OTTAWA – Innovation, Science and Economic Development Canada announced today the provisional results of the 3500 MHz auction, which earned a total of $8.91 billion.
The auction began in June and concluded July 23. Winning bidders have until August 13 to submit 20% of their final payment and until October 4 to submit the remaining 80%. The money will be paid into the Consolidated Revenue Fund administered by the Receiver General of Canada, according to an ISED press release.
In total, 15 Canadian companies were awarded 1,495 licences, 757 of which went to small and regional players.
“Results of the 3500 MHz auction increased spectrum holdings of small and regional providers by over 50% across the country,” reads the press release.
“The 3500 MHz auction is a key step in our government’s plan to promote competition in the telecom sector, improve rural connectivity, and ensure Canadians benefit from 5G technologies and services,” said François-Phillippe Champagne, the minister of Innovation, Science and Industry. “As intended, small and regional providers have gained access to significantly more spectrum, meaning that Canadians can expect better wireless services at more competitive prices.”
Of the 757 licences for small and regional players, 294 went to Vidéotron and 263 went to Xplornet, leaving 200 licences to 10 other companies including Cogeco Connexion Inc., Saskatchewan Telecommunications, TBayTel, Sogetel Inc., Bragg Communications and Valley Fibre Ltd.
Rogers (325), Bell (271) and Telus (142) won the remaining 738 licences. Rogers spent $3.33 billion, the most of any company involved. Bell spent $2.07 billion, and Telus spent $1.95 billion.
What the companies are saying:
Cogeco: The auction results are significant for Cogeco, which is looking to expand into mobile wireless. The company won 38 licences for $295 million, $205 million of which went towards spectrum in the Greater Toronto Area and the remainder of which went towards spectrum in other Ontario regions and the Trois-Rivières region in Quebec. “These spectrum investments, together with the recent CRTC regulatory decision on wireless services and our robust and growing regional broadband network, position Cogeco to further develop plans to enter the mobile wireless services market in a financially disciplined way in all of our core markets in Canada,” said Philippe Jetté, president and CEO of Cogeco Communications, in a press release.
Xplornet: The spectrum Xplornet acquired covers the company’s “rural service areas in all provinces,” according to a company press release. “Acquiring additional licensed mid-band spectrum is a critical component in Xplornet’s 5G broadband strategy to advance the availability of faster and more reliable broadband services to rural Canadians,” says Allison Lenehan, CEO and president at Xplornet, in the press release. “We have made significant investments in our state-of the-art fibre and wireless broadband network in recent years and we are excited to put this 3500 MHz spectrum to work in the very near future for our customers.”
Videotron: The auction was an important step towards Videotron and parent company Quebecor branching out across Canada. The company spent nearly $830 million. “More than half of the investment is concentrated in four Canadian provinces outside Québec: southern and eastern Ontario, Manitoba, Alberta and British Columbia,” a company press release reads. A fact sheet released with the press release notes “Quebecor is now in a strong position to expand its telecom business outside Québec, either by acquiring Shaw’s wireless assets or on the basis of recent CRTC decisions.” The company has previously expressed interest in acquiring Shaw’s wireless assets if they are sold and has indicated it is happy with the CRTC’s recent MVNO decision.
Rogers: Rogers won the most licences (325) of any company that participated in the auction. “This investment in 5G spectrum will build on our existing 5G assets and enable us to deliver the world-class connectivity Canada needs to increase productivity, fuel innovation, create jobs, and compete in a global economy for decades to come,” said Joe Natale, President and CEO of Rogers Communications, in a press release. The company now has “3500 MHz spectrum holdings in 169 out of 172 ISED Tier 4 regions across Canada, including all key regions, the majority of rural areas, and all urban centres including Toronto, Montreal, Vancouver, Calgary and Ottawa,” according to the press release.
Bell: With the end of the auction, Bell announced in a press release it “is acquiring 30% of total 3500 MHz spectrum available to national wireless carriers at auction, including spectrum in major and secondary urban markets across the country, which, together with existing holdings, secures all the 3500 MHz spectrum necessary for Bell to continue leading the roll out of 5G across Canada.” Bell is looking to leverage the full capabilities of 5G “to help bridge the digital divide with enhanced broadband access for more rural and remote communities,” said Stephen Howe, Bell’s chief technology officer, in the press release. “The speed and capacity of 5G, coupled with Bell’s unparalleled fibre backhaul infrastructure and rapidly expanding network footprints, offers infinite service possibilities for consumers and business users, from augmented reality and machine learning to smart homes, vehicles and cities, and we’re eager to deliver these benefits to Canadians no matter where they may live,” he said.
Telus: Telus won licences in B.C., Alberta, Manitoba, Ontario and Quebec. “Combined with the spectrum it acquired privately in January 2021, TELUS now holds licences to an average of 25 MHz of 3500 spectrum nationally and 40 MHz in our key markets, at an average price of $2.53 per MHz-pop,” according to a company press release. The spectrum Telus has acquired will enable the company “to unleash the full potential of 5G technology for Canadians.” Telus CEO and president Darren Entwistle stated in the press release that “by securing spectrum critical to bring transformational, next-generation, 5G connectivity to Canadians, TELUS is able to continue to offer the globally leading network speed, coverage and reliability our fellow citizens need to realise improved outcomes in our digital world.”
For the full provisional 3500 MHz auction results, please click here.
Updated August 3:
Analyst reports published since the end of the spectrum auction have considered what the results mean in terms of expanding services and in light of a potential Rogers/Shaw deal.
Cogeco “picked up set-aside licences in Ontario that includes Toronto, and its operating areas Burlington, Oakville, and Hamilton,” according to a Scotiabank analyst report written by Jeff Fan. “We think the Toronto area licences outside its cable footprint (QBR [Quebecor] picked up the other Toronto set-asides) provides CCA [Cogeco] with optionality and positions it for a partnership deal with QBR across several markets including parts of Quebec where CCA has licences from prior deals. We expect it will remain disciplined in assessing its wireless opportunity.”
Quebecor “picked up set-aside licenses in Quebec and in the Shaw/Freedom major markets positioning itself for a national wireless expansion, directly or indirectly,” according to the report. The company “pushed a lot of its chips into the pot for the ability to pick up Shaw Mobile/Freedom from RCI [Rogers] as part of the potential merger remedy.”
The privately held Xplornet, “picked up mostly rural areas with the exception of Calgary, Edmonton, Winnipeg, London, and Guelph/Kitchener,” the report reads. These are licences that may put the company in a position to acquire Shaw/Freedom from Rogers “replicating the BCE-MTS-Xplornet deal in Manitoba in 2017.” The report goes on to state “Xplornet could then also pursue a wholesale arrangement to assist QBR in its national expansion especially given QBR spectrum position in Ontario, BC, and Alberta. Xplornet/Stonepeak could use its strategic position and exit by selling to QBR.”
BMO analyst Tim Casey considered Quebecor’s (Videotron) spend on spectrum outside of Quebec and its publicly expressed interest in Shaw Wireless assets, Cogeco’s spend and its wireless ambitions, and Xplornet’s spend in a report released last week, concluding that “active bidding by these regional players suggests there will be demand for wireless assets that will likely be divested out of the Rogers/Shaw transaction.”
