Globalive To Make Life Interesting

Apr 28th, 2009 – Comment

Globalive has spent over $400M to buy wireless spectrum from Ottawa and now owns some very valuable digital real estate.

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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.

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Gabriel from Montreal, QC writes about mobile phone industry:

Globalive Communications is a privately-run telecommunications firm that will soon enter the mobile phone market, probably as early as September, 2009.

You Can Take Them Anywhere

You Can Take Them Anywhere

Since Telus, Rogers and Bell dominate 95% of this industry, do you believe that Globalive, with its promise of introducing a better pricing system for Canadians, can survive as a privately-run business, or is its introduction to the stock market seem almost inevitable?

Hi Gabriel,

Globalive has spent over $400M to buy wireless spectrum from Ottawa and now owns some very valuable digital real estate. It will cost considerably more to build out their network and I would assume that they have set priorities as to which markets they will develop first.

You can expect that the existing carriers that you mentioned will be going at it hammer and tong to try and stifle the competition before they get on a roll. At this point the best that the established players have mustered is foot dragging on access to towers and complaints to the CRTC about foreign ownership. Egypt’s Orascom Telecom has  a$700m  interest in Globlealive.

But these are early days and if the intent of granting the spectrum was to foster competition then look for the incumbents to be ready to fight with vigour. After all the market is theirs to lose.

To answer your question an initial public offering that lists shares on a stock exchange is one way to exit an investment in whole or in part. Lets keep in mind that  all investors are looking to cash in on their investments at some time.  Another way is to sell the company to a competitor for a nice profit.  Finally a company can undertake strategic acquisitions to bulk up to better compete in the land of the giants.

All competitive markets tend to devolve into an oligopoly. Ten years ago there were companies like Clearnet and Fido operating as independent wireless carriers. They eventually got bought up by the likes of Telus and Rogers producing nice profits for their investors.

The fight for market share will produce new offers in the market for wireless communications and if that means new services and lower prices I’m all for it.

Happy Capitalism!

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