Wind Mobile Reportedly Up for Sale

by Istvan Fekete on March 22, 2013

Just the other day, Telus argued that there is indeed competition in the Canadian wireless market, but today’s news seems to contradict that view: Wind Mobile, the first fully foreign-owned carrier, is up for auction, with the first bids to be collected today.

The report comes from Dvai Ghose, head of research at Cannacord Genuity, who cited several unnamed sources claiming that Wind Mobile’s owner, the Amsterdam-based VimpelCom, has started the process to sell its Canadian business.

The Globe and Mail was able to obtain confirmation — or sort of — of the above claims: Its anonymous source claims that VimpelCom is “on the verge of making a strategic move with respect to its Canadian subsidiary.”

Considering that Wind’s parent has invested roughly $1.7 billion in its Canadian business, and this includes the $442 million paid for their AWS spectrum (Cannacord estimate), the sales price isn’t going to be small. And add another $1.5 billion the buyer needs to invest to build its LTE network.

Which obviously leaves only a handful of bidders. Three to be more precise: Rogers, Bell and TELUS.

There were rumours, however, that Wind and the other two new wireless players Mobilicity and Public Mobile could be subject to sale, but these whispers seemed to have no solid base as they weren’t confirmed at that time.

But today’s report is backed by earlier statements from Wind Mobile’s founder, the Egyptian Orasom chief Naguib Sawiris. He said his company was weighing its options for Canada, and ultimately it could exit Canada, merge with another Canadian carrier, or continue to grow organically.

In fact, the company has recorded slight growth on a year-over-year basis, but plans for building an LTE network were scrapped from the start.

The report also names Rogers as a potential buyer, as the company is set to expand its user base and spectrum: Canada’s No. 1 wireless player shares adjacent blocks of spectrum in the AWS band, so this could be a great move strategically.

The deal, however, could face several roadblocks, such as the prohibition on incumbents buying new-entrant spectrum — which expires in 2014 — and Industry Canada, which announced recently that it is reviewing its policy on transfer or wireless licenses.

If Wind Mobile is sold to any of the incumbents, the “competition” bubble will burst and Canadians will have to face the harsh reality of an uncompetitive market.

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

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