BUSINESS

Verizon Canada? U.S.'s Largest Wireless Player Eyes Wind Mobile Purchase

06/17/2013 11:58 EDT | Updated 06/18/2013 01:49 EDT
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NEW YORK, NY - JUNE 07: A Verizon advertisement is viewed outside of a store on June 7, 2013 in New York City. In a statement today U.S. President Barack Obama defended the government's surveillance programs following a news leak on June 5 that the U.S. government had been obtaining Verizon's phone records for years. The records were obtained through a secret court order which also revealed that the government has been monitoring business phone calls both nationally and internationally. (Photo by Spencer Platt/Getty Images)

UPDATE: Verizon's chief financial officer, Fran Shammo, said Tuesday the company is in the early stages of exploring a possible expansion into Canada.

Following a report in the Globe and Mail Monday, citing unnamed sources, Shammo confirmed to the Wall Street Journal Tuesday the company has been in talks with Wind Mobile.

"We're looking at the opportunity," Shammo said. "This is just us dipping our toe in the water."

Original story follows below.

The U.S.’s largest cellphone company could soon be operating in Canada.

Verizon is considering the purchase of Wind Mobile, one of Canada’s small wireless entrants, as a springboard to becoming Canada’s fourth major wireless provider, according to a report in the Globe and Mail.

That could satisfy a goal of the Harper government, which has loosened foreign ownership laws of wireless companies on several occasions in order to spur more competition in a market that many consumers say is overpriced and lacking in choice.

News this spring that all three of Canada’s indie wireless providers -- Mobilicity, Public Mobile and Wind Mobile -- put themselves on the selling block raised concerns among consumers’ advocates that this could spell the end of hopes for greater competition.

A source close to Wind Mobile told The Huffington Post Canada in March that large U.S. cellphone companies were looking at the possibility of buying Wind.

Story continues below slideshow

What You Need To Know About Wireless Code of Conduct

Verizon has been at the centre of the recent controversy over NSA wiretapping, following a report in The Guardian revealing that the telecom firm hands over records on millions of customers' phone conversation to the U.S. on a daily basis, as part of a court order.

The company has also come under criticism for a plan to sell customers' "background information" to marketing companies.

According to the Globe, Verizon is the likeliest candidate to enter the Canadian market, although unnamed “industry sources” tell the paper that AT&T may also be interested in Canada.

Britain’s Vodafone and Norway’s Telenor are also mentioned as possible candidates. (Telenor is already a shareholder in VimpelCom, the Dutch company that owns Wind Mobile.)

Verizon’s interest in Wind Mobile comes after Industry Minister Christian Paradis rejected a plan for Telus, one of Canada’s three major wireless companies, to take over Mobilicity and its wireless spectrum.

He argued that the spectrum was set aside for smaller entrants, and that handing it over to Telus would not meet the government's goal of increasing competition.

But Verizon’s purchase of Wind could both satisfy regulatory demands and the hopes of consumer groups and the Harper government that Canada will see a fourth major wireless carrier.

Under rules loosened last year by the Tories, a foreign entity can own a Canadian wireless company so long as it has less than 10 per cent market share. Wind’s market share is low enough for Verizon to qualify as a buyer.

But Verizon is also the U.S.’s largest cellphone service provider, with 115 million subscribers as of the fourth quarter of last year. Compare that to Rogers, Canada’s largest wireless company, with 9.3 million subscribers as of last year.

That would give Verizon the weight and access to funding needed to set up a serious challenge to the major wireless players -- Bell, Rogers and Telus.

According to analysts cited by The Globe, getting Wind Mobile up to a point where it’s not losing money would cost between $1 billion and $2 billion.