Rookie cellphone company gets more cash to build network

One of the new wireless licence holders preparing to launch later this year now has a few million dollars more to spend on building its operations.

BMV Holdings, owned by a number of Canadian and U.S. private equity and venture capital companies, said Thursday it has a new investor: OMERS Private Equity, the investment arm of the Ontario municipal employees pension fund.

OMERS will put in up to $50 million in BMV’s as yet unnamed cellphone service, to be launched in Ontario and Quebec in the third quarter.

“It allows us to have more flexibility in terms of the build-out and launching the operation,” said Bruce Kirby, BMV’s director of business development.

“BMV and its investors made an astute purchase in Industry Canada’s wireless spectrum auction last summer and we believe the company has great potential in the Canadian wireless market,” Paul Renaud, president and chief executive officer of OMERS Private Equity, said in a news release. “In addition, we are impressed by the leadership and experience of their management team and investment partners.”

Its Canadian shareholders include Toronto-based Kensington Capital Partners, a private equity fund of funds manager, and Rho Canada, the Montreal wing of New York’s Rho Ventures. U.S. partners include Columbia Capital and M/C Venture Partners, who are both veterans in setting up wireless startups in their country, Rho Ventures, and communications vencaps Charles River Ventures and Ignition Partners.

Ignoring the business market, BMV will target consumers with flat-rate, unlimited voice-and-text packages. One will cost $40 a month.

Unlike most of the new bidders in last summer’s spectrum auction, who paid hundreds of millions for AWS spectrum, BMV paid $52 million for PCS spectrum in the “G” block 1.910-1.915Ghz and 1.990-1.995Ghz frequencies. No manufacturer has a handset on the market now covering those frequencies – one reason the spectrum was relatively inexpensive – although chipsets are available. For the right price, a handset maker could be persuaded to come up with a model or two.

Just before Christmas, BMV received bids from handset and network equipment suppliers and Kirby expects his company will make an announcement on the winners “in the next month or two.”

Meanwhile, staff continues to work on the network design. While BMV – like all the new entrants – has the option of striking a deal with incumbent wireless carriers to share antennas and towers, so far the company hasn’t made any approaches. Incumbents (Bell, Rogers and Telus) “will drag [negotiations] out as long as possible,” Kirby suspects. Last November a spokesman for Videotron confirmed that suspicion, complaining of “very limited co-operation.” Instead BMV initially is planning to strike deals with other service providers who have roof-top equipment in large Ontario and Quebec cities.

While some may think the deepening recession is not a good time to launch service, Kirby has no doubts. “In an environment where people are looking to save money and cut costs, we think we fit perfectly.”