Globalive's big dreams move closer to reality by Simon Avery
Source : Globe & Mail
Upstart wireless firm secures $700-million investment commitment, plans to be in major centres by second half of 2009
September 5, 2008
The telecom giants that first dismissed Globalive Communications Corp. as a threat face the reality today that the upstart wireless firm could become Canada's fourth national cellphone company in less than a year.
Globalive said yesterday that it has paid in full its $442-million tab to the federal government for 30 spectrum licences covering most of the population, and also secured a public commitment from its biggest financier for up to $700-million (U.S.).
The Toronto-based firm plans to roll out wireless service to Toronto, Calgary, Edmonton and Vancouver by the second half of next year, targeting consumers who do not want to lock themselves into multiyear contracts with the three incumbents: Rogers Wireless Communications Inc., BCE Inc.'s Bell Mobility Inc. and Telus Corp.
Globalive has made a name for itself over the past decade by selling consumers long-distance services under the Yak brand. Last year, the firm generated $120.3-million (Canadian) in sales. That result pales in comparison to revenue of the major phone companies, but represents rapid growth for a small firm started by Anthony Lacavera, at the time an ambitious outsider with almost no knowledge of the industry.
Mr. Lacavera's best talent as chief executive officer may be recognizing his own limitations and bringing in experienced people to support him. The thirtysomething CEO has tapped Orascom Telecom Holding SAE as financial backer for his wireless dreams.
Orascom is the largest mobile phone company in the Middle East, and offers wireless service from Europe to Asia, serving more than 90 million customers. Yesterday, the Egyptian-based company told investors it would invest as much as $700-million (U.S.) in Globalive over the next four years.
Egyptian billionaire Naguib Sawiris, CEO of Orascom, said Canada is an attractive market because of "muted competition," relatively low numbers of cellphone users and high wireless sector profits.
His firm has a 65-per-cent equity stake in Globalive, although foreign ownership rules restrict his voting equity to no more than 20 per cent. If Ottawa eventually lifts restrictions on foreign ownership, as a government-appointed review panel recommended in June, Orascom may take full control of Globalive.
Globalive will target customers who prefer prepayment over signing a contract. It will focus on voice service, rather than data services such as streaming video and TV that incumbents are rolling out on their recently upgraded 3G networks. Mr. Lacavera said his firm will distinguish itself by offering customers better service, simpler pricing plans without hidden charges, and less expensive phones.
Peter Rhamey, an analyst with BMO Nesbitt Burns Inc., said the strategy will make Globalive "a rational yet aggressive competitor," and put pressure on the incumbents.
Globalive expects to spend $1.9-billion on a new wireless network over the next 10 years and wants to have 1.5 million wireless customers in three years. It has a long-term goal of 3.5 million subscribers, about half of what Rogers has today.
In the spectrum auction, Globalive secured licences for each province but Quebec, where Quebecor Inc.'s Vidéotron Télécom Ltée managed to shut out all other entrants. Globalive customers will be able to roam on the networks of other operators, but to keep fees down the firm would need to partner with Vidéotron.
Mr. Lacavera said he is willing to partner with "anyone and everyone," including Vidéotron and Data & Audio-Visual Enterprises Wireless Inc., another upstart looking at launching across Canada.
© Globe and Mail
Globalive said yesterday that it has paid in full its $442-million tab to the federal government for 30 spectrum licences covering most of the population, and also secured a public commitment from its biggest financier for up to $700-million (U.S.).
The Toronto-based firm plans to roll out wireless service to Toronto, Calgary, Edmonton and Vancouver by the second half of next year, targeting consumers who do not want to lock themselves into multiyear contracts with the three incumbents: Rogers Wireless Communications Inc., BCE Inc.'s Bell Mobility Inc. and Telus Corp.
Globalive has made a name for itself over the past decade by selling consumers long-distance services under the Yak brand. Last year, the firm generated $120.3-million (Canadian) in sales. That result pales in comparison to revenue of the major phone companies, but represents rapid growth for a small firm started by Anthony Lacavera, at the time an ambitious outsider with almost no knowledge of the industry.
Mr. Lacavera's best talent as chief executive officer may be recognizing his own limitations and bringing in experienced people to support him. The thirtysomething CEO has tapped Orascom Telecom Holding SAE as financial backer for his wireless dreams.
Orascom is the largest mobile phone company in the Middle East, and offers wireless service from Europe to Asia, serving more than 90 million customers. Yesterday, the Egyptian-based company told investors it would invest as much as $700-million (U.S.) in Globalive over the next four years.
Egyptian billionaire Naguib Sawiris, CEO of Orascom, said Canada is an attractive market because of "muted competition," relatively low numbers of cellphone users and high wireless sector profits.
His firm has a 65-per-cent equity stake in Globalive, although foreign ownership rules restrict his voting equity to no more than 20 per cent. If Ottawa eventually lifts restrictions on foreign ownership, as a government-appointed review panel recommended in June, Orascom may take full control of Globalive.
Globalive will target customers who prefer prepayment over signing a contract. It will focus on voice service, rather than data services such as streaming video and TV that incumbents are rolling out on their recently upgraded 3G networks. Mr. Lacavera said his firm will distinguish itself by offering customers better service, simpler pricing plans without hidden charges, and less expensive phones.
Peter Rhamey, an analyst with BMO Nesbitt Burns Inc., said the strategy will make Globalive "a rational yet aggressive competitor," and put pressure on the incumbents.
Globalive expects to spend $1.9-billion on a new wireless network over the next 10 years and wants to have 1.5 million wireless customers in three years. It has a long-term goal of 3.5 million subscribers, about half of what Rogers has today.
In the spectrum auction, Globalive secured licences for each province but Quebec, where Quebecor Inc.'s Vidéotron Télécom Ltée managed to shut out all other entrants. Globalive customers will be able to roam on the networks of other operators, but to keep fees down the firm would need to partner with Vidéotron.
Mr. Lacavera said he is willing to partner with "anyone and everyone," including Vidéotron and Data & Audio-Visual Enterprises Wireless Inc., another upstart looking at launching across Canada.
© Globe and Mail
