WIND could use Mobilicity’s help to make the most of its AWS-3 spectrum acquisition

Alongside all of the MWC craziness from last week, the mobile landscape within Canada saw major change with the wrap up of the AWS-3 auction. As we reported last week, WIND won big thanks to Mobilicity’s failure to secure financing for participation in the auction. This left WIND open to acquire three chunks of spectrum in Southern Ontario, Alberta, and BC.

This is great news for WIND and its customers but, as we discussed on last week’s podcast, it’s not as simple as all of that. Subscribers could be waiting until next year to benefit from these events for a few reasons. One is that no handsets support AWS-3 yet. This is not a problem unique to Canada. The U.S. just finished their AWS-3 auction and the same is true there — phones supporting AWS-3 won’t arrive until early next year.

The other issue is one highlighted in a National Post article published earlier this week. The focus of the piece is on Mobilicity and how the company and its creditors want to proceed following last week’s no-show. There’s speculation that the Catalyst Capital Group, which owns a portion of Mobilicity’s outstanding bonds, purposely didn’t provide the money Mobilicity needed to participate in the spectrum auction and it has a lot to do with how WIND will use the spectrum that it just acquired.

The theory is that WIND will need a lot of money to actually utilize its new spectrum and Mobilicity’s creditors have demonstrated that they have access to a lot of capital. Infrastructure doesn’t come cheap and, as FP points out, WIND still has unused airwaves from the last auction in 2010. Though investors are likely a lot happier throwing money WIND’s way following the auction, the cheque books haven’t open yet. In 2013, there were reports that Catalyst hoped to merge WIND Mobile and Mobilicity. The Post seems to think that desire for a WIND/Mobilicity partnership still exists but notes that there is still “an ad hoc group of debt holders” still hoping for an approved sale to one of the nationals Big Three.

It’s an interesting situation for WIND. We’ve discussed all manner of options that may or may not be open to the company for the next 12 months. Whether it plans to repurpose existing spectrum to roll out a limited amount of LTE service or if it will ask customers to sit tight and weather the storm for one more year, when AWS-3 phones will be available. But none of these represents the perfect solution. Expecting customers to wait a year for LTE, especially customers who might not necessarily be happy with their service, is asking a huge favour. You’d want to have built some serious goodwill to make that request. And that’s without the consideration that these customers who are going to wait for LTE, they’re going to need to buy a new handset if they want to reap the reward for being so patient.

The common line of thinking prior to the auction seemed to be that WIND just needed additional spectrum and then everything would be fine, but the issue is more complicated than that. It’s one of compatible phones that won’t hit the market for at least a year, and of towers and antennas that cost money, and of giving existing unsatisfied customers something to stay for.

[source]Financial Post[/source]