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Verizon looks at Canada; competitors get antsy

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VERIZON Wireless says it's still eyeing the possibility of entering Canada's wireless market.

"We continue to explore and have discussions, but at this point it's really just an exploratory exercise," said Verizon's chief financial officer Francis Shammo during a conference call Thursday.

The company said it sees ripe opportunity in Ontario and Quebec, which are also adjacent to Verizon's U.S. properties.

Verizon is also interested in participating in a January spectrum auction for the 700-megahertz frequency.

"It mirrors up exactly with what we launched here in the United States," said Shammo.

However, he cautioned Canada's regulatory environment and rules on foreign takeovers could pose challenges.

Ottawa recently began allowing foreign takeovers of telecom companies that have a 10 per cent or less share of the market.

Verizon has reportedly been in talks to acquire startup carrier Mobilicity, and there are reports it has made an initial $700-million offer for Wind Mobile, another of Canada's small telecoms.

Maher Yaghi, an analyst at Desjardins Securities, said if Verizon decides to enter the Canadian wireless market, it could have a huge effecct on incumbents BCE Inc., Rogers Communications Inc. and Telus Corp.

"Verizon has very, very deep pockets," said Yaghi.

"We're used to saying Bell and Telus and Rogers are big companies and they make a lot of money, but if they go up against Verizon -- it's not an even fight."

The entry of Verizon could have a material impact of 10 to 18 per cent on the incumbents' stock prices, Yaghi wrote in a report.

And if Verizon provides coast-to-coast service in Canada, it could snatch up as much as 10 or 15 per cent of the market after a few years, he said.

"Verizon still doesn't have all the pieces in place to enter the Canadian market," said Yaghi.

"I think they need to figure out a few things first. On the regulatory side, they want to make sure the spectrum auction stays as presented by the government right now. They don't want any of the rules to change."

The current rules on the sale or transfer of radiowaves used to operate cellphone networks don't allow incumbents to bid on and win more than one block, but this doesn't apply to new entrants, said Yaghi.

"The rules were set up for small entrants, to entice them to come to Canada, but maybe not a big company like Verizon," he added.

Telus Corp. called on Industry Canada to level the playing field so a "foreign behemoth" such as Verizon doesn't have an unfair advantage over incumbent Canadian carriers.

"We welcome competing with anyone, even an international giant such as the Verizon organization," said Josh Blair, the company's chief corporate officer.

"We just believe it needs to be on a fair basis and on a level playing field. They should be treated the same way as Telus or Bell or Rogers when it comes to the acquisition of spectrum."

 

-- The Canadian Press

Republished from the Winnipeg Free Press print edition July 19, 2013 B11

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