Fitch Evaluates Verizon's Potential Canadian Wireless Investment
CHICAGO -- August 8, 2013
In a new special report, Fitch Ratings discusses the challenges, opportunity
and probability of Verizon Communications Inc.'s (NYSE: VZ) entry as a viable
fourth wireless operator in the Canadian wireless market.
In June 2013, Verizon acknowledged that it was exploring its options to enter
the Canadian market. Since entering the market beginning in late 2009, the
existing competitors (the new entrants) to the three incumbent operators-Bell
Canada, Inc., Rogers Communications, Inc., and TELUS Corp.-have struggled.
While hurdles remain, certain conditions are favorable for entry into the
Canadian market, including the relaxation of foreign ownership restrictions,
an upcoming spectrum auction, and new entrants that are potentially for sale.
Yet challenges remain, including significant investments in possible
acquisitions, spectrum and needed network investments, all to compete against
three strong incumbents.
Importantly, applications to participate in a January 2014 auction for highly
desirable 700MHz spectrum are due in September 2013 and accelerate the
timetable for companies looking to enter or increase their investment in the
Canadian wireless market.
A decision by Verizon to enter the Canadian wireless market is not likely to
have an effect on Verizon's credit profile. In Fitch's opinion, there is
potential longer term pressure on the incumbents in the Canadian market,
depending on how aggressive Verizon would be in its strategy in acquiring
existing new entrants, bidding on spectrum, and investing in its network.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 5, 2013);
--'Rating Telecom Companies - Sector Credit Factors' (Aug. 9, 2012).
Applicable Criteria and Related Research: Verizon--Heading to Canada?
Corporate Rating Methodology: Including Short-Term Ratings and Parent and
Rating Telecom Companies
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John C. Culver, CFA
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
Brian Bertsch, +1-212-908-0549
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