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Shaw CEO: time right to move into mobile with $1.6 billion Wind Mobile purchase

The $1.6-billion buyout of Wind Mobile by Shaw Communications puts the upstart wireless company one step closer to rolling out a high-speed LTE network and offering the latest Apple iPhones with its unlimited data plans.

In announcing the deal Wednesday night, the Calgary-based cable provider said the acquisition of Wind gives it affordable entry into the wireless industry and an avenue for expanding Shaw’s customer base beyond Western Canada.

Meanwhile, the backing of Shaw (TSX:SJR.B) gives Wind Mobile financial security for the first time since its founding in 2008 — one of a small group of new wireless players that aimed to take on Canada’s three big telecoms.

Since then, the company has scrambled to find the funding it needs for network upgrades and the vital wireless spectrum that enables mobile communications.

Wind Mobile has so far been unable to strike a deal with Apple to carry the ultra-popular iPhone, and its relatively pokey 3G data connections lag well behind the high-speed LTE networks on which its competitors.

3Macs telecom analyst Troy Crandall said Wind Mobile now is finally a real threat to the established wireless players, and Shaw clearly has a plan to take the carrier national.

“That puts Wind and Shaw in everybody’s backyard now,” he said.

Crandall said questions remained about the company’s long-term health even after its announcement last week that it had secured $425 million in financing from a syndicate of major Canadian banks for a planned upgrade to LTE to meet growing demand for streaming video and music on mobile devices.

“Some of its competitors and even its investors had thought that Wind would just disappear someday, but it looks like it’s going to be here to stay,” he said.

The Wind purchase will allow Shaw to join BCE (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T) in offering the entire slate of popular bundled services — wireless, television, home phone, and Internet.

Shaw scrapped its previous plans to introduce a mobile network in 2011, and two years later signed a deal to sell the spectrum — which would have been the foundation of that network — to Rogers.

Company president and chief executive Brad Shaw told analysts on Thursday that it has been clear that Western Canada’s largest cable company needed to be a player in mobile communication but the costs were too high until recently.

The acquisition of Wind Mobile, subject to various regulatory approvals, will give Shaw (TSX:SJR.B) a ready-made wireless operation with more than 940,000 customers, mostly in Ontario, Alberta and British Columbia.

Despite concerns about its coverage area and network speeds, Wind Mobile has attracted customers with low-cost plans that feature unlimited data, although traffic is throttled after a certain amount of usage, as well as cheap add-on packages such as a $15 per month package that allows unlimited roaming in the United States.

Wind Mobile CEO Alex Krstajic said Thursday that the company will maintain its low-cost approach, even under new ownership.

“The long-term strategy with Wind Mobile and our network is really one of continuing to aim at the right customer base and making sure that the value proposition is always one that is competitive,” he said.

Krstajic said the company has already had conversations with Apple about offering the iPhone, and that he hopes to strike a deal to begin offering the latest models in time for the planned completion of the LTE upgrade in 2017.

Recent models from the iPhone 5 onward are compatible with Wind Mobile’s network, but as the company is not an authorized Apple dealer it cannot offer the latest devices with a subsidy and customers must pay the full price — currently starting at $899.

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