Newspaper article The Canadian Press

Will US Telcos Find Interest in Canada? Don't Count on It, Say Analysts

Newspaper article The Canadian Press

Will US Telcos Find Interest in Canada? Don't Count on It, Say Analysts

Article excerpt

US interest in Cdn telcos? Unlikely: analysts


MONTREAL - Big U.S. carriers Verizon and AT&T could find access to Canada's wireless market too small for their liking, with new entrants like Wind Mobile or Mobilicity offering few incentives to head north, say telecom analysts.

"If you wanted to come into Canada, you'd want to come in to dominate it," said Iain Grant of the SeaBoard Group.

"These are companies that make big bets for big pots."

Foreign carriers in Canada are restricted to buying wireless companies that have 10 per cent, or less, of the marketplace. Such a small piece of the Canadian market wouldn't do much to improve Verizon's or AT&T's financial results, Grant said.

"Making a little bet for a marginal player, even if it did really well, wouldn't actually move your stock price," he said.

The Globe and Mail reported that Verizon has talked with Wind Mobile investors and also flirted with the possibility of picking up Mobilicity. AT&T, Norway's Telenor and Great Britain's Vodafone were also cited as possible investors, it said.

But those transactions might offer too small a share of the Canadian market to keep U.S. telecom giants interested.

The federal government lifted restrictions on foreign ownership for small telecom companies more than a year ago to help encourage competition. Industry Minister Christian Paradis has said that Ottawa is committed to having a fourth wireless player in every region of the country.

Newcomers to the Canadian wireless industry haven't grown as quickly as hoped.

Although Wind Mobile has more than 600,000 subscribers, it fell short of its goal of 1.5 million subscribers after its launch in 2009.

Mobilicity, which was in the crosshairs of a Telus Corp. (TSX:T) acquisition before it was nixed by Ottawa, has about 250,000 subscribers and is awash in debt.

The country's three biggest carriers Rogers (TSX:RCI.B), Telus and Bell (TSX:BCE) have about 25 million wireless subscribers between them, and unlike the smaller carriers, their coverage spans most of the country. …

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