Rogers also in talks to purchase Wind; BCE for Public Mobile

Further consolidation in Canada's wireless market is expected this year as Rogers Communications Inc. is another player in talks with Wind Mobile about purchasing the new entrant carrier and BCE Inc. has held discussions with Public Mobile Inc., industry sources said. The people spoke to The Wire Report on a background basis because the negotiations are private, and said the talks do not necessarily mean those companies are close to announcing deals. “Everyone is talking to everyone,” one person said. The sources said further consolidation is expected following Telus Corp.'s announcement Thursday that it will purchase new entrant carrier Dave Wireless Inc., operating as Mobilicity, for $380 million. According to the deal, Telus would take Mobilicity's 250,000 subscribers and the AWS spectrum licences the new entrant purchased for $243.2 million in 2008. Incumbent wireless carriers BCE and Rogers, or other possible buyers, are not expected to announce any possible deals for new entrants Wind Mobile and Public Mobile before Industry Minister Christian Paradis releases his final decision, as soon as this month, on new rules for spectrum transfers, particularly sales to the incumbents, the people said. Rogers is just one of several companies talking with Wind Mobile, owned by Amsterdam-based VimpelCom Ltd. Other potential suitors are BCE Inc. and Accelero Capital, a Paris-based investment firm owned by former Wind Mobile investor Naguib Sawiris, in a partnership with outgoing Wind CEO Anthony Lacavera, The Wire Report reported in April. Investment firm Fairfax Financial Holdings Ltd. has also been in talks with Wind, though it said in April it was backing out of an offer. VimpelCom chief executive Jo Lunder said this week that the company is keeping its options open in the Canadian market and that it could hold on to its Wind Mobile Canada asset. Industry Minister Christian Paradis must approve Telus' deal for Mobilicity and the transfer of the new entrant's spectrum assets. The minister must also decide on Rogers' proposed purchase of unused “set aside” spectrum from Shaw Communications Inc. for $325 to $350 million. Further purchases of new entrants by the incumbents pose a problem for Paradis' policy aim of ensuring four competing wireless carriers in every region of Canada, and sources said Lacavera, partnered with Accelero, has a stronger case to make to the government for a purchase of Wind because the bid would keep a fourth player alive. Lacavera and Accelero's offer for Wind will depend, to some degree, on how much the bidders are willing to invest. Analysts expect Wind Mobile to sell for $600 million to $900 million. Canaccord Genuity telecom analyst Dvai Ghose told The Wire Report in March that Lacavera and Accelero would also need to consider spending about $500 million to $600 million in Industry Canada's upcoming 700 MHz auction in order to compete in the market, as well as $200 million to $300 million for 2500 MHz spectrum in an auction the following year. That does not include the cost of building out fourth-generation wireless networks, which would cost hundreds of millions of dollars, he said. The sources said that some of the talks for purchasing new entrants—at least those that are more advanced—have involved presentations to the government about possible deals. The Lobby Monitor reported this spring that Accelero hired Ottawa lobby firm Playbook Communications for meetings with government, and that Toronto private equity firm Catalyst Capital Group Inc., which has also expressed interest in purchasing a new entrant and operating a fourth wireless carrier, hired consultants with Summa Strategies in Ottawa. According to the federal lobbyist registry, representatives from Globalive (headed by outgoing Wind CEO Lacavera) and Mike Van Soelen, a PlayBook Communications consultant representing Accelero, on April 9 met with Kelly Gillis, senior assistant deputy minister at Industry Canada; Phil Harwood, a policy adviser in the Prime Minister’s Office; and Sean Speer, director of policy in the finance minister's office; as well as other officials at Industry Canada and the Finance Department. Van Soelen again met with Harwood on April 17 on Accelero’s behalf, the lobbyist registry shows. The subject matter of the all the meetings was “telecommunications.” PlayBook is registered to lobby for Accelero and Globalive on the government’s policy framework on spectrum licences, and to represent Lacavera’s AAL Corp. to “discuss the rules governing the transfer of acquired spectrum licences,” according to the registry. Rogers officials met with Gillis on April 8 and with Gillis and John Knubley, deputy minister of Industry Canada, on April 26 to discuss telecom and “consumer issues.” The company also met with Sean O’Leary, Paradis’ telecom policy adviser, on April 16, the registry shows. BCE representatives also met with Gillis and Speer separately in early April, according to the registry, and with Nigel Wright, the prime minister’s chief of staff, on April 25, to discuss telecomunications. The Wire Report reported Thursday that Telus also held a series of meetings with senior government officials to discuss telecom issues in April, in advance of its announcement of a deal to purchase Mobilicity. Industry sources told The Wire Report that they expect Paradis to release the new spectrum transfer rules as soon as the end of this month, possibly timed with a speech the minister will make June 5 at a conference in Toronto called the Canadian Telecom Summit. Analysts with Veritas said this week they expects the federal government will provide “regulatory relief” for Canada's new entrant wireless carriers within the next three weeks. Companies participating in Industry Canada's upcoming 700 MHz spectrum auction, scheduled for November, have until June 11 to submit initial applications and deposits. According to the auction rules, registered bidders are not permitted to consolidate with one another. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and files from and copy editing by Nicholas Kyonka at nkyonka@thewirereport.ca

Rogers also in talks to purchase Wind; BCE for Public Mobile

News | May 17, 2013

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Rogers also in talks to purchase Wind; BCE for Public Mobile

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