Globalive strikes network deal with Telus to increase its chances of buying Freedom


For the first time, a Canadian carrier has entered network and spectrum sharing with a purely independent wireless competitor, but on the condition of Freedom

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Globalive has signed a network and spectrum sharing agreement with Telus Communications Inc., setting the table for an uncertain and uncompleted offer to acquire Freedom Mobile, Shaw Communications Inc.’s wireless unit, valued at up to US$4 billion -Dollar, trading as Shaw, is preparing attempts to merge with rival telecom giant Rogers Communication Inc.

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Globalive said its agreement with Telus represents the first time a Canadian carrier has entered into network and spectrum sharing with a purely independent wireless competitor, but it is “subject to Globalive’s successful acquisition of Freedom Mobile.”

Anthony Lacavera, the founder of Globalive, has said publicly and repeatedly that a competitive mobile market with lower prices for consumers depends on the Freedom assets – once owned by Globalive and operated under the Wind Mobile banner – in the hands of a Play pure wireless operator and not an incumbent telecom provider.

In addition to Lacavera Group, the Freedom assets have attracted interest from Montreal-based Quebecor Inc. and Xplornet Communications Inc., a rural broadband provider owned by New York-based private equity firm Stonepeak Infrastructure Partners.

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According to media reports, Lacavera is unhappy with the way Rogers handled the Freedom Mobile sales process and has suggested Globalive was ousted.

The sales process was thrown into turmoil earlier this month when the Federal Competition Bureau officially objected to Rogers and Shaw’s $26 billion merger. In documents filed with the Competition Tribunal, the Commissioner of Competition said the “remedy” proposed by Rogers and Shaw was insufficient to address his concerns that competition would be reduced to the detriment of Canadian consumers.

The filing argued that Freedom has disrupted the wireless landscape dominated by Rogers, Telus and Bell and lowered prices for consumers where it operates.

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Rogers said it would continue discussions with the Competitions Office and formally respond to the filing with its arguments for the court to weigh, but promised to sell Freedom “in its entirety.”

In a Thursday press release, Globalive said that “long-term sharing of networks and spectrum is critical to the stability of the fourth player” to ensure that competition in the wireless market remains despite recent upheaval and the scarce and finite spectrum used as efficiently as possible.

“Newcomers to the industry, committed to offering lower wireless network prices, have historically struggled to build networks that can sufficiently compete with the 25-year lead of incumbents,” the statement said.

“This transformational agreement would enable Globalive to not only offer consumers lower prices and innovative offerings, but also deliver peer-to-peer network quality and create a strong competitive environment for decades to come.”

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Earlier this week, Telus lost a legal battle with Quebecor over its eligibility to bid on spectrum that was shelved in an auction overseen by the federal government last year. A federal court judge ruled that Quebecor was entitled to bid on the spectrum critical to the development of the latest generation of cell phone technology.

Quebecor paid $830 million for the spectrum, which is a key part of the Montreal-based telco’s plan to expand cellular services outside of its Quebec stronghold.

Quebecor CEO Pierre Karl Péladeau said Quebecor is interested in Shaw’s Freedom Mobile assets but has other options, including new regulations from the Canadian Radio-TV and Telecommunications Commission that oblige Bell, Rogers and Telus to maintain their national networks for seven years long open to regional actors while they build their own.

Speaking on a conference call with analysts this month, he said the big players have been reluctant to negotiate so far. Tariffs must be commercially negotiated between the parties in the wholesale virtual network operator (MVNO) agreements, but final bid arbitration by the CRTC is available if negotiations fail.

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