The WINDs of Change

by Jordan Richardson on March 27, 2012

Recent news of changes to the foreign investment structure in Canada’s telecommunications industry could have a ripple effect within the ownership structure of WIND Mobile, some analysts predict.

WIND CEO Anthony Lacavera says that there are no plans for a management shuffle at the carrier, but the pending changes to foreign investment rules do mean that Amsterdam-based VimpelCom Ltd. could be taking over the company.

“There is no management shuffle planned at WIND Canada,” Lacavera said. “A lot of progress has been made and I am very proud of our team.”

VimpelCom recently merged with Egypt’s Orascom Telecom Holding, the company that serves as WIND’s financial backer. The merger technically created the world’s fifth largest mobile operator by subscriber numbers, so the move could give Canada’s WIND Mobile considerable heft in the fiscal department.

What’s more, Ossama Bessada, VimpelCom’s head of the Europe and North America division, is resigning at the end of June and relocating elsewhere with his family. And where is Bessada relocating to? That’s right: Canada.

The whole situation has been enough to give fuel to the rumours that WIND Mobile’s structure may have a little more VimpelCom in the cards.

“We believe Mr. Bessada has been closely involved with the development of Wind Canada,” Phillip Huang, an analyst with UBS Securities Canada Inc., said. “Despite his intention to leave [VimpelCom], we find the destination for his relocation and the timing of the announcement intriguing (two weeks after the relaxation of telecom foreign ownership restrictions).”

Despite the potential infusion of capital and clout from VimpelCom, there’s still the question as to if WIND is planning on bidding in the upcoming spectrum auction. The rules still haven’t been adjusted to a sufficient degree for the carrier and the hoped-for “set aside” didn’t materialize, leading to the suggestion that WIND would sit the auction out. This could prove disastrous for any hopes of the company’s competition designs, of course, and, according to Huang, could even mean that WIND would have few other options but to put itself up for formal sale.

An awful lot hinges on the next few months for WIND Mobile and, by extension, Canada’s other new carriers. The foreign investment changes could mean more market mobility for some, but others continue to insist that the rules provide “no reason” to participate in the spectrum auction.

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