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TELUS Poised To Be Big Winner In The 2500 MHz Auction Tomorrow

April 13, 2015 - Written By Cory McNutt

It seems that every month we are writing about a spectrum auction going on in Canada, and it just so happens that the 2500 MHz auction will be taking place tomorrow.  The 2500 MHz provides lots of ‘space’ for high-bandwidth activities like video streaming.  This auction is different from others in that the federal government is not bending the rules to favor the new entrants and trying to create more competition.  However, it does not really matter because of the cap of 40 MHz per region, TELUS is the only one of the Big Three that can really bid on this new spectrum.

The spectrum auction is divided up among three geographical regions and each carrier is limited to 40 MHz per region.  Rogers and Bell already obtained a lot of 2500 MHz through its Inukshuk Wireless deal, leaving TELUS to grab up as much as it wants – within the limits, of course.  It will also give some of the lesser-known rural carriers that have registered to take part – CCI Wireless, SSi Internet Inc. Atlantic Canada operator Eastlink Wireless, Tbaytel and Xplornet Communications Inc…giving these smaller companies a chance to grab spectrum.  Mobilicity that had to sit out of the last AWS-3 auction – and are still under court protection from creditors – did not sign up for the 2500 MHz auction.

The geographical regions areas for this auction divide most of the country into 58 regions, and then add the Northwest Territories, Yukon and Nunavut, where there is no cap limit.  Dvai Ghose, head of research at Canaccord Genuity said, “I don’t expect there to be excessive valuations …I don’t expect Bell and Rogers to spend very much, but that’s because of the cap, and therefore, there’s a bit of a free ride for Telus.”  He also believes that Quebecor Inc.’s Videotron Ltd. and Wind Mobile Corp. will likely enjoy relatively easy access to spectrum. Analysts don’t expect the amount raised in this auction to come anywhere near the $2.11 billion raised from the AWS-3 auction or the 700 MHz auction in 2014.  A BMO Nesbitt Burns Inc. analyst Tim Casey, in a January report, said the 2500 MHz auction could raise up to $850 million.

The AWS-3 auction used the easier sealed bid auction, where the 2500 MHz auction is using a more complicated “combinatorial clock” process.  It allows the bidder to bid on packages of licenses that can last for multiple rounds.  Once the auction is over, the government will announce the provisional winners within five days from the end of the auction.

2500MHz Spectrum Map in Canada