(Bloomberg) — Canada’s telecommunications companies will pay C$8.9 billion ($7.2 billion) to buy licenses for 5G wireless airwaves, with Rogers Communications Inc. spending the most to protect its No. 1 position in the market.
Toronto-based Rogers committed C$3.3 billion in the government’s spectrum auction, while BCE Inc. spent C$2.1 billion and Telus Corp. more than C$1.9 billion, according to a statement by the industry ministry. The three companies dominate the sector, with more than 10 million wireless customers each.
Spectrum is never cheap, but the amount is far more than what analysts expected, another sign that so-called midband frequencies are viewed as crucial by wireless companies seeking to establish an edge in 5G services. A U.S. midband auction earlier this year resulted more than $80 billion in spending, led by Verizon Communications Inc. and AT&T Inc.
Investors had anticipated that the overall figure in the Canadian auction would be C$5 billion to C$6 billion. In earlier forecasts, RBC Capital Markets analyst Drew McReynolds projected the three largest companies would spend a combined C$3.25 billion — slightly less than the final amount spent by Rogers alone.
“Underscoring the Bell team’s goal to advance how Canadians connect with each other and the world, acquiring this significant additional 3,500 MHz spectrum will drive Bell’s ongoing leadership in 5G,” BCE Chief Executive Officer Mirko Bibic said in a press release. The 3,500 MHz band is considered particularly valuable because of its ability to transmit large amounts of data over long distances.
Quebecor Inc., led by CEO Pierre Karl Peladeau, spent C$830 million in the auction, including parts of western Canada, where it doesn’t compete today. Peladeau has expressed an interest in expanding wireless services and taking up the mantle of Canada’s fourth player.
“We are now counting on the government to create a favorable environment to foster and maintain healthy competition,” Peladeau said in a statement. “We are confident that we are the right player, the one with a real ability to break the oligopoly and put consumers across Canada back in the driver’s seat.”
Rogers Dealmaker Touts 5G Plan, Says Shaw Merger ‘Will Get Done’
Cogeco Communications Inc., a regional cable provider that doesn’t currently sell wireless services, spent C$295 million in the auction. Its licenses cover its home province of Quebec, as well as the Greater Toronto Area, where it has a wireline footprint.
Rogers is awaiting regulatory approval of its proposed C$20 billion acquisition of smaller rival Shaw Communications Inc., which was announced in March. Shaw, through its subsidiary Freedom Mobile, is Canada’s fourth-largest wireless provider and didn’t participate in the auction.
“We went into this auction with a clear plan and acquired the spectrum we need to continue driving the largest and most reliable 5G network in Canada and to deliver long-term value for our customers, shareholders and Canada,” Rogers CEO Joe Natale said in a statement.
(Updates with CEOs’ comments starting in fifth paragraph.)
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