Auction Day 2: Pieces of the puzzle falling into place

After four rounds and only two days, bidding strategies are starting to reveal themselves with new entrant wannabes seemingly conserving precious eligibility points by bidding on non-reserved spectrum. MTS Allstream, Shaw Communications, Vidéotron ltée among other wireless hopefuls are locked in a battle with the Big Three, Bell Mobility, Rogers Communications Inc. and Telus Mobility for lucrative licences such as Vancouver, Calgary, Edmonton, Ottawa, Toronto and Montreal. While Rogers ended up being standing high bidder on all these six of these highly coveted properties, control for these licences has seesawed over the first two days of bidding. This is a trend that will likely continue over the next several rounds and days so we shouldn't read too much into that at this point in the auction. Despite the deep pockets of Shaw, Vidéotron and less so MTS, it is unlikely they will be able to unseat any of the Big Three from non-set aside spectrum. Bell, Rogers and Telus - still fuming from the government decision to set aside spectrum in the first place - will not let a new entrant secure a licence in which they are interested. In fact, the three are likely to duke it out for some of the prized licences in the latter stages of the auction. The most hotly contested licences so far in the auction have generally been the non-set aside spectrum in the top markets mentioned above. The A-band licence in Vancouver has consistently been the most popular, receiving six bids in the fourth round and five in the third. Companies interested include the usual suspects of Rogers, Bell and Shaw, but also Vidéotron, Globalive and Bragg Communications (EastLink) have thrown their hats into the Vancouver ring. The wide-spread multiple bids for the same properties will only last as long as the new entrants can afford it. When the price for prized spectrum in these and other major markets gets too high, new entrants are likely to switch to bidding more heavily on set aside spectrum. This is where it could get interesting as the new entrants fight it out for their own swath of spectrum, leaving the ILEC wireless carriers to battle for their piece of AWS bandwidth. Tomorrow could spell the end for a couple of bidders. The top two candidates are Golden Spike and Westman Media. Both companies have only one waiver remaining and haven't been active. The third day of bidding also marks an increase in the number of rounds per day, increasing from two to four. While not a huge jump, it means that some of the new entrants with less auction experience will have less time to make a decision. By the end of the week, it is conceivable that participants with deep pockets, the resolve to continue and those on less attractive licences will be the only ones remaining. At the end of two days of bidding, total standing high bids have topped $700 million, almost half of the amount Industry Canada deposited in the federal government coffers back in 2001 after the auction for reserve PCS spectrum. How high will it go? It's still too early to tell, and will depend on how much financial risk new entrants are willing to take in battling for a piece of the AWS bandwidth they consider is theirs by right. Rogers leads the way at the end of round four with standing high bids on eight licences, totaling more than $111 million. 6934579 Canada Inc. isn't far behind with $107 million committed to six licences. Telus Mobility takes top spot in number of licences on which it holds the standing high bid with 64 worth $75 million. Bell Mobility comes in second with standing high bids of 46 licences worth $83 million.

Auction Day 2: Pieces of the puzzle falling into place

News | May 29, 2008

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