Verizon Communications Inc.
) has reportedly postponed the acquisitions of Canadian telecom
provider Wind Mobile and Mobilicity. The company is waiting for
the government auction in Canada for wireless licenses in January
next year before entering the Canadian market. Previously,
Verizon proposed to acquire Wind Mobile for $700 million and
reportedly entered a non-disclosure agreement with Mobility for a
According to reports, the company is now focusing on
participating in the upcoming auction of the 700-megahertz band
spectrum. News reports also suggest that if Verizon wins,
it might reconsider its purchase plans or go ahead next
Despite the small stature, we believe these companies would
mark a significant stepping stone for the company in
Canada. Wind Mobile, which began its operations in 2009,
has around 600,000 customers, which has almost surpassed
wirelesses subscriber base of the fourth largest wireless
Canadian carriers - Saskatchewan Telecommunications Holding
Corporation. Further, Mobilicity - an acquisition targeted
by Telus in the past - has around 250, 000 subscribers. Although
Mobilicity has undertaken no major expansion in the last two
years, it continues to operate in key areas like Greater Toronto
Area, Ottawa, Calgary, Edmonton and Greater Vancouver.
We believe the company's entry into new markets like Canada
would provide a significant opportunity to grow beyond the
saturation of the U.S. wireless market.
However, the news of possible takeovers in Canada by telecom
giant Verizon has stirred volatilities for tier one Canadian
telecom carriers like
Rogers Communications Inc.
). The market has been on the sidelines over these carriers,
which pulled down their market valuation. To tide over the
debilitating scenario, Rogers attempted to hinder Verizon's
possible market entry by proposing a buyout to these two carriers
in private equity bids. We believe with more companies eyeing
Canadian takeover, Verizon will face many contenders ahead.
Verizon, currently has Zacks Rank #3 (Hold).
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