Birch Hill withdraws from 700 MHz auction

Toronto-based private equity firm Birch Hill Equity Partners Management Inc. withdrew its application to take part in Industry Canada’s 700 MHz spectrum auction, Industry Canada said. In an updated list of auction applicants posted on the federal Industry Department’s website Tuesday, Industry Canada said BH Wave Acquisitions Corp., a Birch Hill subsidiary, has withdrawn its application to take part in the January auction. The notice did not cite a reason for the withdrawal and Birch Hill did not immediately return an interview request for this story Wednesday. Birch Hill, which says it manages about $2 billion in investment, first made ripples in Canada’s wireless market in late July after the Globe and Mail reported that the firm was working with incumbent carrier Rogers Communications Inc. to buy new entrant carrier Wind Mobile in an effort to “sidestep” Industry Canada rules that prevent the new entrant from being sold to incumbents Rogers, BCE Inc. or Telus Corp. Analysts said at the time that the government would likely block any deal to acquire Wind involving Rogers and Birch Hill, and the deal never materialized. BH Wave, the subsidiary, was included on Industry Canada’s initial list of auction applicants following a Sept. 17 deadline for deposits to take part in the auction. The department is scheduled to publish a list of “provisionally qualified bidders” on Oct. 22. Other auction applicants include all three incumbents and Wind (which is owned by Globalive Wireless Management Corp.), as well as regional carriers Eastlink (owned by Bragg Communications Inc.), MTS Inc., SaskTel, TBayTel and Videotron Ltd. (a Quebecor Media Inc. subsidiary). Private equity firm Catalyst Capital Group Inc., the leading debtholder in new entrant carrier Mobilicity, has also applied, as has Feenix Wireless Inc., a company owned by John Bitove, Mobilicity’s executive chairman. Smaller Internet providers and technology companies Corridor Communications Inc., Novus Wireless Inc. and Vecima Communications Inc. have also applied. Canaccord Genuity analyst Dvai Ghose said in a telephone interview Wednesday that Birch Hill’s withdrawal from the auction could reflect a change of mind about the likelihood of earning a return on any investment it made in Canada’s wireless market. He speculated that Birch Hill’s auction plan may have involved trying to acquire “prime” 700 MHz spectrum in British Columbia, Alberta and Ontario—the three provinces that do not feature a regional carrier to compete against the three incumbents—and then “flip” that spectrum to an incumbent at a higher price. “I always assumed that Birch Hill was only opportunistic and didn’t have a business plan for operating a wireless entity,” Ghose said. Ghose said the firm may have decided it would be unlikely to sell any spectrum licences it won to an incumbent in light of new Industry Canada rules for spectrum transfers, and in light of the department’s response to a renewed Telus request to acquire Mobilicity. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Birch Hill withdraws from 700 MHz auction

News | October 16, 2013

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Birch Hill withdraws from 700 MHz auction

News | October 16, 2013

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