Small wireless carrier Wind Mobile, part of a wave of new companies offering more cellphone competition, is being put up for sale by VimpelCom, its Dutch telecom owner.
Wind Mobile founder Anthony Lacavera and Egyptian telecom player Naguib Sawiris, the original financial backer of Wind in Canada, have submitted an offer to buy back Wind, a source familiar with the process told The Canadian Press.
“Wind Mobile is for sale and Accelero Capital and Anthony Lacavera have made a bid,” the source said.
VimpelCom subsidiary Orascom, which had 65.1 per cent stake, acquired full control of Toronto-based Wind Mobile in January under new foreign investment rules for small telecom companies that have less than 10 per cent of the market.
Canaccord Genuity analyst Dvai Ghose said he’s heard from several sources that VimpelCom has started the process to sell Wind Mobile, launched in December 2009.
Ghose said initial bids were due Friday and identified Sawiris’s private equity firm Accelero as a possible bidder.
“It has been suggested that a potential bidder is Accelero Capital, which was founded by Orascom CEO Naguib Sawiris,” Ghose said in a research note on Thursday.
Ghose did not name Lacavera as being involved in the deal.
“We wonder if Accelero has enough capital to bid for Wind Mobile Canada without external funding, especially as we assume that any buyer of Wind would have to look to finance the 700 megahertz and 2500 megahertz spectrum purchases and build LTE (network), which could in total cost $1.5 billion on top of the acquisition price for Wind,” Ghose said.
VimpelCom also declined to comment.
“This is the opinion of an analyst and we do not comment on this type of speculation. It does not relate to any announcement or comment made by VimpelCom,” company spokesman Bobby Leach said in an email.
Lacavera wouldn’t comment on buying back Wind Mobile with Sawiris.
Wind Mobile had a two-year legal battle focused on whether it met the test for Canadian ownership and control when it entered the market. That argument was put to an end last spring by the Supreme Court of Canada.
The Canadian Radio-television and Telecommunications Commission prevented Wind Mobile from initially entering the cellphone market in 2009.
The regulator had ruled that Wind wasn’t Canadian owned and controlled because most of its debt was held by Egyptian-based Orascom, later acquired by Amsterdam headquartered VimpelCom.
A federal cabinet order overturned the decision, allowing Wind Mobile to launch its business.
Wind Mobile said recently it has 600,000 subscribers with its network in Toronto and southern Ontario, Ottawa, Calgary, Edmonton and Vancouver. The company had been aiming for 1.5 million subscribers after three years of operation.
Rogers, Bell and Telus, have more than 24 million wireless customers combined.
Lacavera has said he planned to start a venture capital company focused on telecom, technology and media, saying there’s not enough capital available to young entrepreneurs.
He still owns Toronto-based Globalive telecom company, which provides high-speed Internet and home phone service to consumers and a variety of telecom services to small business.
Small players Public Mobile and Mobilicity and Quebecor’s Videotron all launched new wireless services in 2010.
Ghose said the buyer of Wind Mobile could affect Public Mobile and Mobilicity, but it’s still unclear.
“While we assume that any acquirer of Wind Mobile Canada would consider consolidating Mobilicity and Public Mobile, this would require even more capital,” Ghose said.
“Given that Wind’s own position remains far from clear, it is very unclear what a Wind sale could potentially mean for other new entrants.”