TMCnet Feature
June 28, 2013

Verizon May Acquire Two Canadian Telecom Companies and Become a Key Player in Canadian Market

By Ed Silverstein, TMCnet Contributor

Verizon may acquire two Canadian telecom companies, Wind Mobile (News - Alert) and Mobilicity, according to news reports.



Reuters reports that Verizon wants to purchase Wind Mobile for between $600 million and $800 million. The Toronto Globe and Mail identified Verizon’s (News - Alert) offer for Wind Mobile at $665.87 million.

Another firm, VimpelCom Ltd., no longer wants to acquire Wind Mobile.

It is unclear how much Verizon could pay for Mobilicity.

Currently, much of the Canadian wireless telecom market is dominated by BCE Inc, Telus Corp and Rogers Communications (News - Alert).

“The three companies are the dominant players in the Canadian wireless market, where prices have traditionally been higher than in the United States,” Reuters (News - Alert) reported.

Rogers, Telus and Bell each saw their shares fall “sharply” after the Globe and Mail reported how Verizon could acquire Wind Mobile, the CBC reported. Rogers’ shares declined by over 9 percent, Telus by 8 percent, and BCE (News - Alert) edged down 4 percent on the Toronto Stock Exchange, the CBC adds.

The wireless sector "is already intensely competitive in Canada with three large national carriers and a few dozen regional and smaller carriers," and "Telus has never shied away from competition, and that won't change if a U.S. carrier opens shop in Canada," according to a Telus media statement.

"Bell is always ready to compete," BCE added in a media statement.

Also, TMCnet reported that Jeff Kagan, a telecom analyst, said on BNN, “Today the Canadian marketplace limits foreign ownership, but today the limits are higher than they were. I believe that trend will continue and over the next few years the limits will rise and eventually be eliminated. That is why Verizon wants to get into the Canadian marketplace early and start to build.”

Meanwhile, Wind Mobile and Mobilicity were both described as “struggling” mobile-phone carriers, by Market Watch.

Also, The Wall Street Journal recently valued Wind Mobile at about $477 million.

It was also reported by the Ottawa Citizen that it is unlikely any acquisition of Mobilicity could take place without involvement of Catalyst Capital Group.

The private equity business does not want to buy Mobilicity, but it is “involved in the process for Wind.” Catalyst owns over 30 percent of “the senior secured credit of Wind’s rival Mobilicity,” the newspaper said. 




Edited by Rich Steeves
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