TORONTO – New York-based Verizon Communications is setting its sights on entering the Canadian market by reportedly offering to acquire Wind Mobile for $700 million.
Citing “two people familiar with the situation,” the Globe and Mail today reported that the U.S. carrier has also held recent talks with Mobilicity’s stakeholders to discuss a potential acquisition.
With a market cap of US$135 billion and an estimated US$10.8 billion in free cash flow, the odds of successfully entering the Canadian market would be in Verizon’s favour, according to analyst Dvai Ghose of Canaccord Genuity. By purchasing Wind Mobile and potentially Mobilicity as well, Ghose says Verizon would be in a relatively strong spectrum position if it acquires 10 to 30 MHz of AWS spectrum from WIND and Mobilicity, and two prime blocks of 700 MHz spectrum in the upcoming auction in 2014.
Verizon’s entry into Canada would pose a credible threat to the big three incumbents; today’s news has already negatively impact shares for Telus, Bell and Rogers. While all three national incumbents may suffer from a Verizon Wireless entry, Rogers may have the most to lose, says Ghose.
That’s because “Verizon may initially concentrate on the GTA where Rogers enjoys leading wireless share; [and] there are only four prime 700 MHz spectrum blocks up for auction and Verizon could acquire two,” Ghose said, adding, “Bell and Telus would seem better positioned than Rogers because they share spectrum, while Rogers does not have a national spectrum sharing partner.”
