Canada's Teleglobe Launches Global Satellite Phone Business

Matched against the likes of AT&T, British Telecom-MCI, and other global phone giants, Canada's Teleglobe may not seem like much to reckon with.

For more than three years, the unrelenting quest of the company, led by chairman Charles Sirois, has been to transform itself from an unexciting international long-distance company called Teleglobe into a Maserati of global communications.

With slow first steps, but increasing speed, Mr. Sirois and Teleglobe are getting there.

While many high-flying satellite network concepts today languish on corporate drawing boards struggling for funding, Mr. Sirois, who is also Teleglobe's chief executive officer, is one of the few to get money and start launching.

"By the year 2000, developing countries served by satellite and cellular will be a major source of growth for us," Sirois says in an interview. "Right now we are building a position for the future with our satellites."

Two satellites launched last year and now orbiting over North America are the foundation of Montreal-based Teleglobe's plans for two global satellite networks - one supplying voice and data, the other two-way paging and messaging. More satellites are being prepped and the next launch is expected in 1997.

In the shorter run, he says, the focus will be on reaching outside Canada to markets like the US, where rising competition to provide customers with international calling has opened the door for Teleglobe.

Evidence that this approach is working appeared recently as third-quarter earnings rose 53 percent over the same period a year earlier. Analysts attributed the rise to Teleglobe's new strategy of catering to international long-distance traffic that does not start or end in Canada. Teleglobe's non-Canadian phone traffic quadrupled in the third quarter.

"The strategy they talked about three years ago is starting to kick into gear," says Imtiaz Kahn, an analyst at Research Capital Corp., a Toronto investment house.

This success and agreements with smaller international carriers are a big change from a few years ago, when Teleglobe's role was plain vanilla: supply Canadians with reliable long-distance phone links to the rest of the world.

Teleglobe still has a comfortable and lucrative monopoly on Canada's international phone-call business. But such state monopolies worldwide are fast losing their privileged status as markets from China and India to Eastern Europe are thrown open to competition.

Sirois claims he is eager to have the Canadian government take the last steps to dissolve Teleglobe's domestic monopoly and the regulations that entails. "We're in a very quickly changing environment, and there is a need to evolve quickly," he says.

Through his holding company Telesystem Ltd., which owns nearly 20 percent of Teleglobe, Sirois operates a smaller private firm called Telesystem International Wireless out of the same Montreal office tower as Teleglobe. Through TIW, Sirois has lined up investors to win licenses to supply wireless phone service to India, China, and, recently, Romania.

Sirois envisions satellites spinning overhead serving roving businesspeople, and a cellular network providing basic telephony to the masses in Asia. Worldwide subscribership to wireless systems overall is expected to rise to perhaps 300 million customers from 80 million today - with annual sales of $100 billion to $220 billion.

To match larger rivals, Sirois may need a fleet of companies to compete - and that is just what he appears to be creating. "Our cellular systems in all these countries will need good international access," Sirois says. "Teleglobe is developing the international network and TIW is developing the local network that will be a source for Teleglobe in the future."