Public Mobile sends a message

Published: June 24th, 2010

It's common for wireless carriers to get a financing deal from their equipment suppliers. Financing is a way the manufacturer ensures its gear is entrenched with the carrier, and the carriers use financing as a way to pit suppliers against each other.

But it was a surprise today when Public Mobile announced the price tag on its arrangment with China's ZTE Corp. In a news release the startup said the deal is worth $350 million. “This arrangement, combined with hundreds of millions of dollars in equity commitments from its shareholders, means Public Mobile has a fully funded business plan and can build out its entire licensed area,”  PM said in the release.  The carrier is building a PCS network in Toronto and Montreal, with plans to extend it from Quebec City to Windsor, Ont.

Usually, carriers are mum on how much the vendor is lending them. In this case, I think PM wants to send a message to Ottawa that it's not waiting for the feds to improve the conditions for foreign investment. Meanwhile, PM is suing the cabinet for giving what it percieves as special treatment to Wind Mobile's parent, Globalive Wireless Management Corp. last December when it okayed Orascom Telecom's hefty investment in Globalive.

The other thing is the timing of this release. It came out this week as the G20 members assemble in Toronto. China's Export and Credit Insurance Corp. is insuring the deal and there was a signing cerimony in Ottawa, of all places. Why the deal is being signed now is a mystery: PM has built much of its network in Toronto and Montreal, so I would have thought it would have been inked months ago. Was this is just a stunt for G20 week, perhaps at the request of ZTE, which is trying to extend its visibility in North America? PM officials didn't reply to an e-mail requesting an explanation by my deadline.

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Jim Love, Chief Content Officer, IT World Canada

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