A source familiar with both negotiations confirmed to CBC News on Friday that two competing plans are in the works. Under the one plan, which was first reported in the Globe and Mail on Friday, Rogers would provide some funding to Birch Hill, but not get an equity stake in Wind. Wind and Rogers would gain access to each others' wireless networks in the process.
That move would allow Wind to carry on as a Canadian company, without any more encroachment from large foreign players. That's something Canada's Big 3 wireless companies — Rogers, Telus, and Bell — are keen to see, as demonstrated by a widespread public relations campaign this week aimed at "levelling the playing field" in wireless and not giving foreign players preferential treatment.
Wireless auction coming
This fall, the government is set to auction off a new round of wireless spectrum, and has said it will govern that auction with a view to ensuring there are at least four viable wireless companies in every Canadian market. Wind has been tagged as a takeover target heading into that auction by those looking to enter Canada's profitable wireless industry.
Indeed, the federal government stepped in earlier this year when Telus attempted to take over Mobilicity in a $300-million deal.
Both Rogers and Birch Hill declined to comment on Friday's report.
Canaccord analysts Dvai Ghose and Sanford Lee, who cover the telecom sector in Canada, said in a note to clients Friday that the government is unlikely to OK any transaction that would see an incumbent gain any sort of control over one of Canada's smaller players, "especially if it is obvious that such transactions are merely designed to keep WIND and Mobilicity from Verizon ownership."
Verizon's name surfaced earlier this summer when the company's chief financial officer said at a telecom conference it was exploring the possibility of entering the Canadian marketplace.
It's believed that Verizon is in the process of finalizing its own offer to take over Wind Mobile, with a value of around $700 million. Verizon has repeatedly declined comment on any specific plans in Canada.
"There is a lot of activity going on, for sure," an insider with knowledge of the Verizon negotiations told CBC News Friday. "The stage is set for Verizon," the source said.
Wind owners fielding offers
The Financial Post reported Friday that the board of directors of Wind's majority owner, VimpelCom Ltd., is also set to meet next week and said to be considering offers to buy the Canadian company.
The Post also said U.S. telecommunications giant Verizon Communications would discuss Wind at a meeting of its directors next week.
As for Rogers' play with Birch Hill, analysts are skeptical that the plan could work and get past regulatory hurdles.
"Given the current regulatory environment, we find the story interesting, but question whether regulators would approve such transactions," Ghose and Lee said.
"The government is bending over backwards to entice Verizon to Canada, regardless of the potential impact on Canadian wireless incumbents and new entrants," they said.Suggest a correction