Verizon Wireless (NYSE:VZ) has confirmed that it’s interested in buying the small Canadian wireless network Wind Mobile, as Canada looks to expand its national wireless market to offer consumers more competition and more choice. Verizon’s Chief Financial Officer Fran Shammo confirmed reports about Verizon’s interest in expanding into the Canadian wireless market to The Wall Street Journal on Tuesday.
Right now Canada’s three major wireless providers — Roger Communications Inc., BCE Inc., and Telus Corp. — control 90 percent of the country’s mobile phone market. Canadian consumers have complained about high prices and few options in regards to wireless service, so in 2008 Canada put some of its wireless spectrum on the auction block in an effort to create more competition for the big three.
Wind Mobile, which is based in Toronto and serves about 600,000 customers, bought some of the auctioned airwaves along with other small providers including Mobilicity and Public Mobile Inc. But none of Canada’s small wireless companies have proved a match for Roger, BCE, and Telus thus far.
If Verizon purchases Wind Mobile it could use its ample cash to build a cutting edge 4G LTE network similar to the one it operates in the U.S., and give Canada’s big three wireless providers the competition Canadian consumers are looking for. Verizon currently offers the biggest 4G LTE network in the U.S. and has 99 million customers. The company could use its cash and know-how to create a similarly fast network for Canadian customers, and offer discounts on high-end smartphone models.
Verizon is looking to take advantage of a chance to purchase Wind Mobile without having to bid against any of the big three. Canada’s Industry Minister blocked a sale of Mobilicity to Telus as the country seeks to create more wireless competition rather than continuing to allow the three major companies to dominate.
The main question investors are asking now is what’s in it for Verizon. The acquisition would doubtlessly benefit Wind Mobile and Canada’s wireless options, but some analysts are questioning whether the time and money Verizon will have to put into Wind Mobile will be worth the effort.
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