New deal will see C1 Communications re-emerge as XO Communications Canada

The president of C1 Communications Inc says his company’s transformation into XO Communications Canada Inc should give it the clout and brand recognition it needs to compete as a larger player in Canada’s major markets. Under the agreement, C1 Communications has joined with Wispra Networks Inc to form XO Communications Canada. Wispra Networks is a consortium of wireless firm Wispra Inc, TD Capital Group and XO Communications Inc. The seeds for the new agreement were planted when C1 was going through a second round of financing. At the time, C1 officials met with several potential partners. "XO kind of came to the surface as one that had an interest in both being a strategic operating partner and also a financial investor," C1 president Tony Cassetta told Network Letter. "The way this deal is structured is that XO Communications Canada is in effect an investment that XO Communications U.S. is making in our company. So we’re not a subsidiary, as it were." C1 had already divested itself of its assets in the Atlantic provinces through a sale to GT Group Telecom Inc. Cassetta says the Group Telecom offer not only provided C1 with some welcome capital, it also allowed his company to focus on core markets elsewhere in Canada. The new company will concentrate its operations in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal. XO Communications Canada expects to have digital multiplex systems switches in place in Vancouver and Toronto by early 2001. In addition to C1, Wispra, and XO Communications, other investors in the new company include New Brunswick Investment Management Corp, William Stanley, Alta Communications, James MacMurray, Charlesbank Capital Partners and XO International (a subsidiary of the American firm). Cassetta, who will be elevated to CEO of XO Communications Canada, expects the deal to close in one to two months. He does not expect to run into any snags with the CRTC or other sections of the government. "There are rules that are basically outlined by both Industry Canada and the commission," says Cassetta. "Certainly we will abide by those rules in terms of making sure that our structure fits with the current and future plans that Industry Canada and the CRTC may have. C1 had to do essentially the same thing." Having a degree of foreign ownership also shouldn’t pose a problem. "We have American investors today in C1," he adds. "In the past what we have done is we’ve taken a proactive approach to meeting with government officials to make sure that they’re aware of the types of things that we’re doing. It’s basically a checks-and-balances type of a review process." Management from C1 Most of the management of the new company will come from the ranks of C1. Wiliam Stanley, chair and CEO of C1, will become chair of XO Communications. The senior management of C1 is likely to shift to similar positions in the newly created company. Wispra has a small staff but Cassetta expects some members will move over to the new firm. Wispra president Joe Church plans to be on the board, but is ruling out any day-to-day role. Wispra brings wireless strength to the table having been awarded 24 GHz licences in the six cities XO Communications Canada plans to operate in Cassetta points to the assets the new company will possess: "You’ve got a few DMS switches, you’ve got wireless spectrum in the six key markets in Canada, you’ve got 130 plus co-locations done by C1, data hosting sites in all the key markets, the 12 hub sites across the country," he says, rhyming off the litany of technical data, "and you’ve also got over 350, close to 400, employees who give you a great start, plus the operating support system. There’s also a very critical aspect of this. You’ve got a company that’s ready to go out there and do some serious business for customers and compete on this landscape."

New deal will see C1 Communications re-emerge as XO Communications Canada

News | November 6, 2000

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