Time for Globalive to bite the Mobilicity bullet
In the 15 months that have passed since the CRTC correctly advised Globalive that being “controlled” by a foreign conglomerate can take many forms, little has changed in Canada’s wireless industry.
The new independents have launched their offerings, and each appears to be going after a different slice of the market. Public Mobile is tackling the “New Canadian” transit crowd via subprime Gateway newspaper stands. Mobilicity seems to be after the central Canadian switcher. Videotron is a local story. Only Globalive spent the bundle to go at the heart of client base of Bell, Telus and Rogers, and has 200,000 customers to show for it.
What is telling about the wireless spectrum auction is that, in hindsight, it was never really going to challenge the three incumbents. With immigration and population growth alone, there are new enough customers each year to give the new players a chance to land some accounts. But with the foreign ownership rules being what they are, and no local financial or pension fund player prepared to risk $500 million on a national assault against the Big Three (since firms such as Orascom have essentially been banned from doing so), Canada’s wireless landscape wasn’t going to look much different when all was said and done.
And it doesn’t.
The only step left for Globalive is the same one I wrote about in October 2009: merge with Mobilicity (see prior post “DAVE sitting pretty now that CRTC is on the case” Oct 30-09). Solve your foreign influence problem, add useful spectrum, and reduce the number of fronts you’re fighting on all in one fell swoop.
It’ll also set Globalive up for a quick IPO, which will backsolve for some of the dilution that Chairman and Founder Anthony Lacavera would suffer if he went this route. The alternative, of course, is to spend the next few years fighting the legal challenge all the way to the Supreme Court.
If you lose the court case, your equity is wiped out. If you win, you’ve still wasted money and energy on a fight that distracts you from your business plan.
The Mobilicty path is the way to go. It won’t be a cheap deal, but it’s the best of the alternatives.
MRM
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