BUSINESS

Wind Mobile's Backer Orascom Telecom Withdraws Application To Get Control

06/19/2013 10:24 EDT | Updated 08/19/2013 05:12 EDT
CP
MONTREAL - Telecom giant VimpelCom has withdrawn its bid to acquire full ownership of Canada's Wind Mobile, leaving the founder of the small wireless company the option of buying it back.

Wind Mobile CEO and chairman Anthony Lacavera said Wednesday that he retains his 35 per cent ownership stake in the company and will go back to the capital markets to raise money to buy the rest of the company.

"I am going to continue approaching VimpelCom about acquiring their stake," Lacavera said in an interview.

Orascom Telecom Holding, a subsidiary of VimpelCom that was instrumental in Wind's startup, has withdrawn its application for full ownership under the Investment Canada Act.

Lacavera said nothing changes for Wind Mobile's more than 600,000 cellphone customers.

"It's business as usual."

But VimpelCom said it continues to be interested "in consolidating its interest in Wind Mobile Canada and in working with the Government of Canada to achieve this goal."

"They can sell their stake in the business, which is 65 per cent, but they can't sell the entire business any longer," Lacavera said.

Egypt-based Orascom had announced in January that it wanted to fully own and control Wind Canada after the federal government lifted foreign ownership restrictions on telecom companies with a 10 per cent or less share of the market.

Parent company VimpelCom subsequently announced that it wanted to sell Wind Mobile Canada. VimpelCom is Russian owned and headquartered in the Netherlands.

Lacavera has teamed with Egyptian telecom player Naguib Sawiris, former owner of Orascom, to buy back Wind. The goal is to create a fourth national carrier to compete against industry heavyweights — Rogers (TSX:RCI.B), BCE's Bell (TSX:BCE) and Telus (TSX:T).

If the bid isn't successful, Lacavera noted that VimpelCom can sell to someone else and "I will just keep my stake."

Lacavera also said he would like to talk to U.S. carriers to see if they're interested in teaming with him.

Big U.S. carrier Verizon has said it's taking a look at possibly entering the Canadian market.

"They're always looking for opportunities. In the last few weeks, Canada has become a lot more interesting place," Lacavera said, noting the government's commitment to four carriers in every region.

Telecom analyst Iain Grant said Lacavera's position becomes stronger because he still owns part of the company even if he's unable to buy the rest of it back.

"Anyone who buys Orascom's stake in Wind will still have to make accommodations with Tony since he owns 35 per cent of the company," Grant said.

"There are a number of things that make Tony a very desirable person to talk to," added Grant, managing director of the SeaBoard Group.

"He is probably the most likely buyer and VimpelCom may have got their mind around that and realized they don't need to spend the legal fees they were trying to spend to make the application for change (of ownership)."

VimpelCom owns 51.7 per cent of Orascom and Naguib Sawiris heads Accelero, an Egyptian company that is seeking to buy Allstream from Manitoba Telecom Services (TSX:MBT).

Industry Minister Christian Paradis has said that the federal government remains committed to having at least four competitors in each region of the country.

Earlier this month, following the Paradis announcement, Lacavera said he'd like Wind to open talks to buy Mobilicity.

Shortly after that, however, another of the small carriers — Public Mobile — said it was now positioned to be the industry consolidator with financial backing from Thomvest Seed Capital Inc. and New York's Cartesian Capital.

Public Mobile's founding CEO, Alek Krstajic, said he would like Public Mobile to buy both Mobilicity and Wind Mobile in order to create a bigger rival to the three industry leaders.

Also on HuffPost

What You Need To Know About Wireless Code of Conduct