New cellphone carrier launching in 2nd half of 2009

More cellphone competition is on the way as Globalive Communications Inc. is aiming to have Canada's fourth national wireless service up and running in the second half of 2009.

The Toronto-based company made the announcement on Thursday after spending $442 million on wireless spectrum licences across the country — except Quebec — in a government auction earlier this summer. Auction participants had been under a gag order since bidding ended in late July and were prohibited from speaking to each other or from sharing their plans with the public until Thursday.

At a press conference in Toronto, Globalive chief executive officer Tony Lacavera announced he was launching a website — wirelesssoapbox.com — where Canadians could share their ideas for what sorts of service and prices they want to see from the company.

"I've never built a wireless company and we as Globalive have never built a wireless company, so we're not going to claim to be the experts," he said. "Canadians have a lot to say about wireless and it's about time that a company did a lot more listening and lot less telling."

The company has not yet decided on which equipment maker will build its network, although the field is down to two, Lacavera said. Globalive plans to launch a test service with a small group of customers in the second quarter of next year, with a full roll-out coming in the "back half" of 2009.

Globalive is a relative minnow in the Canadian telecommunications business, with about one million internet and phone customers — most of whom use the company's Yak long-distance dial-around service. The company has partnered with Egypt-based Orascom Telecom Holding SAE, which is a major service provider in the Middle East, Africa and Asia.

Orascom has footed most of the bill for Globalive's spectrum licences but is limited to maintaining minority control over the new wireless company by Canadian regulations. In a conference call with analysts on Thursday morning, Orascom said its stake in the new company will require it to spend between $500 million US and $700 million US over the next four years.

Orascom expected to acquire majority

Most analysts believe Orascom, which is run by billionaire Naguib Sawiris, is establishing a foothold in Canada with the expectation the foreign ownership restrictions will eventually be lifted. A government-appointed competition review panel indeed made that recommendation in June. Once restrictions are lifted, Orascom is expected to acquire majority ownership of the new wireless venture.

The company — which will take on established incumbents Rogers Communications Inc., Bell Canada Inc. and Telus Corp. — also said it aims to have 1.5 million subscribers in its first three years of operation, with a long-term target of 3.5 million. Orascom said it plans to focus on the prepaid market.

Globalive had also counted Novator Partners LLP, a London-based investment company, as one of its partners during the auction. Lacavera said the company is not currently a member of Globalive's wireless partnership, but retains the option to join in at a later time.

Globalive was one of a handful of potential new entrants to emerge from the spectrum auction. Other companies that won a sizable number of licences include Montreal-based Quebecor Inc., Calgary-based Shaw Communications Inc. and Toronto-based Data & Audio-Visual Enterprises, which is run by entrepreneur John Bitove.

Quebecor and Shaw did not return request for comments, while a spokesman for DAVE said the company would not be making any announcements on Thursday.

Lacavera said he will be discussing potential partnerships with "anyone and everyone," although Globalive is prepared to go it alone. He also said he is open to the creation of mobile virtual network operators (MVNOs), where other companies rent airtime on Globalive's network so that they can sell their own services. Virgin Mobile, for example, is an MVNO that rents airtime on Bell's network.

Canada lags developed world

New entrants were given a leg up over incumbents in the auction, which raised $4.2 billion, when the government reserved for them 40 per cent of the airwaves being sold. The Conservative government last year ruled that cellphone prices were too high and that the market was not competitive enough.

Canada lags the developed world in cellphone adoption, with only about 60 per cent of Canadians having a mobile. In its presentation to analysts, Orascom said Canada is the only developed nation in the world with an adoption rate lower than 80 per cent.

The company also pointed out that more than a third of Canadian customers' bills come from extra charges, like the system access fee and 9-1-1. Canadian carriers also charge customers extra for features such as voice mail and call display, which are normally free in most other countries.