After a decade or so of endless deliberations that only the FCC can match, the Canadian government has finally gone and done it. They have now announced the lifting of foreign investment limits on telecommunications firms, or at least the smaller ones with less than 10% market share. They also unveiled plans for 700Mhz and 2.5Ghz spectrum designed to prevent larger players sitting on spectrum to squeeze out the competition.
So US telecoms can perhaps now own own and operate assets across the border to the north, and smaller Canadian firms can now seek investment from abroad in their efforts to gain traction against the country’s incumbent providers. And the 10% cap doesn’t apply to organic market share growth, but rather to inorganic growth. It’s not a panacea yet, but it is definitly a substantial crack in the door and it will likely lead to some changes in the North American telecommunications landscape.
While the focus of the announcement (and Canada’s regulatory attention) is definitely on wireless today, from here it looks like the ownership changes will to apply to fiber as well. If so, that could lead to some interesting times ahead for operators on both sides of the border, which have been largely segregated for so long despite the deep economic ties between the regions they serve. For instance, we might see some of the smaller but more aggressive US fiber operators finally pursue Canadian conduit and fiber assets, after merely dabbling with some leased connectivity to Toronto and Montreal or perhaps north of Seattle to Vancouver. Or US-based private equity firms might find they have more places to put their metro fiber dollars, and thus reduce demand (and multiples) in these parts.
So what do you think, are there more opportunities up in hockey territory to take advantage of today? Or is all this years too late?