Novus looking to solidify financing to expand in Vancouver market

A lack of financing at Novus Telecom Group Inc has forced the Vancouver broadcast distributor and Internet service provider to abandon plans to expand into Toronto – at least for the time being. Novus finds itself in a cash crunch, but company president George Burnes is confident that adequate financing will be in place within the next 30 days to continue to grow in the Vancouver market. Although he would not reveal details of the new expected financing, Burnes is confident he can double the number of television subscribers by next year. "We certainly plan to continue to grow," Burnes told CCR. "But as far as expanding outside Vancouver, we won’t be doing that (now). We will review that decision as time goes on. Our plans are still to be a national provider, but we have no set time as to when we will move into other cities." According to Burnes, subsidiary Novus Entertainment currently has 3,800 television subscribers and 2,000 Internet users. "We’re pleased with what we’ve done given the capital markets (at the moment)," he says. Novus sold off its competitive local exchange carrier (CLEC) business last year to Wispra Networks, because "we couldn’t see ourselves financing that product," Burnes says. He points specifically to the $5-million to $6-million price tag per switch needed in each city to deliver local telephone service. But he sees cable television and the Internet as being viable because they are more cost-effective products to deliver. Novus’ cable offering currently consists of 38 channels for $25/month, or 68 channels for $49/month in select apartment buildings in Vancouver. It launched its television service in 1999 after acquiring Pacific Place Cable Ltd (PPC) from MultiActive Communications Inc and an affiliate of Telus. PPC was granted a Class 1 cable licence in 1996 (CCR, Dec. 8/99). Last year, the CRTC approved Novus’ application to expand the licensed area for its broadcast distribution undertaking from the Concord Pacific Place condominium development to other multi-unit dwellings in the Greater Vancouver area (CCR, Aug. 17/00). "The difference with our service is that it is all based on fibre," says Burnes. "Over time, we hope to be able to offer more products, such as video-on-demand and video streaming over the Internet." But all that hinges on Novus’ ability to attract more financing. "Institutional investors are backing away," Burnes explains. "But we have re-evaluated our financing and are broadening our base, including looking to sources in the United States."

Novus looking to solidify financing to expand in Vancouver market

Broadcast | September 27, 2001

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