Canada Wireless Auction in Disarray After Wind Pulls Out

Canada’s efforts to boost competition in the wireless sector is in disarray after the largest of the country’s new operators pulled out of a spectrum auction on the eve of the bidding.

Wind Mobile withdrew from the auction that begins tomorrow after its principal backer, VimpelCom Ltd. (VIP), decided not to fund its bid, Wind Chief Executive Officer Anthony Lacavera said in an e-mail. Wind, which has more than 650,000 subscribers in Canada, said exiting the auction leaves it with a spectrum shortfall it must address.

Wind Mobile dropping out ruins the government’s plans to open up the market to more competitors, said David Heger, a St. Louis-based analyst with Edward Jones & Co.

“It really just leaves the three big players and that’s it,” Heger said in a phone interview.

The federal government has sought to increase competition in the wireless industry by limiting the three largest carriers, BCE Inc. (BCE), Telus Corp. (T) and Rogers Communications Inc. (RCI/B), to one block of airwaves each. With the departure of Wind, there is now the risk there will be no bidders for a fourth block in some markets including British Columbia and Ontario, Canada’s biggest province, Heger said.

The auction is for airwaves in the 700-megahertz frequency, prized because it allows carriers to more easily stream data-heavy content in densely populated areas.

Wind Mobile was expected to buy blocks in B.C., Alberta and Ontario, said Dvai Ghose, a telecommunications analyst with Canaccord Genuity Group Inc.

To contact the reporter on this story: Gerrit De Vynck in Toronto at gdevynck@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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