Vecima Closes $7.3 Million Deal to Sell 3.5 Ghz Spectrum to Xplornet

Vecima has announced that it has closed a deal to sell some of its licenses in the 3.5 Ghz spectrum to Xplornet Broadband for $7.3 million.

The sale constitutes Phase 2 of their plan. Vecima had originally sold some of its spectrum to Xplornet under its special purpose entity YourLink inc. The original $8 million deal closed in December 2011, with an option for more wireless spectrum in the future, which Xplornet has exercised.

“We are happy that Xplornet has chosen to exercise their option to purchase additional spectrum,” Surinder Kumar, chief executive officer of Vecima, said. “As mentioned in prior updates, we believe Vecima holds certain assets that have a market value that is many times their book value. Vecima will continue to monetize on its non-core assets. This deal further crystallizes the real value of these assets.”

The Victoria, British Columbia, Canada-based manufacturer of broadband cable and wireless infrastructure said it estimates its remaining wireless spectrum to be valued at between $13 million and $20 million.

“As we have mentioned on numerous occasions, Vecima's spectrum assets carry substantial value that is not reflected in their carried value. This transaction is further strong evidence of that,” Kumar said when commenting on Phase 1 of the sale.

Xplornet specializes in providing broadband to rural markets, and like many other telecommunications companies, faces regulations.

Xplornet CEO John Maduri responded to changes to wireless spectrum auctions by Industry Canada.

“To acquire spectrum for rural use,” he said, “bidders would be required to buy urban areas. This prices many rural broadband providers out of the spectrum market and slows expansion of broadband to rural Canadians.”

Maduri said, however, that he and the company were generally supportive of the proposed changes to the law but recommended that Industry Canada proceed as quickly as possible with the 2.5 Ghz spectrum auction.