When silence is deafening

Published: September 8th, 2008

By Howard Solomon
Sometimes silence is golden, but in the case of 6934579 Canada Inc. it’s positively deafening. This is the numbered company that won some $52 million in interesting spectrum in the recent AWS auction, including 10Mhz covering southern Quebec. Globalive Communications, which won spectrum across much of the nation except in southern Quebec, must be coveting this licence. It will either have to deal with Quebecor/Videotron, the other new entrants which has Quebec spectrum, Quebec, or this entry. But who’s behind the numbered company? No one’s talking.

Before the auction, a Montreal investment house called Novacap was the lead Canadian investor, with several U.S. ventural capital companies experienced in backing new wireless companies providing foreign investment. However, just before the auction started Novacap put out word that there were problems lining up Canadian investors. Instead, a new group of Canadians would head the company after the auction finished. BMO Capital, the venture wing of the Bank of Montreal, Rho Capital of Montreal, and another numbered company with some very difficult to find backers were each supposed to have just over 22 per cent — or a total of 66 per cent — of 6934579 Canada Inc. The other investors, including Canadians, would have all the non-voting shares, presumably putting up a lot of money. But no one is willing to talk from BMO or Rho. Or Novacap. Who was calling the shots during the auction? Don’t know. Now that the auction is over, are BMO and Rho involved? Don’t know.

A partner at Rho e-mailed me Monday morning to say “we have no comment regarding the aws spectrum.” Hmmmm. That isn’t “we’re not involved at all …”
Presumably, BMO and Rho are waiting to see if Industry Canada approves the ownership of the numbered company. If everything’s kosher, then the $52 million the investors plunked down — which includes 10Mhz covering southern Ontario, eastern Ontario and eastern Quebec — could be very valuable indeed. Maybe to an “anybody but Globalive” coalition.

If not, the spectrum goes back into Ottawa’s hands.

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