Article content continued

Stocks of Canada’s three big telecoms players tumbled on the Toronto Stock Exchange as the market digested what could be a game-changing development in what has been a cozy domestic market.

Telus Corp fell 7.8% to $30.75, Rogers Communications lost 9% to $41.77, and BCE Inc was down 4.1% at $41.54.

Mobilicity, Wind and Public Mobile, the three startups that emerged from a 2008 government auction of spectrum, entered the market with cheap talk-and-text plans that pressured the existing players. But they struggled to compete, and Mobilicity debtholders are set to vote on a recapitalization plan early next week.

Activity in the sector has stepped up since the government lifted curbs on the foreign ownership of new entrants last year, and a number of players are now jockeying to strike deals ahead of a second big auction, of coveted 700 mHz spectrum, which requires fewer towers than higher-frequency airwaves.

Sources familiar with the situation say that all three of the juniors have attracted offers from the Canadian incumbents.

But the government wants to boost competition, and Ottawa has made it clear that it does not want the startups to go to existing players. Earlier this month, it quashed Telus’s bid for Mobilicity by blocking the transfer of Mobilicity’s spectrum licences to Telus.

A bid from Verizon would likely be far more tempting to Ottawa, given that it would create a player able to boost competition across the country.