Uncertainty of telecom file delaying Wind Mobile’s ownership change

Seven months after VimpelCom Ltd. filed an application to change control of Wind Mobile, Industry Canada still hasn't released a decision. VimpelCom, an international mobile operator based in Amsterdam, filed application last October with an expectation that the agreement would be approved within 45 days, and before an announcement was made between Wind and VimpelCom in January, people familiar with the transfer process said in background interviews. Industry Canada hasn't yet announced an approval of the change in control under the Investment Canada Act, the people said, and VimpelCom has extended the closing date to June 30. Analysts speculate that the approval of a change in control to VimpelCom—from Globalive Wireless Management Corp. CEO Anthony Lacavera—is related to Industry Canada's consideration of new, unreleased spectrum transfer rules, and its policy to encourage a fourth player in each region of the country, as consolidation talks among companies are ongoing. “My theory is that they're delaying it to keep their options open until they see how the pieces are coming together,” Troy Crandall, a telecom analyst with MacDougall, MacDougall & MacTier in Montreal, said in a phone interview. “There's so many moving parts right now.” Wind Mobile is still technically owned by Globalive and headed by Lacavera. He and Wind Mobile backer Orascom Telecom Holding S.A.E. announced on Jan. 18 a plan to transfer control, and all of Lacavera's shares in Wind, to Orascom, which is majority owned by parent company VimpelCom The agreement, if approved, will officially transfer ownership of Wind to VimpelCom, the world's sixth largest mobile provider by subscribers with operations in Russia, Ukraine, Italy, Algeria, Pakistan and Bangladesh, among others. The Conservative government last year opened up the foreign ownership rules to allow foreign ownership of small Canadian telcos. The Industry Department is expected to release new rules governing the transfer of spectrum assets before June 11, the deadline to submit initial applications for participation in Industry Canada's upcoming auction of spectrum in the 700 MHz band. Analysts said this month that the approaching June 11 deadline, and auction rules that do not permit consolidation between registered bidders after that point, mean that delays in the auction process are increasingly likely. The Wire Report asked Industry Canada whether there has been a delay in the Wind Mobile ownership change application, whether any delay is related to potential acquisitions of new entrants, and how soon a decision can be expected. "The government cannot comment on speculation,” Industry Canada spokesman Michel Cimpaye responded in an emailed statement. “Any transactions that require regulatory approval will be considered accordingly." Crandall added that Wind Mobile is a private company, making it harder to know what is being said behind closed doors. Neeraj Monga, a telecom analyst with Veritas Investment Research in Toronto, said in an interview that he believes the delay is related to the government's plan to provide regulatory clarity on consolidation in the wireless sector. “In order to live up to their policy objective of having a fourth, facilities-based wireless service provider in every province of Canada, they are taking their time to make final decisions,” Monga said. Monga said in a research note to clients this month that Veritas expects Industry Canada to announce “regulatory relief” for Canada's new entrant wireless carriers in advance of the June 11 deadline. The firm said it expects the government to allow new entrants to pay off debt related to the auction over an extended period of time, instead of requiring lump-sum payments, and to introduce new rules to govern roaming and infrastructure sharing agreements within the wireless industry. This month, Telus Corp. announced an agreement to purchase new entrant carrier Dave Wireless Inc., operating as Mobilicity, for $380 million, which must be approved by Industry Canada. Accelero Capital Holdings, a Paris-based investment firm owned by former Wind Mobile investor Naguib Sawiris, in a partnership with Lacavera, has submitted an offer to purchase Wind Mobile from VimpelCom, The Wire Report reported in April. Accelero also announced a deal this month to purchase business services division Allstream from Manitoba Telecom Services Inc. If Industry Minister Christian Paradis intends to make a policy announcement before June 11, it may happen next week. The CRTC is planning to announce a new policy for mobile providers, a code governing consumer wireless contracts, Monday morning. Due to House of Commons business, Paradis also cancelled a speech that was scheduled for June 5 in Toronto at a conference called the Canadian Telecom Summit, said a person familiar with the conference schedule. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Nicholas Kyonka at nkyonka@thewirereport.ca

Uncertainty of telecom file delaying Wind Mobile’s ownership change

News | May 31, 2013

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