Anthony Lacavera’s life has come full circle.
Now the carrier, which was renamed Freedom Mobile, may be up for sale again – and Mr. Lacavera wants to buy it.
Earlier this year, Rogers Communications Inc. struck a deal to acquire Shaw for $26-billion including debt in a deal that, if approved, will bring together the country’s eastern and western cable systems. Analysts expect regulators will force Rogers to sell Freedom to prevent the takeover from lessening competition in the wireless market.
“I think that would be good for the Canadian market if [Freedom] was restored to being an independent, pure play wireless company,” said Mr. Lacavera, who has put together a group of investors to bid for the carrier should it become available.
Mr. Lacavera declined to name the investors but said the group includes pension funds, private equity and family offices – “long term, patient capital” – along with himself. If his bid succeeds, his aim is to make 5G accessible to all Canadians through innovative pricing.
However, Mr. Lacavera is not the only prospective buyer circling an asset that may not even be for sale. Quebecor Inc. head Pierre Karl Péladeau has publicly expressed interest in buying Freedom, and Eastlink Inc. founder John Bragg told Maritime business news outlet Huddle that Eastlink is interested but not holding its breath.
Several private equity and pension funds are also exploring the possibility, according to sources who The Globe and Mail is not identifying because they aren’t authorized to speak publicly about the matter.
“I’m expecting it’s going to be a competitive process,” Mr. Lacavera said in an interview.
“Obviously, I think I have the most knowledge of the asset. I built it from scratch.”
Wind is one of three wireless startups that emerged after Ottawa set aside airwaves for new entrants in a 2008 spectrum auction. The two others, Public Mobile and Mobilicity, were eventually acquired by Telus Corp. and Rogers, respectively.
Globalive, a Canadian telecom company financed by Egyptian billionaire Naguib Sawiris, spent $442-million on wireless spectrum licences in the 2008 auction in order to launch Wind. The price tag was “an extremely high burden to start a company up with,” Mr. Lacavera said.
“Now I have to go build a network and build the stores and build a team, but I’m already $442-million in the hole – that’s a significant problem,” Mr. Lacavera said.
Wind’s launch was delayed when the Canadian Radio-television and Telecommunications Commission determined Globalive did not meet Canadian ownership rules. Although the decision was overturned by the federal government, the issue resurfaced when the case landed in federal court, triggering a legal battle that was appealed all the way to the Supreme Court.
It was a “crazy time” for the company and its employees, Mr. Lacavera said. “One day we’re dead, the next day we’re living, the next day we’re dead again,” he recalled. “I had to say to people, ‘You don’t need to apply for another job, we’re gunna get through this.’ Definitely the circumstances looked pretty grim at certain points.”
In the end, the top court declined to hear the case, handing Wind a victory. But in 2014, Wind’s new owner, Amsterdam-based VimpelCom Ltd., decided not to back the carrier’s attempt to buy additional spectrum.
Mr. Lacavera said he was forced to recapitalize the company with funding from Canadian and U.S. private equity investors, paving the way for the sale to Shaw. “I never would have sold it. I would have just kept building it,” he said.
Since selling Freedom, Mr. Lacavera’s Globalive has been investing in early-stage technology companies; it currently has 75 startups in its portfolio, many in areas such as robotics, smart city infrastructure and autonomous vehicles that require advanced 5G connectivity.
A self-professed “tech nerd at heart” – he studied computer engineering at the University of Toronto – Mr. Lacavera gets fired up talking about the possibilities 5G wireless services will unlock. “The countries that have world-class 5G infrastructure, their GDP growth trajectory will outstrip those who do not. You just can’t compete in business without it,” he said.
That’s why, although he believes that Canadian wireless rates should be 20 per cent to 30 per cent lower, Mr. Lacavera says Ottawa should not be focusing solely on headline prices to the detriment of network investments.
Mr. Lacavera said his track record of running the wireless company successfully and competing against the Big Three wireless carriers (Rogers, BCE Inc.’s Bell Canada and Telus) – Freedom has been credited with driving competition on wireless rates – makes him an attractive bidder from Ottawa’s perspective.
Meanwhile, his long-term investment horizon should be appealing to Rogers, he said. If Toronto-based Rogers is forced to sell Freedom, it would likely ink a network-sharing deal with the buyer, Mr. Lacavera said. “Obviously, Rogers doesn’t want to see that network-sharing partner fail.”
However, it’s still unclear whether the asset will be for sale and, if so, how much of it – Rogers may be forced to part with a combination of wireless customer contracts, spectrum licences, physical stores and cellphone towers to appease the Competition Bureau and the Ministry of Innovation, Science and Economic Development. Both federal agencies, as well as the CRTC, are reviewing the deal.
Mr. Lacavera declined to comment on whether he’s had talks with Rogers. And the company declined to comment.
Mr. Lacavera wants to avoid past headaches. This time around, he’s steered clear of investors from jurisdictions that could stir up controversy, focusing instead on Canada, the United States and Britain. That’s despite the fact that he feels it’s unfair his previous investors “got targeted the way they did.”
“Especially Naguib Sawiris. This is somebody who’s an American-passport-carrying large philanthropist, incredible entrepreneur and was crucified here – like, kicked out of this place. It was very un-Canadian,” Mr. Lacavera said.
Finding investors to back a potential bid for Freedom was much easier this time, he added. “I’m used to raising capital to start things from scratch, where there’s zero revenue, zero customers, zero infrastructure.”
Now, Freedom has 2.1 million subscribers, according to its most recent quarterly report, making it a “very different proposition.”
“I feel like I probably should have spent more of my life trying to finance transactions like [this one] than trying to finance startup transactions, because I probably would have had a much easier go of it,” the wireless entrepreneur said with a laugh.
Despite Freedom’s success, Mr. Lacavera says there’s still room for growth, perhaps by taking the wireless carrier outside of its core markets of Ontario, Alberta and British Columbia. However, such a plan would depend on access to spectrum at affordable prices, he added.
The most recent auction of 5G airwaves, which netted a record-setting $8.9-billion for Ottawa, was a “disaster” for the industry, Mr. Lacavera said. High spectrum costs lead to “all kinds of downstream problems,” he said, such as leaving telecoms with less money to invest in economically critical 5G wireless networks. “You’re crippling our industry by extracting the kind of revenues that the government has extracted from these auctions.”
If Mr. Lacavera’s bid for Freedom succeeds, he plans to be the first Canadian wireless carrier to offer what he calls dynamic pricing.
For instance, if a user is running a virtual or augmented-reality application that requires a 5G connection with extremely low lag time, that may warrant a higher price than streaming a Netflix show, which can be done on a 4G network.
“The networks are dynamic in terms of bandwidth allocation now, and they’re sophisticated enough that we could have different pricing based on the type of consumption and the amount of consumption,” Mr. Lacavera said.
One thing he doesn’t intend to do is part with Freedom again. He previously said he wanted to be 90 years old and on his deathbed owning the company, and that is still the case.
“I’m not interested in monetizing this ... I have a very long-term horizon,” he said.
“This is, like, a forever thing.”
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