The Town of Newmarket has sold off the internet service provider (ISP) into which it invested millions, but said it will completely recoup those dollars.
Mayor John Taylor said it was a way for council to avoid making another significant, long-term capital investment to expand the business. Although the town’s legal department is still vetting the public release of what the sale cost telMAX, Taylor said it entirely covers the town's investment into ENVI.
“The environment when ENVI was born into now has become much more competitive,” Taylor said, adding that the business was growing but “would have required a significant, long-term continued investment by shareholders, and by extension, the taxpayer.
“We’re de-risking ourselves considerably,” he added. “This is really an exceptional outcome.”
The 30 kilometres of fibre and more than 200 customers of ENVI, which began as a $5-million startup in 2018 to expand fibre optic connectivity in Newmarket, will be completely absorbed by Stouffville-based ISP telMAX.
The town has said telMAX will be able to expand the network faster than the municipality could have. Taylor said the investment telMAX is making toward expansion would be approximately $60 million, something the town may have had to put into it over a long period.
The money from the sale will cover the ENVI's line of credit, Taylor said, with the remainder going back into the reserves used to start up the company initially.
ENVI president and CEO Gianni Creta said they were challenged by the pandemic causing businesses they were targeting to have employees work from home. Still, he said they continued to grow and gain trust in the community.
“I would have loved to have done more and gone bigger, but I'm definitely not disappointed at all in the way we’ve run the business,” he said.
The model has had its skeptics since the beginning. Lloyd Ainey, a Newmarket resident and senior partner of Toronto-based telecom Interface Technologies, said ENVI did not make sense given the competition in the market.
“The town can’t loss leader,” he said, adding that the fibre market had also softened as new technologies have emerged like data centres. “I went to those guys and said, ‘Guys, I think you’re making a mistake. We got all these kinds of pressures.’”
But the ability of the town to recover its investment indicates a degree of success, Taylor said. He said he understands the skeptics, and they may be pleased about the municipality divesting itself of the ISP, but there were benefits to undertaking the risk.
“I really feel like we’ve found a balance,” Taylor said. “Taken some level of risk, taken some bold steps to be a leader, but we’ve also seen an opportunity to de-risk and accelerate that program.
“This journey, that investment, has put us into a position to have this sale, which is really going to thrust ourselves into one of the fastest, fully wired communities in Canada,” Taylor further said.
There will be a transition period, Creta said, but he added they have assured ENVI customers that they will be able to maintain those services. Now, telMAX will make its way into the community, with the town boasting about PC Magazine rating it as the fastest Canadian ISP in June of this year.
The mayor expressed appreciation for the board and workers of ENVI and everyone that bought into it.
“We did something incredible,” he said. “This will accelerate our community significantly.”