While rival carriers aren't happy, the Canadian government welcomes Verizon with open arms

While rival carriers aren't happy, the Canadian government welcomes Verizon with open arms
Back in June, Verizon made a bid to buy Canada's WIND Mobile for $600 million to $800 million. The final price depends on what Big Red's accountants find out when they go through the books. With a little more than half a million subscribers, WIND is Canada's fifth largest carrier. If three executives from the country's top mobile carriers have their way, there will be no WIND blowing through Verizon's hair. The three executives and the mobile operators they work for have started a public relations campaign aimed at Verizon using full-page ads and a web site called www.fairforcanada.ca. The domestic Canadian carriers are worried that the entry of Verizon into the country would lead to job losses for Canadians and the website allows you to quickly write and send out complaints to the proper Canadian authorities. But the Canadian government has a different thought on the entire matter.

Just last week, Canadian Industry Minister James Moore said that all regions of Canada need to benefit from competitive market forces. "We will continue to stay the course by ensuring Canadians benefit from a competitive telecommunications industry;" the Minister said. And Verizon is looking to purchase more than just WIND Mobile. There is speculation that the largest mobile carrier in the U.S. is also in talks to buy Mobilicity. Verizon's entry into the Canadian market would also help the Canadian government as it would presumably lead to Big Red's participation in an auction of spectrum by the Canadian government scheduled for next year. Verizon would be expected to bid on two blocks of spectrum. What happens when a deep-pocketed bidder enters an auction? Prices go up sharply and in this case, it would be the Canadian government, as the seller of the spectrum, getting the benefit of Verizon's entry into the Canadian market.

Verizon has 100 million subscribers in the states, ten times as many as the largest Canadian carrier, Rogers. This gives Verizon an edge when it comes to buying handsets, attracting talent and competing in Canada. Still, Morningstar analyst Imari Love wonders if it really would be worth it for Verizon to spend the time, money and effort to build up a business in Canada. Love says, "I don't ever see them truly piercing the oligopoly of the big three or matching their scale in terms of subscribers, nationwide coverage, and integrated network infrastructure."

source: Reuters

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