Auction Day 18: MTS Allstream may be nearing the end of the road

It appears as though MTS Allstream has reached price exhaustion for the 10 MHz D-band set aside licences covering Winnipeg and Brandon as the company relinquished 24 eligibility points yesterday, enough to cover those two properties. MTS used its final waiver in Round 90, leaving the company without any flexibility for the remainder of the auction. And the very next round, the Manitoba-based provider gave up 24 eligibility points the exact amount needed to bid on the tier three licences for Winnipeg and Brandon in either the 10 MHz D-band or E-band. Those 24 points were also needed to bid on the 10 MHz C-band set-aside licence covering all of Manitoba. The set-aside D-band for the two Manitoba cities were prime targets for MTS for much of the auction. The company had bid heavily on both properties early in the auction, then switched to the E-band in hopes of pushing an ILEC off of the two licences. A return to the D-band in the last couple of days didn’t prove fruitful as the cost of the licences simply got too expensive. And expensive they are compared to other properties of similar size. The Winnipeg D-band 10 MHz licence now has a standing high bid of about $12 million for a population of slightly lower than one million people. That is approximately 25% more expensive than the Edmonton licence, which covers 1.2 million people, and is about 30% more expensive than the Calgary licence, an area of 1 million people. The D-band Brandon licence is also going for more than other comparable licences. For example, the Medicine Hat/Brooks area which has about 175,000 people has a standing high bid of $234,000, while the Brandon property, and its 172,000 people, is going for $773,000. With Industry Canada’s Advanced Wireless Services (AWS) spectrum auction now finished its 18th day of bidding, the pressure might be getting to more than just MTS. For the first time in the auction, Bragg Communications relinquished eligibility points, dropping 16 points in Round 89. The company now has 340 points, enough to still take control of 40 MHz of bandwidth in the Atlantic provinces as well as a couple of licences in either Alberta or Northern Ontario, two other areas it has been bidding on since the second week of the auction. The EastLink owner is already well positioned to capture a nice swath of bandwidth. It has been standing high bidder on a number of properties for several rounds and doesn’t appear to be in danger of losing them. But was the company’s drop of 16 eligibility points earlier on Thursday just an aberration? Or is this a sign of things to come from the cable, telephony and Internet provider? At the end of Round 95, the auction had generated more than $3.9 billion and there is a distinct possibility the total will top $4 billion before the weekend. As can be expected the incumbent wireless operators lead the way in standing high bids and numbers of licences. Below is a list of the top 10 companies. Rogers Communications Inc.$ 837,987,722 501096 TELUS Communications Company$ 797,631,000 51996 Bell Mobility Inc.$ 645,590,000 51744 9193-2962 Québec Inc.$ 556,547,000 17816 Globalive Wireless LP$ 443,626,817 25704 Data & Audio-Visual Enterprises Wireless Inc.$ 238,242,000 10364 1380057 Alberta Ltd.$ 202,004,093 20422 Bragg Communications Inc.$ 61,972,500 28332 6934579 Canada Inc.$ 49,765,077 3340 6934242 Canada Ltd.$ 40,773,750 384

Auction Day 18: MTS Allstream may be nearing the end of the road

News | June 20, 2008

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