Wind founder wants to make Freedom Mobile a competitive option for Canadians

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Anthony Lacaverac is poised to buy back the business it started in 2008 and sold in 2016.

In an interview with MobileSyrup, the founder and chairman of Globalive said the company is “very serious” about its acquisition of Freedom Mobile.

“The most important thing for Canadians in the market is that it is a true, independent wireless operator.” Lacavera says this will ensure Canadians have the “competitive advantages” that have been so long lacking in Canada.

Rogers wants to sell Freedom to get regulatory approval for the merger with Shaw Communications.

The airline requires approval from the Competition Bureau and Canada’s Innovation, Science and Economic Development (ISED) approval. Yesterday, the company received approval to broadcast from a third regulatory body, the Canadian Radio-Television and Telecommunications Commission (CRTC).

Lacavera says the recent clearance is a step forward in clearing the overall transaction and believes the “CRTC’s remedy was reasonable.” Rogers’ commitment to producing and distributing Canadian content “is good,” he says.

“I do think Rogers will keep the promises. I think it’s a positive result.”

Edward Rogers speaks at the CRTC hearing in November. Image credit: CRTC/screenshot

The future of freedom with Globalive

Lacavera started Wind Mobile in 2008 and sold it to Shaw for $1.6 billion.

He says the company has independently competed head-to-head with competitors successfully, and Globalive will do it again to build Freedom into the independent business Canadians need, Lacavera believes.

“We are the only ones to have successfully competed against the big three in the last 30 years. We are the only ones who built a viable competitor that was standalone and independent.”

Lacavera says he’s confident he’ll be able to do it again because he won’t be starting from scratch like with Wind, and he’ll be focusing on prioritizing wireless.

Several companies are making sure that as the wireless business grows, it will not affect the rest of their business model, which includes other services such as broadcasting and Internet services. “We need to focus entirely on wireless and earning the Canadian business… we’re not able to bundle people together and put them in bundle contracts and stuff like that, which I don’t think is great for the competition.”

Lacavera says whatever the outcome, there must be a fourth competitor that is a “true independent airline” and not tied to the big three.

“We need freedom to be restored to the way it was when I ran it.” Wind, he says, was completely self-contained, with its towers, spectrum, customers and stores.

What else will he do

Lacavera says that if things went well when Wind was under Globalive’s control, Freedom Mobile would never have become a company that’s currently on the market. But in the mid-2010s, Wind experienced regulatory issues with investors who brought it Lacavera.

Globalive invested $442 million in the 2008 AWS spectrum auction with help from Orascom, a telecommunications company operating in the Middle East, Africa and Asia. VimpelCom, now known as Veon Ltd., bought Orascom in 2011.

Things went well for a while, but soon the foreign companies had to deal with regulatory approvals to continue operating in Canada. The companies were not approved and Lacavera told MobileSyrup that Globalive had been forced to leave the company.

Anthony Lacavera spoke with MobileSyrup in 2014.

Lacavera says she voted against the sale of Wind at the time. “I would never have done that.” He says the company was built to compete, and only regulatory issues held them back.

When asked how Globalive would avoid the same problem if it acquired Freedom Mobile, Lacavera says the “capital balance” he uses this time is different. “U.S.-sourced capital is most of it, while last time it was more foreign capital.”

The Globe and Mail reported that Twin Point Capital and Baupost Group are leading the financing.

Lacavera declined to confirm the specific companies or where they come from.

While Lacavera believes the company is protected from the issues associated with Wind’s equity financing, he is cautious about the capital he brings in, given his past experience. “This time I feel like I ticked those boxes,” he says. But “it’s clearly something we pay a lot of attention to.”

Ongoing questions

Analysts have expressed concern that selling Freedom to one company will not create lasting competition. Lacavera doesn’t think that will be true if Globalive takes over the company.

“Everyone kind of forgets that in 2014 we were the fastest growing airline in Canada.”

Lacavera agrees that it’s hard to compete with the big three. He says they have quality infrastructure and brand equity and are reliable for Canadians, “but they also charge some of the highest prices in the world.”

“I feel like I’ve jumped through hoops to make sure my investor base is absolutely welcome in Canada.”

He says the formula is aimed at a competitor who offers more value while fighting for every subscriber. The worst thing that can happen to Freedom is if a private equity firm takes it over because they will “sell it as soon as possible” to make a profit for their investors. That is why he thinks it is essential that Freedom is taken over by a company that is already in the telecom business.

Lacavera acknowledges private equity investors support his offer, but says Globalive is leading the proposal. If his company takes over Freedom, he won’t resell it.

“I am not a salesman. I wasn’t a salesperson in 2016… and I don’t intend to sell this time,” he says. “I feel like I’ve jumped through hoops to make sure my investor base is absolutely welcome in Canada.”

The competition

Globalive isn’t the only company trying to get their hands on Freedom.

National internet provider Xplornet is reportedly in talks to acquire Freedom, but details about the alleged offer are not clear. Xplornet declined to comment on this story.

Vidéotron’s parent company, Quebecor, has also expressed interest. While media reports indicate that the company has no seat at the table, Lacavera believes Quebecor has an advantage.

The company owns 3.5GHz spectrum, crucial for the rollout of 5G. Lacavera says he would be surprised if the company didn’t make an offer.

MobileSyrup has asked Vidéotron if it has made an offer and will respond as soon as it becomes available.

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