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Eight 700MHz licence winners spend CAD5.3bn

20 Feb 2014

Canada’s Minister of Industry James Moore yesterday (19 February 2014) announced the conclusion of the country’s 700MHz 4G mobile broadband spectrum licence auction. 97 regional licences were awarded to eight companies in the auction which finished on 13 February, meeting the government’s aim to license at least four wireless players in every Canadian region. Total revenue generated from the 700MHz auction was CAD5.27 billion (USD4.80 billion), the highest return ever for a wireless auction in Canada, beating the AWS 2100MHz spectrum auction in 2008 which raised CAD4.3 billion. The relative value of spectrum in Ottawa’s 700MHz sale was also higher compared to the 2008 700MHz licence auction across the border in the US, which gleaned USD19.1 billion – or quadruple the Canadian revenue to cover nine-times the population, TeleGeography notes. Moore said in a speech that Canadian operators obtaining licences will be able to start deploying 700MHz services in mid-April 2014.

The eight winners are listed below (number of paired/unpaired spectrum licences; price paid; licence population covered [of a total population of roughly 35 million]):

Rogers (22 paired; CAD3.292 billion; 33,368,699);

Telus (16 paired + 14 unpaired; CAD1.143 billion; 33,475,914);

Bell (17 paired + 14 unpaired; CAD565.7 million; 33,475,914);

Videotron (7 paired; CAD233.3 million; 28,020,943);

Bragg (Eastlink) (4 paired; CAD20.3 million; 3,101,204);

MTS (1 paired; CAD8.8 million; 1,206,968);

SaskTel (1 paired; CAD7.6 million; 1,039,584);

Feenix Wireless (100%-owned by Mobilicity chairman John Bitove, whose Obelysk investment firm owns a majority voting share and minority equity share in Mobilicity) (1 paired; CAD284,000; 107,215).

By province, 700MHz licences were awarded as follows:

Newfoundland & Labrador – Bell, Eastlink, Rogers, Telus;

Nova Scotia – Bell, Eastlink, Rogers, Telus;

Prince Edward Island – Bell, Eastlink, Rogers, Telus;

New Brunswick – Bell, Eastlink, Rogers, Telus;

Quebec – Bell, Rogers, Telus, Videotron;

Ontario – Videotron [south Ontario only], Eastlink [north Ontario only], Bell, Rogers, Telus;

Yukon, Northwest Territories and Nunavut – Bell, Feenix, Telus;

Manitoba – MTS, Bell, Rogers, Telus;

Saskatchewan – SaskTel, Bell, Rogers, Telus;

Alberta – Bell, Rogers, Telus, Videotron;

British Columbia – Bell, Rogers, Telus, Videotron.

Biggest spender Rogers acquired the prime ‘A’ and ‘B’ 12MHz blocks in Southern Ontario, Eastern Ontario, Southern Quebec, Eastern Quebec, British Columbia, Alberta, Newfoundland, Nova Scotia and New Brunswick. Rogers also acquired 12MHz of ‘C’ block spectrum in Northern Quebec, Northern Ontario, Manitoba and Saskatchewan. In total, Rogers’ new 700MHz licences cover roughly 95.3% of the Canadian population, with two blocks of contiguous, paired spectrum located in key rural and urban locations, and a 700MHz presence in all provinces/territories except Yukon, Northwest Territories and Nunavut, which it said will allow it to expand its multi-band LTE coverage to 99.7% of the population. Rogers added that its one-off cash investment of CAD3.29 billion was ‘in line with recent spectrum transactions’ in the US, where the price range for prime 700MHz spectrum in major states has been in excess of USD4.00 per MHz/population, adding that in the 2008 US 700MHz auction, the top 25 markets sold for USD4.50 per MHz/population, while by comparison Rogers paid CAD4.32 (USD3.94 at February 2014 exchange rates) per MHz/population for 700MHz concessions in the major markets across Canada with licence terms that are 33% longer than their equivalents in the US.

The CEO of second largest 700MHz investor Telus, Darren Entwistle, said the addition of the 700MHz spectrum will enable Telus to expand its LTE coverage into rural areas, extending its national 4G LTE footprint from the current 80% population coverage to 97% ‘well in advance of the auction’s build requirements’. ‘Moreover, the spectrum will enable us to further enhance our coverage in urban areas, adding much needed capacity,’ he added.

Wade Oosterman, president of Bell Mobility, announced that Bell already offers LTE services to 82% of the population, and the new 700MHz spectrum will allow Bell to expand LTE coverage to 98%, by launching services in smaller towns, rural locations and remote communities across the country including the Far North.

Perhaps the most notable winner in the 700MHz auction was Quebecor subsidiary Videotron, as the Quebec-based quadruple-play operator expanded its reach outside its home province to Ontario, Alberta and British Columbia, as well as buying additional spectrum in Quebec. Videotron announced its satisfaction in gaining access to potential coverage of 80% of Canadians for a significantly lower price than its larger cellular rivals.

Two qualified bidders did not win any 700MHz licences, namely TBayTel and Novus Wireless, while Wind Mobile withdrew from the 4G auction shortly before it commenced on 14 January 2014.

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