Lee Bragg, left, with his father John at the EastLink head office in HalifaxPAUL DARROW
Lee Bragg, a pair of Bono-like sunglasses perched atop his shaved head, steers his aging Jeep Cherokee around a seemingly endless Halifax industrial park, growing increasingly annoyed.
He's searching for his company's new sales office. "Where is it?" he mumbles, leaning forward in his seat, scanning one identical office front after another. Finally, the chief executive officer and vice-chair of EastLink Communications Inc. spots his company's logo. It's on a letter-sized sheet of paper taped to a glass door.
Putting up signage tends to become an afterthought when a company is growing as rapidly as EastLink. With remarkably little in the way of headlines, the Bragg family's cable TV operation has expanded from its tiny rural base to span much of Atlantic Canada. It now ranks as Canada's largest private cable company - the biggest cable company you've probably never heard about.
The Braggs, who made their first fortune harvesting blueberries, have shown themselves to be equally adept in reaping the benefits of technology. They have consistently beaten the industry giants in spotting where the future lies. In 1999, EastLink became the first cable company in Canada to launch home phone service. It has since gobbled up market share in Nova Scotia, particularly in Halifax. It also stretched beyond its Atlantic home, snapping up cable operations in Ontario and the West.
Now the Braggs are expanding into the wireless business, the fastest growing segment of the telecommunications industry. They are continuing to thrust beyond their Atlantic home, investing more than $200-million over the past two years to upgrade their cable operations in Ontario, Alberta and B.C. The family's increasingly valuable operations in Central and Western Canada are key bargaining chips if the Braggs choose to engage in an industry-changing swap of properties with their much larger cable competitors.
As big as the Braggs have become, they're still rooted in rural Nova Scotia. John Bragg, the 70-year-old family patriarch, is estimated to be worth more than $700-million. He serves on the board of Toronto-Dominion Bank, but continues to live in tiny Collingwood, N.S. His four children are all involved in aspects of his empire, which spans everything from frozen food and lumber to telecommunications.
One of the family's key holdings is EastLink. As a private company, it's not required to disclose much, and it doesn't. Saying anything at all, to anyone, "goes against our nature," says Lee, 43, John's eldest child.
The Braggs are equally terse when it comes to their private lives, preferring to play down their wealth. When pressed, Lee will admit his "lawn is a little bigger than it should be, kind of hard to mow." He will also grudgingly acknowledge that his father does have the nicest house in Collingwood. "But then there's only 50 houses in Collingwood," he adds.
Turn the conversation to business, though, and you find a family as ambitious as anyone in the cable industry. They are refreshingly plain-spoken on the topics they choose to address - such as the wireless network they plan to launch in the next 12 to 18 months. "I think you can make a scandalous amount of money at it," says Lee. "It seems like everybody else has."
Blueberry kings
The Braggs may run the premier telecom operation in Atlantic Canada, but they also happen to own the largest wild blueberry operation on the planet. "I picked my first blueberries when I was 15 on some abandoned farmland that my father owned," John recalls. "By the time I was through university, I was running the blueberry business on the side and I was making a lot more money doing that than I could teaching school."
Over the next few years, John expanded into frozen foods and built an empire that sells onion rings and other "battered vegetable appetizers." In 1969, he decided to diversify away from food and gambled on acquiring a cable licence for the town of Amherst, N.S. Over the next few years, the Braggs gobbled up neighbouring cable operators. In 1985, they broke into the big time when they acquired Halifax Cablevision Ltd., then the largest system in Eastern Canada.
As he expanded his cable holdings, John made sure his eldest son learned the business from the ground up. Lee donned spurs and a belt and climbed poles to repair cable problems. Then he moved on to managing a small cable system in Truro, N.S.
Lee was promoted to co-CEO of EastLink in 1999, the year it became the first cable company in Canada to launch home phone service. "All the bankers thought we were crazy," Lee says.
The Braggs turned out to be spectacularly right. EastLink's service won a big share of the lucrative Halifax phone market. Other cable companies, like Rogers Communications Inc. and Shaw Communications Inc., soon copied EastLink's move in their own territories.
Now it's time for EastLink to launch a wireless network. And this time, nobody thinks they're crazy.
Winning roles
A couple of months before the federal government auctioned off wireless spectrum licences in 2008, executives at EastLink began to play a complicated game. They formed themselves into teams, each team representing one of the rival bidders in the upcoming auction.
Under Lee Bragg's direction, the rival teams began to play out a mock auction for the airwaves above EastLink's cable networks. The first time through, things seemed to go smoothly - until another team pounced, tossing in bids for some of the licences that EastLink coveted, forcing the firm to retaliate and drive up the price.
When the mock bids were counted, Lee realized EastLink had drastically overpaid. He and his team repeated the mock auction over and over until they figured out a winning strategy: Don't bid on key targets right out of the gate; throw out false bids to raise what competitors pay; don't get caught paying for a huge chunk of useless spectrum.
When the auction rolled around, "it happened exactly that way," Lee says.
EastLink got a great deal: For only $25-million, the company won licences that cover 85 per cent of the company's cable footprint, which means the company can profit from bundling cellphones on top of its existing cable, Internet and home phone services.
The victory exemplified the savvy of the Bragg family, according to Dean MacDonald, a cable executive who has known the Braggs since the early 1980s. "It came down to their style again, playing it to a plan and making it work," he says.
With its new wireless licences, EastLink is poised to become even more of a threat in Atlantic Canada, where industry insiders say it has already taken huge market share from Bell Aliant Regional Communications Income Fund, which is 45-per-cent-owned by BCE Inc., the industry giant.
Dan McKeen, vice-president of customer solutions at Bell Aliant, knows all about EastLink. He spent 24 years at the Braggs' company, rising to become co-CEO with Lee Bragg in 1999. He moved to Bell Aliant in early 2010. "We understand that it's a very competitive marketplace," Mr. McKeen says in his Halifax office, after declining to discuss his time at EastLink. He insists, though: "It's a marathon, not a sprint."
To win that marathon, Bell Aliant is expanding its fibre-optic network in New Brunswick to roll out its Internet TV product. "It's a threat," one industry veteran said. "They're taking their piece out of EastLink's cable business."
Going West
But EastLink shows no signs of slowing. After buying up swaths of Shaw's Nova Scotia cable properties in 2001, the company went on to execute two big deals in 2007, gaining more than 40,000 subscribers in southwestern and central Ontario with the acquisition of AmTelecom, and then adding Persona Cable Systems, a rural provider with a dilapidated network sprawling across several provinces.
EastLink now serves half-a-million cable subscribers in nine provinces. It is spending heavily to upgrade some of its recently acquired cable systems, particularly the old Persona network, and equip them to sell products such as Internet and home phone service.
Sources close to the family say the recent acquisitions and upgrades have been done with a swap in mind. EastLink now has operations in Grand Prairie, Alta. and Delta, B.C., that Shaw might like. It also has subscribers in southern and northern Ontario that it could one day swap for Rogers' customers in New Brunswick.
A swap of the Braggs' non-Atlantic operations for assets closer to home would solidify the regional structure of Canada's cable industry, and organize it around a handful of ruling families - the Rogers clan in Ontario; the Shaws in the West; the Péladeaus and Audets in Quebec; and the Braggs on the East Coast.
The Braggs don't deny the possibility. "If at some point in time there was the opportunity to do some big regional shuffle and we're all better off for it, sure, why not?" Lee Bragg says.
The Braggs can afford to wait. Unlike a public company, they don't have to face shareholders or meet quarterly targets. They say that every option is on the table - from taking the company public, to expanding into the production of media content, to providing home security service through their cable network. But there's no rush: They can think about what's best for the family.
Lee says that he has no desire to turn things over to professional managers. So long as the Braggs own a business, the corner office will always be occupied by a family member. "Sometimes being naive is great, 'cause we didn't know anything about the cable business. I'm a blueberry farmer," Lee says. "[But]as my dad always said, 'I don't know anybody who went broke in the cable business.' "
Cat:e528746c-3414-401a-b14b-50247e3bdf01Forum:d0fa4e14-88d2-41f9-8a19-896bdff9544b
EastLink's numbers
500,000
Number of TV subscribers
330,000
Number of Internet subscribers
210,000
Number of home phone subscribers
11%
Estimated share of Atlantic Canada wireless market by end of 2014.
Source: Convergence Consulting Group Ltd.
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EastLink gaining market share in Halifax
Market share of residential phone lines in Halifax
2005 - 34.9%
2006 - 39.3%
2007 - 43.2%
2008 - 46.0%
2009- 50.0%
Source: CRTC and EastLink