Nice article in today's globe!
posted on
Jan 12, 2009 12:19AM
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SIMON AVERY
From Monday's Globe and Mail
January 12, 2009 at 4:13 AM EST
Look Communications Inc. has lost a lot of money selling Internet and television services to customers in Ontario and Quebec. Sales have plummeted 47 per cent in the last four years at a time when demand for Web access and digital TV has risen steadily.
But the troubled company holds a precious resource in today's telecom industry: wireless spectrum.
As phone companies sell more iPhones, BlackBerrys and other sleek smart phones, they are recognizing that they will need much more spectrum to meet the almost insatiable demands of customers, who are getting hooked on wireless features like e-mail, music and video.
The federal government sold more than 200 licences for newly released spectrum in an auction last summer. The sale reaped $4.3-billion, or three times the revenue experts had forecast.
Gerald McGoey, vice-chairman and chief executive officer of Look, is the first to admit that the Toronto-based company's band of spectrum will not attract the same valuation. There is no equipment available today for consumers to use the frequency covered by the licences. But he does think every telecom player in the country would like to get its hands on the spectrum, which covers about 60 per cent of the population, or 18 million people in Ontario and Quebec.
In fact, the swath of mobile wireless spectrum covered by Look's licences is so wide that Mr. McGoey thinks it could be broken up and sold to the three incumbents (Rogers Wireless, Bell Mobility and Telus) or to new entrants preparing to launch cellphone services (including Globalive Communications, BMV Holdings and Data & Audio-Visual Enterprises Wireless).
Last month, Look announced plans to sell all or some of its assets, which also include a mobile broadcast licence, 30,000 Internet and TV subscribers, and about $300-million in unused tax writeoffs.
The company will ask shareholders this week to approve an expedited process for selling the assets, which will give interested parties one shot for placing bids and will determine winners by late February.
"Rogers, Bell and Telus will all be running out of spectrum in the next four to five years," said one analyst who is not authorized by his firm to speak publicly about Look. "Look is effectively forcing a shotgun sale here."
Look has benefited from an unusual decision by Ottawa several years ago, which allows holders of the 2.5 gigahertz band to convert their spectrum licences from fixed wireless to mobile wireless.
While Look's spectrum is incompatible with today's cellphones and network equipment, analysts say it is one of the three major blocks that will be used by the next generation of wireless technology. WiMAX, and a more popular standard called LTE, are expected to roll out in the next two to four years.
Craig Wireless Systems Ltd. recently converted its holdings of 2.5 GHz that covers the Vancouver area in preparation for offering the faster WiMAX service, which is just starting to come to market in a few North American cities.
Look says it will sell some or all of its assets in return for cash, equity or debt.
Mr. McGoey, who served as chief corporate officer at Bell Canada in the 1990s, said Look tried a number of years ago to raise several hundred million dollars so that it could build its own wireless network. But at the time, potential investors felt the only way a new cellphone company could succeed would be to build nationally.
The spectrum auction last year saw firms such as Shaw Communications Inc., Vidéotron Télécom Ltée and Bragg Communications Inc. win licences in their own markets, and it legitimized the idea of successful regionalized telecom players, Mr. McGoey said.