VimpelCom Writes Down Canadian Investment, Fueling Doubts about Wind Mobile’s Future in the Country

by Istvan Fekete on March 6, 2014

The Russian VimpelCom, Wind Mobile’s financial backer, has “fully impaired” its Canadian assets due to challenges it faces in the country, raising doubts over the future of the wireless startup.

According to an announcement issued early on Thursday, VimpelCom has suffered a total of $2.6 billion in losses in Canada and Ukraine in the fourth quarter, compared to a net profit of $195 million a year earlier. The impairment of Canadian assets amounted to $768 million in the holiday quarter of 2013, compared to $328 million the previous year.

“The net loss in the fourth quarter, and for 2013, was due to non-cash impairment charges taken on our assets in Ukraine and Canada,” said chief executive officer Jo Lunder in a statement.

The news brings dark clouds over the Canadian wireless startup Wind Mobile: this is the second time this year that the struggling wireless player has received bad news from its financial backer. You may recall that earlier this year Wind Mobile withdrew from the 700 MHz auction at the last minute because its backer decided not to fund spectrum purchases.

By the way, VimpelCom is at loggerheads with the Canadian government over foreign investment rules. Last year the company stepped back from taking over Wind Mobile after it became obvious that Ottawa would reject the transaction based on national security concerns.

In a statement issued to the Globe and Mail, however, Wind Mobile CEO Anthony Lacavera tried ease the concern of investors: “It is business as usual at Wind and this accounting decision has no impact on our operations,” Wind Mobile CEO Anthony Lacavera said in an e-mailed statement.

“With an ever-improving network and an established market presence now in our fifth year of operations, I am more confident than ever that Canadians will enjoy the benefits of our market-leading value proposition and the true competition that Wind brings to the market long-term. Wind is here to stay.”

But he also pointed to the train the wireless player missed this January, which obviously affects its growth: “We do need more spectrum to roll out LTE services long-term, and we look forward to discussing potential joint opportunities with spectrum owners in our current operating markets.”

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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