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Think Canada's not the place for telecom investment? Ericsson CEO says it is

Ericsson Chief Executive Hans Vestberg speaks during a news conference to announce the company's third quarter result at the headquarters in Stockholm Thursday Oct. 24, 2013.

Leif R Jansson/AP

At a time when Ottawa is being criticized for scaring off foreign investors from the telecom industry, at least one global executive is happy to do a bit of "promotion" for Canada as a good place to invest.

Hans Vestberg, president and chief executive officer of the Ericsson Group, says his company is growing its Canadian investments and feeling quite bullish about it.

The Swedish company, a global leader in telecom equipment and services operating in 180 countries, recently celebrated its 60th anniversary in Canada.

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"We continue to grow in Canada – both headcount wise and also investment wise. We think it is an important country," Mr. Vestberg said in a telephone interview. "I am long on investment in Canada."

Ericsson recently announced plans to invest roughly $1.3-billion to build a 40,000-square-metre global information and communications technologies centre in Vaudreuil-Dorion, Que. The company announced those plans after winning incentives from the Quebec government, including a 10-year corporate tax holiday.

The new facility, which will be operational in 2015, is one of just three data centres that Ericsson plans to build around the world.

Ericsson has been ramping up its investments in Canada over the last 10 years, including spending billions on research and development conducted here to support its global business. It has also done deals, acquiring assets from Nortel and purchasing Canadian companies such as Telcocell, ConceptWave and BelAir Networks.

The company opened its first office in Montreal to sell telephones and intercom systems during the 1950s. It now estimates that 70 per cent of all mobile traffic in this country travels over its systems. It employs about 3,100 people in Canada.

"The environment in Canada, for us, has been good. We have good co-operation with all the different stakeholders to make investments in Canada," said Mr. Vestberg. "I have nothing to complain on, and if I would have anything to complain on, I would take it directly with the ones involved."

He later added: "That was a promotion for Canada ... because I wouldn't do this [data centre] investment at the company if I didn't believe it would be good place to invest in."

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Mr. Vestberg's comments stand in sharp contrast to those made by other telecom executives, who have accused the federal government of spooking international investors with what they say is an unpredictable approach to foreign investment.

Last week, Egyptian telecom tycoon Naguib Sawiris said he would never invest in Canada again after Ottawa rejected his firm's $520-million bid for Manitoba Telecom Services Inc.'s Allstream division due to unspecified national security concerns.

"I am finished with Canada, I tell you," Mr. Sawiris told Ahram Online, the English-language website of Egyptian news organization Al-Ahram.

Sources have said that Mr. Sawiris's investment company, Accelero Capital Inc., had offered various concessions to get the deal done, including giving up federal contracts.

But when assessing the sale, government officials raised questions about Mr. Sawiris's previous investments in North Korea among other issues.

However, Mr. Sawiris was no stranger to Canadian telecom after bankrolling Wind Mobile's purchase of spectrum licences in the last government auction in 2008.

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"It's totally unacceptable to have foreign investors waste their time and money, hold their capital captive, and then come up with a comment like that," Mr. Sawiris said in reference to Ottawa's vague national security concerns.

Mr. Sawiris is known for making bombastic comments but his sentiments have been echoed by Canadian telecom executives. Earlier this month, MTS Allstream CEO Pierre Blouin said foreign investors would have a "strong hesitation of investing in telecom in Canada right now" because the rules around foreign investment remain unclear.

And in August, Telus Corp.'s chief executive Darren Entwistle blasted Ottawa's capricious approach to foreign investment, saying it risks sending international money elsewhere. He pointed out that Wind's current financial backer, Amsterdam-based VimpelCom Ltd., is now finding it difficult to sell Wind for an "optimal" price due to new regulations on spectrum transfers between telecom carriers.

"What do you think that signals to the rest of the world when they are thinking about coming to Canada – that it is one set of rules on the entry and a different application of those rules on the exit?" Mr. Entwistle said at the time.

For his part, Mr. Entwistle has long advocated for Ottawa to remove all foreign investment restrictions in telecom – not just for small carriers.

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