Unique Broadband Systems Inc fka UBS

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Look seen fetching top price

Hundreds of millions: Major telecom players expected to fight for key spectrum

Peter Nowak, Financial Post
Published: Monday, December 11, 2006

Digital TV and wireless Internet provider Look Communications Inc. is about to be sold to a major telecommunications company in an auction that will likely fetch into the hundreds of millions of dollars, a source familiar with the company says.

Milton, Ont.-based Look is a relative minnow, with only 100,000 customers and a market capitalization of $29-million. But the company has several lucrative assets in Ontario and Quebec: It owns a sizeable chunk of wireless airwaves, known as spectrum, and a broadcast television licence.

The spectrum is in the 2.5-gigahertz band, the frequency designated in North America for WiMax, which many industry analysts are pegging as the standard for future fourth-generation wireless phone, Internet and television services. The company's $400-million in tax losses is also an asset.

An auction for Look will happen before the end of the year and most major players, including Rogers Communications Inc., BCE Inc. and Telus Corp. are expected to bid, the source said.

Look's spectrum alone is worth in excess of $100-million, the source added.

Look chief executive Gerry McGoey confirmed the company has sent invitations to "tier one" players and that a sale of the company was believed to be "imminent."

"This is not a long process; the assets are pretty easy to value," Mr. McGoey said. "They're well aware of the value of the spectrum, the value of the broadcast asset. These are significant assets that are coveted by a number of people."

Mr. McGoey suggested Look's spectrum is worth much more than $100-million. In the government's last airwave auction in 2001, Bell, Rogers and Telus paid $1.2-billion for Ontario spectrum alone -- and that was for about half the amount, or 92 megahertz, owned by Look.

Industry Canada will sell a new block of spectrum next year and will release a discussion paper on the rules of the auction soon. The government is widely believed to be interested in encouraging more competition in the cellphone market, possibly through setting aside spectrum for new entrants. That would make Look's spectrum more appealing to Bell, Rogers and Telus.

Spokespeople for all three declined to comment on whether their respective firms had interest in Look or its assets.

The company has retained investment bank Greenhill and Co. to explore its strategic options, which could also include a partnership. Greenhill managing director Brad Compton ruled out a sale of just the spectrum asset, however.

Look's shares have skyrocketed on the Toronto Stock Exchange recently, from 9 cents two months ago to 28 cents on Friday.

Trading volume at the end of last week was heavier than usual, with 1.3 million shares changing hands on Thursday and Friday versus a six-month daily average of 146,000.

The top buyer over the past two months was "anonymous," but a source familiar with Look suggested it could be one of the big players -- Bell, Rogers or Telus -- making strategic buys.

Shares of Vaughan, Ont.-based Unique Broadband Systems Ltd., which owns 50% of Look, have also soared. The stock traded at 8 cents two months ago and closed at 39 cents on Friday, also on heavier volume.

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LOOK COMMUNICATIONS INC.

Ticker: LOK/TSX-VEN

Close: $28 cents, up 1 cents cents

Volume: 598,458

Avg. 6-month vol.: 146,000

© National Post 2006