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Gone with the Wind?

Wireless Entrant Faces Arctic Reception in Canada.

 

       
     
   

December 2009 - IGB Grant +1 514-849-3508, Amit Kaminer +1 416-413-1636, Cynthia Lee +1 416-619-4926, Bianca Anghel +1 416-413-9381

   
    OVERVIEW  
 

 

 

The CRTC has ruled that newly licenced wireless carrier Globalive will not be allowed to launch its wireless service this year. The Commission found after a public review that when taken together, Globalive’s current shareholder agreements, debt covenants, technical service, trademark and branding agreements, do not make it a Canadian-controlled company. Globalive has the option of addressing these issues and reapplying to the CRTC for another examination of its ownership and control, which will probably be subject to appeal,or it can walk away; to leave the Canadian market and return to warmer, more hospitable climes.

This paper examines how Globalive has hit this roadblock and explores the ‘walk away’ option. Should the company decide that retreat is the best course of action, the $750M or so that has been invested by Globalive’s Egyptian backer, Orascom, would be stranded. SeaBoard looks at potential buyers that may be interested in purchasing its spectrum and/or various assets.

Our conclusion? One of the other new entrants - Public Mobile or DAVE Wireless - is the most obvious purchaser. Public Mobile has the lowest cost spectrum at present and could afford to ‘average-up’ its spectrum cost, and so might be the prospective purchaser willing to pay the most. DAVE Wireless, on the other hand, is installing a network using the same technology (albeit made by a different manufacturer) as Globalive and might be interested in obtaining assets as well as spectrum. Since the incumbents are not eligible to bid on the spectrum and have recently made significant deployments of HSPA+ equipment, we do not see them as potential buyers.

Will the Government step in and change the foreign ownership laws to make an exception in Orascom’s case? We suspect not. Competition in the Canadian market will be vibrant in any case, with, or without Orascom. The rules, we argue, should be changed, but not just for a single entrant – an entrant that knew the rules of engagement at the outset.

 


 
   


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Thursday, 13 December 2018

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