Wind Mobile’s subscriber base may have increased by almost 19,000 customers in its second quarter, but parent company Orascom Telecom Holding said it is continuing to explore the possibility of selling the company.
Wind Mobile added 18,732 subscribers during the quarter, bringing its total number to 620,451 customers, representing a 35.8% year-over-year increase compared to Q2 2012. Average revenue per user (ARPU) for the quarter was at $28.30.
Orascom said that its strategic planning for Wind is ongoing, according to the company’s second quarter report, released today. (The company pulled its application off the table to transfer ownership of Wind Mobile in June.)
“After a review process and discussion with the Government of Canada, OTH decided to withdraw its applications for Investment Canada Act approval of its acquisition of control of WIND Mobile Canada. The group might reapply in the future. The process of establishing the final strategic position for the Canadian operations is ongoing, including the possibility of disposing of the business,” states the report.
Wind’s potential suitors currently include Verizon, of course, which has reportedly bid $700 million to acquire the wireless carrier, and appears to have tacit approval from the federal government to go ahead with a deal should it choose to. And last week, the Globe and Mail reported that Birch Hill Equity Partners Management Inc., had announced its interest in buying Wind, with a proposal backed by Rogers.
Dvai Ghose, telecom analyst with Canaccord Genuity, described Wind’s second-quarter results as modest, falling below expectations for subscriber growth, which he says seems to indicate that Wind is in a holding pattern ahead of a sale.
“We assume that Industry Canada has told Orascom and VimpelCom that they will not approve a change of control at WIND ahead of an expected sale of the company to a third party, and instead will rule on any potential sale to a third party,” Ghose wrote in a research paper to investors.
“We assume that Industry Canada would approve a sale of WIND to a third party like Verizon, as is now widely expected, but not to one of the three national wireless incumbents, despite the fact that the new entrant set aside on Wind’s AWS spectrum expires in 2014.”
If Verizon were to buy Wind, Ghose says the primary reason would be for Wind’s spectrum, which would be available “at a valuation well below invested capital, and without competition from the incumbents.” That would still leave Verizon with large to-do list to “fix” Wind – including Wind’s coverage, distribution, weak subscriber growth and modest APRU, to name a few – before it could have any real impact in the Canadian market.
