Craig Wireless sells spectrum

Company holds rights to 2.5 and 2.6 GHz-band spectrum in New Zealand

A Canadian company that promised to start a mobile wireless WiMax-based data service to Vancouver this spring has given up before it started.

Craig Wireless Systems, which also has rights to a chunk of New Zealand spectrum, said on Friday it has sold all of its 2.5GHz Canadian spectrum to a consortium called Inukshuk, headed by two of the country's biggest incumbent wireless carriers, for C$80 million.

The future of another planned WiMax deployment in Palm Springs, California, isn't known. In addition to its Canadian and New Zealand rights. Craig also has spectrum interests through subsidiaries in Greece and Norway. A company executive couldn't be reached for comment.

Craig Wireless gave no explanation for the move, but it has been in financial trouble for years. The company's share value increased four-fold on the news. Last February, Craig sold half of its New Zealand and Norwegian spectrum rights to US-based venture capital firm Everest Wireless Partners for US$5.75 million. Those interests were then vested in two companies incorporated in the Cayman Islands. "The investment by Everest Wireless in our Norway and New Zealand spectrum assets demonstrates the relative stability of the value of our current spectrum asset portfolio in spite of the current condition of the global markets," co-CEO T Boyd Craig said at the time. "We are excited to be entering into this venture with Everest and look forward to working with them to maximise the value of our holdings in Norway and New Zealand over time." Craig acquired the licences in 2007. The license New Zealand licences are for the use of 40MHz of spectrum in two separate lots, in the 2500-2520 and 2620-2640 MHz.

Craig says in a press release that last week's Vancouver sale is "very supportive of the company's strategy to create value for shareholders through a portfolio of spectrum investments".

Craig Wireless operates fixed wireless interent service in Vancouver and Winnipeg, Manitoba, where the company is headquartered. It uses a proprietary fixed wireless system which the company has wanted to upgrade for years so it can increase subscribers.

Last September a company executive said a WiMax-based network using the 802.16e standard was under construction using equipment from Motorola Canada. In February the company said the network was up and would start commercial service early in the second quarter. A Motorola Canada spokesman could not be reached for comment. Craig Wireless is controlled by the Craig family, which has its roots in Canadian radio and television broadcasting with a

company called Craig Media. However, that company had to sold in 2004 after debt mounted. The telecom assets were not part of that deal and became Craig Wireless. It too, however, has been having trouble trying to build an international wireless business. According to its latest annual

financial report, for the fiscal year ending August 31, 2009 Craig Wireless had a net loss of C$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. The company it sold its Canadian spectrum, Inukshuk, is a partnership of telco Bell Canada and cableco Rogers Communications. They use the spectrum to give fixed wireless broadband to communities where their own wireline broadband can't reach. Iain Grant, a Montreal-based telecommunications consultant, said that with the sale Inukshuk has almost a monopoly on the 2.5 GHz spectrum in the country. The sale is proof that for the upcoming 700MHz spectrum auction the federal government should insist on setting aside spectrum for new entrants. It did that in 2008's AWS spectrum, resulting in eight new spectrum owners. One, Wind Mobile, have already started wireless service, while three are expected to open their doors before the summer ends.

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