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Wireless auction raises $5.27 billion for Ottawa; Rogers biggest bidder

Industry Minister James Moore announces the wireless Spectrum Auction Results in Ottawa, Wednesday, February 19, 2014. THE CANADIAN PRESS/Fred Chartrand

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Industry Minister James Moore announces the wireless Spectrum Auction Results in Ottawa, Wednesday, February 19, 2014. THE CANADIAN PRESS/Fred Chartrand

OTTAWA - The federal government raked in $5.27 billion in the latest wireless spectrum auction, the most Ottawa has ever received in such a sale, Industry Canada said Wednesday.

The auction also saw Quebecor's Videotron (TSX:QBR.B) make a major push outside of its home province, spending some $233.3 million for licences not only in Quebec, but also Ontario, Alberta and British Columbia.

Industry Minister James Moore said he believed that Videotron had the capacity to become the fourth national wireless company that his government has been pushing for.

"I think it is great that they are making an investment," Moore said.

"I think it is great that they are looking beyond the traditional footprint of the province of Quebec."

Videotron said it currently has more than 500,000 customers on its wireless network, which was launched in 2010.

Robert Depatie, chief executive of Quebecor Media and Videotron, said the company now is well-equipped to develop its network.

"Given the way the auction unfolded, Quebecor Media could not pass up the opportunity to invest in licences of such great intrinsic value in the rest of Canada," Depatie said.

"We now have a number of options available to us to maximize the value of our investment."

Consumer advocacy group OpenMedia.ca said it was important that Ottawa make sure Videotron uses its new spectrum to serve Canadians.

Calgary-based Shaw Communications (TSX:SJR.B) bought up blocks of wireless spectrum in a 2008 auction, but later decided against using it to start up a new wireless business.

"More choice could be in the cards but the reality is that this auction will not fully address the high wireless prices that are holding our economy and country back," said OpenMedia executive director Steve Anderson.

"We welcome Minister Moore's commitment to fix our broken wireless market — now he needs to build on this development to ensure Canadians have the choice and lower prices they deserve."

Before the auction results were announced, analysts had speculated that the sale would yield a total of upwards of $2.5 billion.

The biggest bidder for the 20-year licences was Rogers (TSX:RCI.B), which paid $3.29 billion for 22 licences across the country, except in the Yukon, Northwest Territories and Nunavut.

Moore noted that Rogers bought the prime real estate on the wireless spectrum. "They paid the most, but they got the highest quality spectrum within the auction," he said.

Rogers said the spectrum it has acquired will help it deliver video over its wireless network.

"Not all 700MHz spectrum in the auction was the same; we secured the beachfront property we wanted," Rogers president and chief executive Guy Laurence said.

Telus (TSX:T) spent just over $1.14 billion for 30 licences, while Bell spent (TSX:BCE) $565.7 million for 31 licences.

In total, the auction saw some 10 bidders participate, with eight of them winning licences.

Telus chief executive Darren Entwistle said the spectrum acquired by his company will help expand coverage in rural areas.

"Moreover, the spectrum will enable us to further enhance our coverage in urban areas, adding much needed capacity for our more than 7.8 million customers.

"Indeed, we have already begun to prepare our wireless cell sites to deploy 700 megahertz spectrum, and plan to begin operationalizing the spectrum for the benefit of our customers as soon as it is made available to us later this year."

Companies will be able to start using the new spectrum as early as mid-April if they have the equipment in place.

The airwaves up for grabs are considered particularly valuable because they allow signals to travel further and penetrate buildings and tunnels where calls are often dropped.

They became available after television broadcasters switched to digital signals.

Wade Oosterman, president of Bell Mobility, which already offers LTE service to 82 per cent of the population, said the new spectrum will help expand that service.

"This new 700 MHz spectrum will help us take the network further: To towns, rural locations and remote communities across the country including Canada's North," Oosterman said.

Ninety-seven of the 98 available licences were sold in the 108 rounds of bidding that took place over 22 business days.

Manitoba Telecom Services (TSX:MBT) spent $8.8 million for one licence in Manitoba, while SaskTel also bought one licence in Saskatchewan for $7.6 million. EastLink paid $20.3 million for one licence in each of Newfoundland and Labrador, Nova Scotia and Prince Edward Island, New Brunswick and northern Ontario.

Feenix, which lists John Bitove, Mobilicity's executive chairman, as CEO, bought one licence in Yukon, the Northwest Territories and Nunavut, for $284,000.

The previous auction in 2008 raised $4.3 billion for federal coffers and saw the addition of several new wireless companies.

Another auction for wireless licences for the 2,500 megahertz band is set for April 2015.

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