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Vancouver’s Telus spends nearly $1b on wireless spectrum for 5G

What happened: Telus and other wireless carriers shell out $3.
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Cell dishes at Vancouver's Harbour Centre | Chung Chow

What happened: Telus and other wireless carriers shell out $3.47 billion for wireless spectrum in federal auction

What it matters: Telus says efforts to build out 5G network face inflated costs due to auction format

With an eye on building out its 5G network, Telus Corp. (TSX: T) is laying down big bucks to acquire wireless spectrum.

The Vancouver-based telecom giant revealed Tuesday (April 11) it’s paying $937 million for new 600 MHz spectrum licences in B.C., Alberta, Saskatchewan, Ontario and Quebec.

“The acquisition and deployment of this spectrum is critical to the advancement of our national 5G growth strategy and to the global-leading network quality, speed and coverage we provide to Canadians,” Telus CEO Darren Entwistle said in a statement.

The low-frequency 600 MHz spectrum is coveted among the telecom companies for its ability to carry signals over long distances and to penetrate buildings.

Telus’s acquisition of the spectrum follows the conclusion of a federal wireless spectrum auction that ran from March to April.

Nine companies walked away with 104 of the 112 available spectrum licences.

One notable exception, however, was Bell.

The company said it already had sufficient spectrum.

Rogers Communications Inc. (TSX: RCI.B), meanwhile, spent $1.7 billion on acquiring licences.

Entwistle took aim that the format of the auction, stating Canadian carriers were left with “the highest prices paid for 600 MHz spectrum in the world.”

Based on MHz-pop — a unit of measurement denoting the population in a coverage area — Entwistle stated Canadian national carriers paid an average of $1.89 MHz-pop compared with $0.93 MHz-pop paid by carriers in the U.S.

Ottawa’s auction featured open spectrum as well as “set-aside” spectrum for smaller players.

Without calling out Shaw Communications Inc. by name, Telus complained its competitor was able to bid on both the open spectrum and the set-aside spectrum (Shaw owns Freedom Mobile).

This, Entwistle said, resulted in inflated pricing for the open spectrum auction.

The federal government’s auction raked in $3.47 billion from all the participants.

“We know that Canadians want more choice, lower prices and better service. Through this process, we have strengthened wireless competition, which will drive prices down and improve coverage. It is clear that the big winners in this auction will be Canadians in both urban and rural areas,” Minister of Innovation, Science and Economic Development Navdeep Bains said in a statement.

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