Craig Wireless tackles B.C. market as it takes greater ownership stake in Look

As Craig Wireless International Inc. increases its stake in wireless cable operator Look Communications Inc., the state of the rollout of its own wireless cable system in British Columbia remains a mystery. Craig had until Dec. 31, 2002 to launch in the province, after applying for and receiving two extensions from the CRTC in the past couple of years (CCR, Aug. 15/02). CRTC sources tell Canadian Communications Reports that Craig has not applied for a further extension, and that president and CEO Boyd Craig had indicated in a phone message that the service had launched. But commission sources add that Craig also mentioned that there would be no regular customer service available until "all details" had been worked out. Craig Wireless CFO Darcy Kindred bowed out of a scheduled interview with CCR on the progress made in the B.C. market in late November, stating that he would be "in a better position to release more information that you can share with your readers" the following week. He has not returned repeated calls over the last two months, and finally indicated in a January 27 email that "there’s a fair amount going on with Craig (Wireless) right now" and that the best person to speak to was Boyd Craig. Craig has not returned numerous calls. On January 16, Craig Wireless announced that it had purchased 7.2 million common shares in Look from an undisclosed third party to raise its stake in the company to 29.9%. CCR has since learned that the shares were purchased from Teleglobe Inc., which is currently in bankruptcy protection in both Canada and the U.S. Craig also agreed to acquire more shares to increase its stake in Look to 32.5%, subject to CRTC approval. Commission sources say that application has not yet been filed. When Look came out of bankruptcy protection in 2001, the ownership position of Look’s two largest creditors, BCE Inc. and Telesystem Ltd., increased to a combined 70% total from an earlier total of 36.9% (CCR, Dec. 6/01). BCE, through its subsidiary Teleglobe, held shares representing about 34% of Look. But when BCE unloaded Teleglobe to Cerberus Capital Management LP and TenX Capital Partners LLC last September, the Look shares went with the transaction, which is expected to close early this year. On the same day that Craig announced it had significantly upped its stake in Look, equipment manufacturer Unique Broadband Systems Inc. (UBS) bought shares from Look totaling about 20% of the company. Look chair Michael Cytrynbaum confirms to CCR that following the UBS and Craig transactions earlier this month, Craig and Telesystem were the company’s major shareholders, followed by UBS. Boyd told the Winnipeg Free Press that he was meeting with Look’s other shareholders to see if they’d be interested in merging Look’s Eastern Canadian operations with Craig’s Western Canadian operations to establish a nationwide wireless digital television and Internet distribution network (CCR Update, Jan. 22/03). That means that Craig will have to convince Montreal businessman Charles Sirois of the benefits of his plan. Telesystem, which owns about 39% of Look, is Sirois’ holding company. But Cytrynbaum states that "Look is not in talks with Craig." Craig Wireless’ equipment supplier for its entry into the B.C. market is IPWireless Inc., which has non-line-of-sight technology. Craig’s Manitoba operations and Look’s operations in Ontario and Quebec are hampered in signing up some customers due to line-of-sight problems with their existing equipment. An initial agreement between Look and UBS included a $2.4-million equipment supply arrangement, which was dropped from the final $2.4-million deal announced earlier this month that saw UBS acquire the 20% stake in Look. "What happens in the future is obviously subject to all kinds of negotiations again between the various parties. But the relationship was not a formal relationship between Craig and Look in the same sense that it was between UBS and Look," says Peter Block, who is in charge of investor and media relations at UBS. He adds that UBS entered into the Look deal primarily to acquire recurring revenue from Look’s Internet and television operations. "I think it is a bit premature to say that UBS is going to lose business to this other supplier (IP Wireless) or what the relationship will be," he notes. Craig Wireless owns SkyCable Inc., which provides wireless cable and high-speed Internet services in Manitoba. But the question many industry observers are asking remains: Is Boyd Craig aiming too high with plans for one national wireless company, when his company still hasn’t managed to do much in the B.C. market, two and a half years after being licensed? Craig Wireless asked for its second extension in the launch date due "to unavoidable delays relating to the installation and implementation of equipment in British Columbia." The first extension of a year was requested on the grounds that Craig Wireless wanted to wait for an improvement in the capital markets and to explore potential partnerships. Craig Wireless beat out Look for a regional multipoint distribution system (MDS) licence to serve the B.C. communities of Victoria, Vancouver, Abbotsford, Chilliwack, Penticton, Kelowna and Vernon in July 2000. In its licence application, the company proposed a monthly basic service fee of $17.99, including the cost of the antenna and decoder equipment as well as installation. Look had proposed a monthly fee of $20.95 and an installation fee of $125.

Craig Wireless tackles B.C. market as it takes greater ownership stake in Look

Broadcast | January 30, 2003

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