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Verizon Heading North to Canada Mobile Market (Again)…in New International Investment Wave?

by Susan Welsh de Grimaldo | 6月 28, 2013

Verizon stated this week that it is interested in entering the Canadian mobile market, and reportedly has made an offer for Wind Mobile (currently owned by Vimpelcom) and also approached Mobilicity.

Verizon sold off international assets after previous ventures, including divestiture of its interest in TELUS in Canada in late 2004 as part of a strategy to focus on its core wireless and broadband business in the US, so why now look at international again? With the US market maturing (although with continued growth potential), the timing may be ripe to revisit select opportunities in other markets, just as Softbank and others are looking at US investments to diversify.

Why Canada?

With a total of 27 million cellular subscriptions in the entire country at the end of 2012—less than a third of Verizon Wireless total subscribers—Canada would appear to offer only a small growth opportunity.

Yet Canada is attractive market for US carriers:

  • Relatively low mobile penetration for a developed market, with mobile Subscription Penetration by end 2013 under 82%, compared to nearly 116% in the US, as forecast by Strategy Analytics Wireless Operator Strategies service. In fact, mobile penetration in Canada is lower than in Mexico, which will reach just over 90% penetration in 2013 (see Worldwide Cellular User Forecasts, 2012-2017 )
  • High ARPU - Strategy Analytics Wireless Operator Strategies projects ARPU per subscription in Canada will be at US$56.45 compared to $45.61 in the US at the end of 2013.
  • Upcoming auctions for 700 MHz spectrum that may provide economies of scale and roaming with US carriers using 700 MHz bands for LTE, and provide opportunities for new competition with the leading three Canadian operators Bell, TELUS and Rogers
  • A market that is important for roaming to and from the US

 

With deadlines for applying to participate in the Canadian spectrum auctions looming in mid-September, Verizon and any other operators from the US or Europe eyeing the Canadian wireless challengers will have a busy summer working to clarify any acquisitions or investments.

Susan Welsh de Grimaldo, Wireless Operator Strategies

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