The culprit, for good or for ill, is The Globe and Mail, which started the ball rolling on Jun. 17 with a report that the U.S. giant was eye-balling Canada. The newspaper followed that up with another story on Jun. 26 confirming that Verizon had indeed made a $700 million offer for Canadian upstart Wind and that it was also in talks with Mobilicity.
While the U.S. carrier confirmed that it was looking at Canada as a possible opportunity, it never officially verified the Wind offer, with the Globe attributing much of its information to unnamed sources. Only the reporters and editors involved are likely to ever know who those sources were, but one thing is obvious to the outside world: there has been a whole lot of game playing going on.
This is all speculation, but let’s start with what’s definite: Bell, Rogers and Telus positively freaked out upon learning of Verizon’s plans. Wireless executives generally don’t make a habit of deciding courses of action based on a couple of newspaper stories, so it’s safe to assume they made some phone calls to confirm what was really going on. Telus’s reaction to the news seemed to be the most over the top, what with lawsuits against the government and all, which makes sense since Verizon used to own a sizable stake in the company. Surely some Telus executives still have some of their American counterparts on speed dial.
In light of that, it seems highly unlikely that the incumbents would have gone ahead with their all-out war against the government if they didn’t have privileged information that, yes, Verizon really was seriously thinking about coming to Canada.
That makes chief executive Lowell McAdam’s comments about how the company “never seriously considered” expanding into the country seem rather disingenuous. For its part, Verizon had every opportunity to deny that it had made an offer to buy Wind, but it chose to let that one fester. That sure looks like game playing.
So who leaked the info? It would obviously have been someone with something to gain from doing so, but it’s hard to figure out who, if anyone, won from this whole situation. Conspiracy theorists have mentioned Wind, the government and even the incumbents as possibilities, but each of those suggestions range from unlikely to downright crazy.
If anyone came out ahead, it may indeed have been Verizon. While the wireless war was going on in Canada, the U.S. company was also negotiating with Britain’s Vodafone over its 45-per-cent stake in their Verizon Wireless joint venture. The company may have been playing a game of chicken, where it was subtly suggesting to Vodafone that it might soon turn its attention elsewhere and that it might not be interested in buying that stake for much longer. Could the company itself, or someone associated with it, have leaked the info to the Globe as a gambit in that negotiation?
Some observers have poured cold water on that theory by pointing out that Canada is a tiny gnat to the likes of Vodafone, so that would be a rather useless ploy on Verizon’s part. But adding credibility to the idea that Verizon was the leaker is the fact that the $700 million Wind offer was a rather specific number that was unlikely to be known to anyone outside Wind, the U.S. company or their bankers and lawyers.
The Vodafone agreement ended up happening, so did Verizon indeed play everyone, Canadian wireless executives included, or did circumstances merely change? McAdam says the Vodafone deal had no bearing on his company’s interest in Canada and logically, it shouldn’t have. The $700-million acquisition cost of Wind and even the $3 billion in associated spending analysts were figuring would be necessary for Canadian expansion was a drop in the bucket compared to the $130 billion the company had just shelled out to Vodafone. Out of those two options, the latter is therefore unlikely.
Either way, this all ended up pretty poorly for Canada. An awful lot of fuss was made, battle-lines were drawn, relationships were strained, harsh words were spoken and an awful lot of money was wasted through bouncing share prices and incumbent ad campaigns. And the country has nothing to show for it at the end.
The media gets manipulated all the time by self-interested sources, but in this sense it’s the country as a whole that lost out as a result. The challenge all journalists face when presented with juicy inside information is the ascertaining of the interests involved. In the wake of Verizon’s pullback, the deeper and far more important story now is who played the media and why? I wonder if that story will ever emerge.