Wind Mobile wants Mobilicity’s spectrum for LTE network: Lacavera

Globalive Wireless Management Corp., operator of Wind Mobile, is looking at buying Mobilicity because it needs more spectrum in order to roll out an LTE network, Wind CEO Anthony Lacavera said. “Spectrum is the real estate of our business, as you know,” Lacavera said in a phone interview. “We have kind of used the real estate we’ve got, and we’ve deployed 3G services on that. We now need a new chunk of real estate to roll out 4G, or LTE services.” “So it’s really about that,” he said of Wind’s application, under a court-monitored process, to be an approved bidder for Mobilicity (operated by Dave Wireless Inc). “It’s about next-generation wireless services and having sufficient spectrum to roll out LTE services, which we do not have enough of today.” Potential bidders for the company had until 10 p.m. ET Monday to submit qualifying information, while the deadline for submitting formal bids is 5 p.m. ET on Dec. 9, according to a release from Mobilicity. Sarah Shields, a spokeswoman with Ernst & Young, the court-appointed monitor of Mobilicity’s bankruptcy restructuring, would not say whether other potential bidders submitted information in time for Monday’s deadline. The company’s website containing documents relating to the process contained no information about potential bidders. Nick Anstett, an associate with Longview Communications Inc., speaking on behalf of Mobilicity, said in an email that the company is “not in a position to answer specific questions about the sales process at this time,” when asked about potential bidders besides Wind. Despite submitting an application to become an approved bidder, Lacavera said it’s not a given that Wind will make an actual bid in time for next week’s deadline. “We are in the process, and we are assessing alternatives at this point,” he said. Lacavera said in an email before the interview that “we are expressly saying nothing about any possible value of Mobilicity.” The Globe and Mail has reported, citing anonymous sources, that Mobilicity is seeking at least $350 million for its assets. In May, Telus Corp. announced a deal to purchase Mobilicity for $380 million, which was blocked by the federal government in June. When Mobilicity filed for bankruptcy protection in September, it was granted a temporary stay from paying debts as it lobbied the government to approve a second proposed sale to Telus. Industry Canada told Mobilicity in a private memo in October that the government does not want Mobilicity’s wireless spectrum licences transferred to Telus because of concerns over spectrum concentration. During the interview, Lacavera said adding Mobilicity’s subscribers—projected to be 180,000 active customers by the end of October, according to court documents filed earlier that month—to Wind Mobile’s 650,000 is also an incentive to consider in making the acquisition. “All else being equal, sure, more subscribers is what it’s all about in our business,” he said. “But obviously that’s a very simplistic view and we have to get in there and really understand what might have what value to us, and we really have no idea right now.” Lacavera said there have been several attempts to negotiate a merger with Mobilicity in the past. “We just ultimately couldn’t agree on terms, really,” he said. Lacavera said the court-monitored process has made it easier to move forward with the kind of arrangement he feels should have happened already. “Since the spectrum auction in 2008 which launched Wind Mobile, since we acquired that spectrum, I’ve been saying the whole time we have to find ways to co-operate with other new entrants,” he said. “We shouldn’t be competing with each other. We should be working together. It’s the big three that we’re competing against.” Wind Mobile’s attempts to expand its network in Canada come after Jo Lunder, the CEO of its 65 per cent equity owner, Amsterdam-based VimpelCom Ltd., told an investor conference in June that he’s looking to make a “clean exit” from Canada, after the federal government stalled on making a decision on an application from the company to assume operational control over Wind. “It is very challenging to work through the issues concerning a potential Mobilicity bid when you do have all this uncertainty around control and ownership,” Lacavera said. “That’s been a very big challenge, and all I can say is I’m doing my best to work through the issues surrounding that.” He added: “I think, definitively, Wind is going to exist long-term. The only question is who owns it. …. It may not be called Wind. It may be called something else, ultimately, but it will exist.” Cannacord Genuity analyst Dvai Ghose said in a research note that “we cannot take such a potential bid seriously,” in reference to Wind’s application to be a bidder for Mobilicity. Given VimpelCom’s stated intention of leaving the Canadian market, Ghose said he doubts the parent firm would put up the money needed for Wind to purchase Mobilicity or buy spectrum in the 700 MHz auction in January. On how attractive a combined Wind and Mobilicity might be to other potential buyers, Lacavera said: “It’s clearly a value to anyone trying to roll out LTE. The question is, there’s technical integration issues; does (Mobilicity’s spectrum) marry with the Wind spectrum very well?” Scotia Capital Jeff Fan said in a telephone interview that Wind Mobile seems to want to keep its “options open” with the move to purchase Mobilicity, even with its uncertain ownership structure. “They kept their name in for the auction to keep options open for them,” Fan said in a phone interview. “Why wouldn’t they also examine a look at Mobilicity? … Even if they want to exit Canada, even if that’s their first priority, they still need to ensure that options are open.” Fan added that while a combined Wind and Mobilicity would have access to more capital and more spectrum, and stand a better chance than the companies would on their own, the long-term prospects for a merged company to compete with incumbents Telus, Rogers Communications Inc., and BCE Inc. are not good. “They are stronger, I guess technically, relative to them being independent,” he said. “But strong enough to compete effectively over a longer period against incumbents? Probably not.” — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija akarad@thewirereport.ca

Wind Mobile wants Mobilicity’s spectrum for LTE network: Lacavera

News | December 3, 2013

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