MONTREAL -- Shares in Canada's big three wireless carriers -- Rogers, Bell and Telus -- could start regaining value next week if it turns out that no large foreign telecom has applied to take part in Canada's wireless spectrum auction, according to a report by America's biggest bank, JPMorgan.

Their shares, which remain weak, could also rally later if a foreign telecom does take part in the January auction but ended up as an unsuccessful bidder without spectrum, JPMorgan analyst Richard Choe said Friday.

"We believe the stocks should rally significantly if the new entrant overhang is removed," Choe said in a research report, his first on Canada's communications industry.

But Choe also warned that if a well-funded foreign wireless player did come to Canada, it would have a significant negative impact on all three carriers.

Bell (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T) have said they took an almost $15 billion collective hit on the capital markets after news broke in recent months that U.S. carrier Verizon was looking at entering Canada's wireless market.

Verizon has since said it's no longer interested in Canada's cellphone market and it remains to be seen if any other foreign carriers have put down a refundable deposit for the Jan. 14 auction.

Industry Canada will publish a list of those who have applied to participate in the auction on Monday, but the government has said it wants four wireless carriers in every region to bring more competition and lower prices to the market.

The auction of 700 megahertz spectrum has been called "beachfront property" by analysts because those radio waves have the ability to allow cellphone signals to reach into elevators, deep into underground parking lots, traffic tunnels and basements where calls are often dropped. The signal can also travel great distances and will require few cellphone towers in rural Canada.

Choe estimates that a new wireless player would have to spend between $2.5 billion and $4.5 billion to have a chance at being a successful national carrier in Canada.

The previous auction in 2008 raised $4.3 billion and brought more competition to the cellphone market with the launch of Wind Mobile, Mobilcity, Public Mobile, Quebecor's Videotron and Eastlink. Choe noted that few of the new players have been successful.

He also estimated the auction of radio waves needed to operate cellphone networks could raise $3 billion for the Canadian government and possibly as much as $4 billion.

"In our view, the regulatory environment remains difficult and unpredictable, but incumbents have been able to manage so far and we expect they will continue to do so," he said. "Wireless continues to grow and new entrant fears are overblown."

Choe said Bell Canada is his top pick with its strong potential growth in such areas as wireless and Internet protocol TV, followed by Rogers and Telus.