US based Verizon is stated to have made an offer to buy the Wind Mobile a Canadian network company making worth a price of US$700 million.
The Canadian government, however, has made is difficult for Wind mobile to sell themselves to larger owners as they have blocked their recent attempts to bid it. Canada’s three smallest networks have struggled to compete against the larger incumbents.
Mobicity’s sale was blocked as the buyer was one of the three larger incumbents, while Wind Mobile faced concerns about the potential Russian owner.
Verizon seems to be taking advantage of new rules that let full foreign ownership of a small mobile network with less than 10% market share, and being a US company is possible to experience a few regulatory problems than Russia’s VimpelCom.
The US Company has also begun negotiation with financially stricken Mobilicity, and is in consideration whether to bid in a pivotal auction of wireless licences in January.
Updates stating that Verizon has moved from simply considering a bid to tabling an actual offer sent the share prices of the three larger networks, Rogers, Telus and BCE down sharply.
The Canadian government wants to see competition in the market increase and may support a merger by a rich investor of two of the smaller networks to build a fourth national carrier.
“We believe the entrance of Verizon into the Canadian wireless market would be a game changer for wireless economics and wireless valuations,” Drew McReynolds, a telecom analyst with RBC Dominion Securities, said in a research note.