Will Orascom Sell WIND Mobile to Rogers, Bell or Telus?

by Istvan Fekete on January 22, 2013

Hot on the heels of Orascom gaining full control of WIND Mobile and thus becoming Canada’s first foreign-owned wireless operator, rumours have surfaced suggesting the Egyptian company — now owned by the Amsterdam-based VimpelCom Ltd. — is playing with the idea of selling its Canadian business.

According to industry sources cited by The Globe and Mail, Orascom was pondering over several options for its Canadian business, and one of them was selling it to an existing market player, which would run counter to the federal government’s effort to open up Canada’s wireless industry.

Earlier rumours suggested a WIND Mobile and Mobilicity merger, gaining some traction with the forthcoming wireless spectrum auction, but sources say that negotiations recently ran cold as VimpelCom Ltd. weighs the possibility of selling WIND to a Canadian incumbent.

Fact is, Wind’s foreign financial backers have a surprising view of their Canadian business. When asked about WIND Mobile, its billionaire backer, Egyptian Naguib Sawiris said back in 2011 that he regrets entering the Canadian mobile market because “it was a bad idea”.

Rogers’ expansion plans are obvious: it recently announced it will purchase wireless spectrum from Shaw Communications Inc. as part of the $700 million deal. But even if Rogers is interested in purchasing WIND, it all depends on the government. There are no signs of the Ottawa government easing its ban on incumbents purchasing spectrums from smaller carriers before next year, although it could make an exception, as it’s is widely thought that startups are financially distressed.

“The wild card is whatever VimpelCom wants to do,” said a source familiar with discussions among the startups. Should they sell to Rogers, or any of the incumbents, and get government approval to do so, consolidation would be off the table.

WIND Mobile’s uncertain status is casting a shadow over another wireless carrier startup, Mobilicity, as the company has been struggling to gain market share, and for more than a year it considered options of an initial public offering or a merger with WIND. But both remained out of reach, at least in the wake of WIND becoming part of Rogers.

If WIND Mobile is acquired by any of the Big 3 (Telus, Rogers and Bell), Mobilicity market competition could reach a dead end, also smashing the government’s years of effort to encourage competition.

Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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