Auction Day 1: MTS bleeds eligibility points; Shaw goes head-to-head with wireless ILECs

It didn't take long for AWS auction participants to reveal their strategies with two new entrant hopefuls going in opposite directions. MTS Allstream Inc. could be downsizing or adjusting its aspiration for new spectrum acquisitions, while Shaw Communications Inc. (1380057 Alberta Ltd.) appears willing to bid against the deep-pocketed incumbent wireless companies for a piece of the non set-aside spectrum. In the second round of the auction, MTS (6934242 Canada Ltd.) lost approximately 60% of its eligibility points by not being active enough. The national new entrant wannabe dropped 1571 points, leaving the company with 1072. While this amount of points still gives MTS Allstream a fair amount of flexibility to acquire spectrum outside of its home territory in Manitoba, the company is now unable to purchase a full 20 MHz of bandwidth across the entire country. It has enough eligibility points to bid on 10 MHz across the country, but will likely try to acquire 20 MHz in the higher population regions. Shaw, with more than $153 million in standing high bids, seems ready to go head-to-head with the Big Three. It is the standing high bidder on some important and lucrative licences at the end of round two. Shaw landed on 10 MHz licences in Toronto, Vancouver and Montreal as well as 10 MHz bandwidth in Ottawa and Edmonton in its home province. If its intentions were unknown at the outset of the auction, Shaw may be tipping its hand as it has secured standing high bid on 20 MHz licences in Vancouver, Calgary, Edmonton, Toronto and Montreal. Globalive (Yak Communications), with about $132 million, doesn't appear to be holding back either. Another surprise from the auction is 6934579 Canada Inc., which had reportedly dropped out of the auction, has nearly $25 million in standing high bids. Report on Wireless will have more on this later in the week. As far as the Big Three are concerned, Telus Corp. has been the most active with standing high bids on 60 licences worth nearly $60 million. Bell Mobility is on top of 42 licences committing about $75 million, while Rogers Communications Inc. has committed $18 million to have standing high bids of four licences. But Rogers has also lost eligibility points dropping more than half of what it started the auction with. At the end of the second round, the media and communications conglomerate had 1872 eligibility points - enough to acquire an additional 20 MHz of spectrum. This would certainly beef up its already significant spectrum position of 85 MHz across the country, with the exception of Toronto where it has 75 MHz. The 1670-1675 MHz band has only received interest from MTS, but this could change as the auction unfolds. This band can accommodate mobile TV, using the digital video broadband-handheld (DVB-H) standard. And Rogers has mused in the past that it would eventually migrate its mobile TV services off its traditional cellular frequencies to this new band. Now, with the first day of bidding closed, some may be scratching their heads regarding Shaw's seemingly national intentions. CEO Jim Shaw has said the company's initial $400 million deposit was to give it the flexibility to compete in the auction. The days ahead will reveal how that flexibility will work to Shaw's advantage.

Auction Day 1: MTS bleeds eligibility points; Shaw goes head-to-head with wireless ILECs

News | May 28, 2008

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