Auction Day 3: MTS packing it in

It's all over but the crying for MTS Allstream Inc. The Manitoba-based provider is now a two-bit player in the auction after dropping another 60% of its eligibility points during the seventh round of the auction. At the end of the third day of bidding, the company has only 309 eligibility points remaining, down from the 2,643 it started with, but certainly enough to continue bidding on the B- and C-band licences for Manitoba as well as the tier 3 D-band licences covering the Prairie province. Currently, MTS is standing high bidder on 11 properties with a value of more than $18 million. After spectrum auction deposits were made public, this was the farthest thing from anyone's mind. But when the company, along with its financial backers the Canadian Pension Plan Investment Board and the Blackstone Group, announced that they had dissolved a partnership specifically formed for the auction, it was a sober reminder that perhaps a national new entrant was far from MTS' reach. Based on an analysis of MTS' bidding during the day, the company signaled pretty early on that it wasn't going to be able to maintain its previous activity level. It didn't place a bid in the fifth and seventh rounds and placed only three new bids in the sixth round. The company also used waivers in each of the fifth, sixth and seventh rounds and then opted to lose eligibility points in the day's eighth and final round. But MTS' decision to scale back spectrum acquisition expectations is a positive development for the other larger new entrant wannabes - Shaw Communications and Vidéotron ltée. Both companies remained active during the day's four rounds of bidding against the wireless ILECs for a piece of non-reserved spectrum. At the end of the day, Shaw stood on top of 35 licences valued at more than $35 million, while Vidéotron was standing high bidder on 19 properties worth $128 million. Globalive remains active as well bidding on tier 2 licences covering Southern Ontario and British Columbia as well more localized areas such as Toronto and Vancouver. At the end of the day, the Yak Communications owner was standing higher bidder on six licences worth approximately $67 million. Another big development during the day has been from John Bitove's Data & Audio-Visual Enterprises Wireless Inc. (DAVE). The company, which also has the backing of Microsoft Corp. co-founder Paul Allen, finds itself atop the bidder list with more than $232 million committed on six licences. DAVE has been fairly consistent in bidding on new entrant set-aside spectrum, but in some instances is vying for the non-reserved bandwidth. It's still early in the auction so it remains to be seen how long the company will last.As predicted yesterday, Westman Media Cooperative Ltd. and Golden Spike Mobility Inc. have dropped out of the race. Neither company placed a bid in the auction. Another interesting development today was bidding by EastLink owner Bragg Communications on the highly lucrative licences of Vancouver and Torontoday. At the end of the day, the company was standing high bidder on the 20 MHz Toronto F-band licence which is now worth $85 million. If the company had won the coin toss - the process for selecting a standing higher bidder when multiple parties place a bid on the same licence is a done randomly - for the 20 MHz A-band licence in Vancouver, it would be into the government for more than $100 million. Is the company really interested in these two licences or is EastLink preserving its eligibility points for a later battle? This, and other developments have yet to play out and the outcome of this spectrum auction is far from over.

Auction Day 3: MTS packing it in

News | May 30, 2008

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