Private equity firm Birch Hill pulls out of Canada wireless auction

TORONTO, Oct 16 (Reuters) - Birch Hill Equity Partners has withdrawn its application to take part in an auction of prized Canadian wireless airwaves, the country's industry ministry said on its website.

Birch Hill, a private equity firm, had previously been tipped as a possible bidder for small wireless providers Wind Mobile and Mobilicity, with sources saying in August that market leader Rogers Communications Inc would help fund the push in return for a network-sharing deal.

Withdrawing from the auction frees Birch Hill to talk to any of the remaining auction participants about an acquisition. Bidders are forbidden from such talk under Industry Canada rules.

The Canadian government last month released a list of 15 companies that registered to bid on the 700 MHz spectrum in an auction that kicks off on Jan. 14.

The list showed major foreign telecommunications companies had decided to shun the auction, which was good news for the dominant Canadian companies - Rogers, BCE Inc and Telus Corp.