Shaw looks to enter wireless market with $1.6B deal for Wind

The Big Three may have just become the Big Four, as Shaw Communications Inc. announced Wednesday it is attempting to become a wireless provider by acquiring Wind Mobile. Shaw said in a press release the deal means Shaw will acquire Canada's largest non-incumbent wireless provider, which currently has 940,000 subscribers in Ontario, British Columbia and Alberta, along with 50 MHz of spectrum in each province. It said the deal has an “enterprise value of approximately $1.6 billion.” Shaw spokesman Chethan Lakshman said Wind is being paid for with “100 per cent cash,” though the $1.6 billion value also includes assumed debt. "This transaction represents a transformational step in the history of Shaw and we are excited about our future growth prospects in mobile,” Shaw CEO Brad Shaw said in the release. “This growth will be accelerated by combining Shaw's existing customer relationships, trusted brand and wireline and WiFi infrastructure with Wind's impressive asset base, including its existing spectrum position and mobile network." He added: “"By acquiring Wind, we now have immediate scale, spectrum, retail distribution and a network with a clear path to LTE that complements our existing fibre and WiFi infrastructure." The release said Wind CEO Alek Krstajic “and his team” will remain with the company. Shaw was the only one of Canada's large telecom providers to stay out of the wireless market, despite previous moves into the sector. It bought $190 million worth of spectrum in the 2008 AWS auction, only to decide three years later to abandon its wireless ambitions and instead build a network of WiFi hotspots for its Internet subscribers. Shaw then sold that spectrum to Rogers Communications Inc., in a deal that was approved in June and saw Rogers offload some of that spectrum to Wind. Wind was the last of three wireless “new entrants” that entered the market in the wake of that 2008 spectrum auction and have now been purchased by large telecommunications companies, alongside Public Mobile, purchased by Telus Corp., and Mobilicity, bought by Rogers earlier this year. Shaw said Wednesday that the acquisition of Wind “represents the most efficient operating and financial entry point into the Canadian wireless landscape.” It said Wind, which marked its sixth anniversary operating in the Canadian market Wednesday, is expected to generate $485 million in revenue in the 2015 calendar year. “As Wind continues to reinvest in its network and service offering, including a scheduled upgrade to 4G LTE services by 2017, the company expects that its unique customer value proposition will result in continued strong growth in the future,” Shaw said. Wind stopped reporting quarterly revenue and subscriber data after its buyout from VimpelCom Ltd. by a consortium led by Anthony Lacavera's Globalive Capital in 2014. Lacavera led a group that included Toronto-based investment firm West Face Capital, as well as U.S. investors Tennenbaum Capital Partners and LG Capital Investors, which purchased Amsterdam-based VimpelCom's 65 per cent stake in Wind Mobile for $135 million in cash and the assumption of about $150 million in debt. The 940,000 subscribers cited Wednesday compared to about 800,000 reported by Wind late last year, before it stopped providing updates. Wind said Wednesday that its parent company, called Mid-Bowline Group Corp., is made up of investors that include funds managed by West Face Capital, Tennenbaum Capital Partners and Globalive Capital. "We are delighted to announce the sale of Wind to Shaw, one of Canada's premier communications companies with highly complementary consumer offerings," Greg Boland, CEO of West Face Capital, said in Wind’s release. "Under Shaw's stewardship, Wind's employees and customers will be in great hands." Shaw said the deal is expected to close in the third quarter of fiscal 2016, which runs from March to May, and is subject to court approval, as well as approval from the Competition Bureau and the Ministry of Innovation, Science, and Economic Development. OpenMedia, an advocacy group that promotes more access to and freedom on the Internet, expressed some ambivalence toward the proposed takeover of Wind by Shaw. “We’ve campaigned for years for greater choice in our broken telecom market and today’s move should mean a viable fourth option for all Canadians,” OpenMedia spokesman David Christopher said in a press release. “However, given Shaw’s poor track record as one of Canada’s most expensive Internet providers, we’re not holding our breath for lower wireless prices.” It’s unclear where the deal leaves Quebecor Inc.'s long-term plans for its mobile service under the Videotron brand. Last month, Quebecor chief financial officer Jean-François Pruneau said selling its spectrum in Ontario, Alberta and British Columbia was its “only option” for these assets, though he said a partnership will Wind was still possible. Quebecor spokesman Martin Tremblay on Wednesday night declined to comment on what the Shaw purchase of Wind means for Quebecor. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and reporting and editing by Derek Abma at dabma@thewirereport.ca CORRECTION: A previous version of this article incorrectly said the transaction was expected to close in Shaw's third fiscal quarter of 2013.

Shaw looks to enter wireless market with $1.6B deal for Wind

News | December 17, 2015

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Shaw looks to enter wireless market with $1.6B deal for Wind

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