IN WHAT APPEARS TO be a big blow to the federal government’s plans to entice outside investors into Canada in order to be a fourth national wireless carrier, American wireless company Verizon has apparently pulled the plug on buying Wind Mobile or Mobilicity, reports the Globe and Mail.
The report, citing anonymous sources, says Verizon has – for now – decided to set aside any attempted purchase of the two companies, both of which have been for sale for months, until after the January 2014 auction of 700 MHz spectrum.
The report says Verizon will now decide whether or not it will participate in that auction on its own. Initial deposits are due into Industry Canada on September 17th with final deposits due October 29th. The Ministry is supposed to publish the final list of qualified bidders on November 8th. Once a company decides it’s officially in the auction, it is prohibited, by the auction rules, from negotiating with any other bidder (or even talking to the media about it).
(Ed note: One can nearly hear all the crackling knuckles in Ottawa from here as Conservative government officials now all cross their fingers hoping those other than the usual suspects decide to jump into the auction.)
What this means for Mobilicity especially, is unclear. It has said it is running out of money and, while privately held, is thought now to have less than 200,000 subscribers by industry financial analysts. It had found a white knight back in April when a willing Telus offered $380 million, but the federal government said no to the spectrum transfer to Telus which would have had to happen prior to the expiry of the five year moratorium on selling the set aside purchased by the company in the 2008 AWS auction.
Mobilicity shelved its recapitalization plans in July when it became apparent there were other suitors in the weeds and it would appear from outsiders to be too short on capital to bid in the auction, so it is hoped another buyer comes forward, soon.
Wind, on the other hand, is in better shape, but still for sale. It’s parent, Amsterdam-based Vimpelcom, has said it wants to sell – and has at least one eager buyer in CEO Tony Lacavera, who has made no secret of his desire to take control, perhaps with the help of his original investor, Naguib Sawiris, whose investment arm Accelero agreed to buy Allstream earlier this year. Wind has over 620,000 subscribers, according to Vimpelcom’s latest quarterly release.
Another suitor, apparently for both Wind and Mobilicity, reported the Globe, is buyout firm Birch Hill Equity Partners, which is apparently interested in investing in Canadian wireless, with the financial backing of Rogers Communications. The Globe reports say Rogers would only provide financing and not take an ownership stake, in order to try and avoid the federal government’s concerns about spectrum hoarding by the big three. Fuelling that fire a little is the fact that Birch Hill principal and chair Stephen Dent registered as a lobbyist with the Office of the Commissioner of Lobbying on August 8, 2013, under the subject matter of: “Telecommunications Policy Framework with regard to investment in wireless carriers in Canada.”
However, the registry shows no meetings as yet between Dent and any government officials.
The 2013 wireless saga continues…
– Greg O'Brien
