Norigen spectrum licences could be left on auction floor with no apparent takers

The receivers for Norigen Communications Inc may find it difficult, if not impossible, to find any company interested in buying the assets of the now defunct CLEC and LMCS provider. A senior industry analyst says there are no obvious takers for the company's spectrum licences, switches, access nodes, telephony equipment and property access agreements, even at fire-sale prices. "The biggest thing (Norigen) had going for it was its customer list, but since they've all run back to Bell, Telus, AT&T, Group and Sprint, there's not a whole lot there (in terms of assets)," Mark Quigley, associate director of research at the Yankee Group in Canada, told Report on Wireless. The majority of Norigen's customers were located in the Toronto and Montreal areas, with the rest scattered in the major centres in Alberta and British Columbia. Since these markets are already well covered by a mix of incumbents, CLECs and long distance providers, it's unlikely that competitors such as Group Telecom, Bell Canada, Telus Communications, AT&T Canada or Sprint Canada would see any benefit in acquiring more switches or spectrum licences, he explains. "They really hadn't had the time to go and build their network out like Axxent (for example), which had co-locations all over the country," says Quigley. "So that was at least valuable for Bell looking west and Telus looking east. But Norigen simply didn't have the same kind of assets in place." Companies that might have wanted the assets have already disappeared or simply don't need what Norigen has to offer, even at bargain-basement prices, Quigley adds. The only real asset of any value may be the LMCS spectrum licences that Norigen won in a spectrum auction (RoW, Nov. 29/99). But even those may have limited value. "When you think of the folks that were interested in expanding their networks on the ILEC and the CLEC side, (they) went out and purchased spectrum when it was auctioned," he notes. "And the CLEC population has certainly shrunk dramatically since then, so we don't have a bunch of companies that have the ability to expand networks." On the ILEC side, the incumbents seem more intent these days on putting fibre into the ground than acquiring more spectrum. Even if they needed extra bandwidth, they would probably look to lease wireless capacity from an existing player rather than dealing with the time and cost of getting a new network up and running, says Quigley. Even Stream Intelligent Networks Corp, another winner in the 1999 spectrum auction, may stay away from the sale, says Quigley. Its focus has been Toronto and isn't necessarily interested in "exploring the voice game," he adds. Creditor documents were mailed out a couple of weeks ago, and interim receiver PricewaterhouseCoopers (PwC) now has a better picture of the state of affairs at the fledgling CLEC. However, officials with the receiver remain mum on any potential developments. "The process is just starting so it's a little premature," Andy Wilczynski, senior VP at PwC told Report on Wireless. "At this stage, I haven't a really good feel for (how long it will take)." Trouble for Norigen began at the beginning of summer Struggles for Norigen began in June when founder, chair and CEO Saied Nadjafi left the Toronto-based company. He was followed soon after by president and COO Bill Baines. Later that month, the company's VP wireless engineering was let go and Report on Wireless later learned that the company had shelved plans to roll out its wireless network (RoW, July 9/01). Norigen was forced into interim receivership by its primary lender, Chase Manhattan Bank, last month after its revenues dropped too low to sustain operations. Earlier this month, Norigen told about 900 customers to find another service provider. Its web site has also been been shut down.

Norigen spectrum licences could be left on auction floor with no apparent takers

News | 09/04/2001 4:00 am EDT

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