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And then there were fewer. On the eve of Canada’s AWS spectrum auction, another major bidder has just lost the better part of their backing. Canada pension plan and blackstone group are now out though MTS is still qualified as a bidder, though according to the post and others, MTS may go it alone. They consortium haven’t said much other than a very short release. What MTS have said is

“Consistent with its previously stated goal of maintaining its current dividend policy, the company intends to pursue a focused and disciplined approach to the auction.”

Here’s what this means. MTS is not raising outside capital, and they are not indenting to straining what capital or free cash flows they have already. This means they aren’t building a network even if they win, at least not a very big one. Your hopes of MTS being Canada’s next big coast-to-coast mobile player are done.

More likely, MTS will be bidding and bidding conservatively on licences at least up to the deposit capital they have set aside already. Then they’ll sit on it. Should they actually win any block at a good price, the wheeling and dealing may begin again. Perhaps they think they can get better terms out of their financing partners once the dust settles. Or failing that, flip it to Rogers in five years for a healthy profit.

The other factor that is substantially in play here is of course the credit crunch in the capital markets in general. Unfortunately for Canadians and for Industry Canada, they picked a real tough time for anyone to be sticking out their hat on the street looking for a few extra billion for some brand new high risk venture.