Could AT&T and T-Mobile be eyeing Canada?

In May, Canada will have it’s own spectrum auction. To help create competition the country’s wireless industry, 40 percent of the spectrum will be reserved for new entrants. This is opening up opportunities to expand their businesses with the power of radio spectrum. CBC News takes a look at one of those companies in particular: Niagra Networks, which has no current operations in Canada. Could it be that T-Mobile or AT&T could be behind this holding?

Of course, neither company would comment on the issue. But CBC notes that both companies have past ties to Canada. AT&T had a stake in Rogers Wireless until 2004, when they cashed in the investment. T-Mobile had a stake in Microcell Telecommunications, parent company of the Fido brand, Rogers acquired it, also in 2004.

The stronger tie may be to AT&T, who announced that it will spend $1 billion in international business this year, and increase over last year — which was an increase over the year before.

In a recent interview with CBCNews.ca, AT&T Canada executives declined to say how much of the investment would go to Canada but said the country was a key priority. The company provides telecommunications services — minus cellphones — to multinational corporations operating here.

Maura Lendon, chief counsel for AT&T Canada, praised recent moves by the government to boost telecommunications competition, including the favouring of new entrants in the spectrum auction.
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“We do see more positive trends in the Canada market, which I think are opening opportunities. It trends towards more open competition,” Lendon said.

Of course, it wouldn’t be easy for either company. Canada has restrictions on foreign entrants in their telecommunications industry. In essence, no foreign firm could hold more than 46 percent stake in a company, so they would need a Canadian partner. There is a movement to reduce these regulations, though, allowing foreign competitors to more easily enter the market.

“There is a precedent whereby T-Mobile purchased a minority stake initially, before moving to majority when the rules allowed,” wrote CIBC World Markets analyst Robert Bek in a recent research note to clients.

In other words, partnering with a Canadian firm for the spectrum auction could simply be the first step in the grander plan of a foreign cellphone provider.

Canada seems ripe for another competitor. They seemingly need one, with Bell, Rogers, and Telus comprising 95 percent of the industry.

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