Debt-laden Craig Wireless Systems Ltd. has sold all of its Canadian wireless spectrum just a month after saying its new moblie WiMax network in Vancouver would soon be in service.
The sudden announcement came Friday morning in a press release, which said the Winnipeg-based company headed by brothers Drew and Boyd Craig had sold the spectrum for $80 million to the Inukshuk consortium. Inukshuk is a partnership between BCE Inc.’s Bell Canada and Rogers Communications Inc. to bring wireless broadband to underserved areas of the country. The sale is subject to regulatory approval.
It’s unclear what will happen to Craig Wireless’ fixed wireless Internet business in Winnipeg and Vancouver, which it deperately wanted to upgrade to the speedier mobile WiMax technology to pull in more subscribers. Co-CEO Drew Craig couldn’t be reached for comment Friday morning
“We are very pleased to be able to complete a deal with such great Canadian companies as Bell and Rogers,” he said in a news release. “This sale is very supportive of the company’s strategy to create value for shareholders through a portfolio of spectrum investments,” added Boyd Craig, who is the other co-CEO.
The announcement could mean that Craig Wireless is abandoning Canada. Through subsidiaries, it holds or leases licenses for spectrum in the in California’s Riverside County, where it has said it also is building a WiMax network and in Greece, where it has been involved in a lengthy legal dispute with a partner. The CWS Group also has spectrum interests in Norway and New Zealand.
The Vancouver network was being built by Motorola Canada. It isn’t known how much it will lose by Craig Wireless’ withdrawal from the market. A company spokesman could not be reached for comment.
A hint that Craig Wireless might be changing its Canadian strategy came March 15 when it issued a press release saying it “continues to be in the process of considering its financing options including exploring the possible financing or sale of certain assets, both domestically and internationally.”
Controlled by the Craig family, publicly-traded Craig Wireless has been in financial trouble for years. According to its latest annual financial report, for the fiscal year ending Aug. 31, 2009 the company had a net loss of $10.9 million. On top of that, after an amalgamation of subsidiaries it carried an accumulated deficit of $32 million, bringing the total to just over $43 million.
Craig Wireless has operated Internet and wireless television service in Winnipeg and Vancouver for years using a proprietary wireless technology in the 2.5 Ghz spectrum from an equipment manufacturer. It has wanted to upgrade that technology to mobile WiMax, and in interviews the company has blamed some of its financial trouble on the fact that it is using older technology.
To shift to mobile WiMAX, which involves a different spectrum licence than the ones it already had, the company needed Industry Canada permission, which it received in November, 2008.
In September, 2009 it announced Motorola Canada was finally building a WiMax network in Vancouver, the first step in its upgraded Canadian strategy. Last month a company executive said commercial service would start early in the second quarter.
For example. Recently, Bell applied to the federal telecom regulator, the CRTC, for permissionto offer its HSPA wireless service to a number of Ontario and Quebec communities instead of service through Inukshuk as planned
“We had a five-year start, if not 10 [on WiMax],” Grant said, “and so far [Inukshuk] has been able to illuminate only 80 communities.”
