AWS-1 sale unlikely to set precedent for 700MHz: Canaccord

The sale last week of Videotron’s AWS-1 spectrum by Quebecor Inc. to Rogers Communications Inc. isn’t likely to have implications for the company’s 700MHz spectrum, according to Canaccord Genuity analyst Aravinda Galappatthige. Reflecting on the Friday deal, which saw Videotron’s AWS-1 Toronto-area spectrum go to Rogers with no government concessions, Galappatthige said that doesn’t necessarily indicate the same outcome for the company’s “most valuable spectrum block,” which he estimates as worth $561 million or more. The government is unlikely to “see the sale of the 700MHz spectrum the same way as it did the AWS-1,” he said. “This is because there is a case to be made that a sale of the 700MHz to an incumbent would place at a disadvantage with no low band spectrum (until the eventual 600MHz deployment) and thus have a negative impact on the competitiveness of the wireless market,” Galappatthige said in a Monday note. Additionally, and as a result of its previously expressed interest, “we maintain our view that the 700MHz sale would likely still go to Shaw,” Galappatthige said, adding a potential catalyst for a bid could be the sale of its Viawest data centre business. Barclays Capital analyst Phillip Huang said in a Friday note that the deal with Rogers was the first time such a big player was allowed to acquire new entrant spectrum “outright with no strings attached,” adding the deal could set a precedent for future spectrum transfers. Galappatthige said Monday that the government can either stick with the previous four-player policy and only allow the sale of the spectrum to a non-incumbent, in which case Shaw becomes the sole bidder and reduces the value of the holdings, or allow Videotron to sell to an incumbent but have a chunk of spectrum allocated to a third party such as Shaw. “The problem is splitting 10MHz of spectrum is not practical, unless separated on a geographic basis,” Galappatthige said of the latter option. Adding to the question about potential suitors for the spectrum, National Bank analyst Adam Shine agreed in a Monday note that Shaw is a likely candidate “given Freedom’s need to strengthen its spectrum holdings and network.”

AWS-1 sale unlikely to set precedent for 700MHz: Canaccord

Brief | June 12, 2017

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AWS-1 sale unlikely to set precedent for 700MHz: Canaccord

Brief | June 12, 2017

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