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Wednesday, September 4, 2013

Verizon Never ‘Seriously Considered’ Move Into Canada, Chief Says

Speculation that Verizon Communications would enter Canada by buying two struggling start-up carriers, allowing the company to bid for radio spectrum at a  coming government auction, dominated in recent weeks.

But on Tuesday, Lowell C. McAdam, Verizon’s chairman and chief executive, told analysts during a conference call that the company’s interest in expanding into Canada had been blown out of proportion.

“We never seriously considered the move and it’s off the table,” Mr. McAdam said.

Mr. McAdam’s remarks came a day after the company, which is based in New York, agreed to spend $130 billion to take full control of its enormous wireless unit, buying out its longtime partner, Vodafone.

In Canada, where the cellphone market has been dominated by Bell Canada, Rogers Communications and Telus, there is widespread sentiment, not always  supported by statistics, that wireless service is excessively expensive. A move by Verizon to buy the start-ups, Wind Mobile and Mobilicity, was expected to have been encouraged by Prime Minister Stephen Harper’s government.

Aside from posting a petition demanding better cellphone service terms on his Facebook page, Mr. Harper has introduced measures to help turn start-up carriers into market leaders from also-rans.

First, the government barred Telus from closing a deal for Mobilicity, which is nearly insolvent, while making it clear that Telus and Mobilicity, which is Russian owned and struggling, were off limits to the big three.

The larger carriers must also sell service on their networks at wholesale rates to start-ups to enable them to offer nationwide roaming. Had Verizon bought Telus, Mobilicity or both, it would have been considered a start-up in Canada, despite its $75.9 billion in revenue last year. And start-ups can acquire more radio spectrum at a government auction scheduled for January than the established players can buy.

The response over the last few weeks from Canada’s three larger carriers was a flood of ads condemning what they viewed as unfair special treatment for Verizon, even though it had made no formal move into the market. Joining them in the condemnation were several labor unions.

Despite the heated debate, it now appears that Verizon’s northern expansion was more exploratory than a real possibility.

“You know, it is something that we look at. We look at a lot of different countries around the world. We’ll continue to do that, but it was always on the fringe for us,” Mr. McAdam said on Tuesday’s conference call.

While Mr. Harper laid out a welcome mat, he did not take a crucial step that might have lured Verizon or another foreign carrier into the Canadian market. Bell, Telus and Rogers all remain off limits to foreign investors.

Verizon’s deal with Vodafone could be seen as a signal that it intends to redouble  its efforts in the United States, where subscriber growth in the the wireless business  gradually slowed  in the last few years as the number of people without phones has grown increasingly smaller.