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Cell phone users passing the Telus store at 25 York Street in Toronto on Monday, April 1, 2013.Peter Power/The Globe and Mail

The federal government has lost two more bidders for a pivotal auction of wireless licences next year.

Industry Canada announced late Friday that Victoria-based Vecima Networks Inc. and 1770129 Alberta Inc., a company headquartered in Calgary that controls Corridor Communications Inc., have both withdrawn from the 700 megahertz auction.

That means only 12 companies are prepared to vie for the most valuable public airwaves that have ever come up for bidding in Canadian history.

Fifteen companies had originally applied to participate in the 700 MHz auction. Then in October, Toronto private equity firm Birch Hill Equity Partners Management Inc. became the first applicant to drop out.

Ottawa's failure to attract a new large foreign carrier to the auction has created doubt about its strategy to encourage more competition in the $20-billion wireless market.

Wind Mobile's parent, Globalive Wireless Management Corp., along with private-equity firm Catalyst Capital Group Inc. and Feenix Wireless Inc., a new company headed by John Bitove (also executive chairman of Mobilicity), remain on the list and have "qualified" to participate, Industry Canada said.

A shrinking list of bidders, however, is good news for the Big Three wireless carriers (Rogers Communications Inc., BCE Inc. and Telus Corp.) because they face less competition for those valuable wireless licences.

The first round of bidding in the auction is set to begin on Jan. 14, 2014. Final payments for spectrum will be due later next year, likely in the spring.