pretense of WIND wanting to build a national network...

    It makes sense though. In particular if they sold some spectrum where they never expect to operate, it could give them some cash to buy extra AWS-1 spectrum from Mobilicity, Shaw, Videotron (southern Ontario) etc. for LTE.

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    I don't get it... Sasktel isn't considered one of the big 3 so why not let them do this?
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    Quote Originally Posted by fruvous View Post
    I don't get it... Sasktel isn't considered one of the big 3 so why not let them do this?
    That is kind of odd. The government's goal is to have 4 carriers in each province. Sasktel would be the 4th.

    I think this would be a good strategy for WIND at this point. Based on their original auction bidding, they did have the intention of operating a national network. But without Quebec, it's an uphill battle. None of the newer auctions are going to give them spectrum in Quebec without a big fight with Videotron.

    I think they've decided to concentrate on building out their existing network and just sell off all other original spectrum they got to Sasktel, MTS and EastLink. They could even make reciprocal roaming as part of the deal. This way they get cheaper roaming without building a network and the home carrier gets a guarantee that WIND won't be able to play in their backyard. Part of the plan should also be to acquire Shaw's spectrum out west and Videotron's southern ON spectrum, and buying Mobilicity.

    Now this all depends on whether Videotron itself has any national aspirations.
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    Quote Originally Posted by fruvous View Post
    I don't get it... Sasktel isn't considered one of the big 3 so why not let them do this?
    Maybe the regulators recognize that SaskTel will just share the spectrum with Belus anyway.

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    The point isn't to hurt the Big 3 in all markets. The point is to have for vibrant competitors in all markets. If Sasktel has 70% marketshare and lots of spectrum, I can understand why Industry Canada would be reluctant to let Sasktel consolidate further. The fourth competitor isn't a scrappy underdog in all markets.
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    Quote Originally Posted by cmstlist View Post
    Maybe the regulators recognize that SaskTel will just share the spectrum with Belus anyway.

    Sent from my Nexus 5 using Tapatalk
    I didn't think of that but of course this totally makes a tonne of sense...

    And so then MTS will be rejected too because of ROGERS.

    All Wind can aim for is to sell Northern Ontario and the Maritimes to Eastlink in exchange for a reciprocal roaming agreement with the relief of knowing that no 5th carrier would be possible for Eastlink.

    Unfortunately, the money will be peanuts... probably not even worth pursuing

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    Quote Originally Posted by joeforshow View Post
    All Wind can aim for is to sell Northern Ontario and the Maritimes to Eastlink in exchange for a reciprocal roaming agreement with ...
    In the end, Canada's fourth network will probably have to be a coalition of smaller carriers thus keeping prices low. But I doubt this will ever happen -- especially if Robelus has anything to do with it.

    Blocking this spectrum deal is a bad idea especially with another auction right around the corner. Hopefully Canadian investors can open up their wallets (and their hearts) to protect our wireless competition.
    People fight too much on this forum. Can't we all just be friends?

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    Quote Originally Posted by savbers View Post
    Blocking this spectrum deal is a bad idea especially with another auction right around the corner.
    After the next auction the government will have a much clearer picture of who has what spectrum - and therefore the government will be in a far better position to rule on spectrum transfers. It may be easier for companies to transfer spectrum after the next round.

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