01/13/2014 06:21 EST | Updated 03/15/2014 05:59 EDT

Wind Mobile backs out of 700 MHz spectrum auction

Wind Mobile is dropping out of the 700 megahertz spectrum auction set for Tuesday after failing to get financial support from its parent company, VimpelCom.

The announcement, disclosed Monday on the Industry Canada website, leaves mainly the big three telecom companies — Telus, Rogers and Bell — in the running for airwaves that will allow consumers to connect to a new generation of devices.

"From Wind Mobile’s perspective, there will be no change in our day-to-day business as a result of this decision," the company said in a written statement. "Wind Mobile remains firmly committed to serving our customers and we are determined to continue to be a vital influence on mobile competition in Canada."

The move deals a blow to the federal government’s plan to introduce competition in the telecom marketplace and lower prices for consumers.

Without Wind’s bid, Ottawa has failed in its efforts to create a fourth player in the telecom market in Ontario, Alberta and British Columbia.

Other small new entrants are non-starters — Mobilicity is under bankruptcy protection, while Public Mobile was sold to Telus Corp. late last year.

“Wireless costs are down almost 20 per cent in markets where Wind operates. It is a sad day for competition and real choice for Canadian consumers and businesses that Wind is unable to participate in the 700 MHz auction,” Wind Mobile CEO Anthony Lacavera said in a statement.

Wind, held by Globalive Wireless Management, has faced huge obstacles since entering the Canadian market in 2008, but has managed to snag 675,000 customers with its lower rates.

Amsterdam-based VimpelCom Ltd., Wind’s main investor, told the government of its intention to withdraw from the 700 MHz spectrum auction earlier Monday.

"Wind Mobile’s shareholder VimpelCom decided not to fund Wind Mobile’s participation in this auction, but confirmed that it remains in discussions with the federal government and Wind Mobile’s other shareholder AAL Holding to craft a path forward that will continue to build Wind Mobile as a strong competitor in the Canadian wireless market," Wind Mobile said in a statement.

The parent, backed by a Russian conglomerate, has run afoul of Ottawa’s foreign investment rules, which prevent it from taking full control of Wind.

Ottawa’s decision to block the sale of MTS Allstream to Egyptian billionaire Naguib Sawiris because of unspecified national security concerns may also have spooked VimpelCom.