Lacavera steps aside as Orascom moves to gain control of Wind

Anthony Lacavera will sell off his share of Wind Mobile and step down as its chairman and CEO as foreign parent company Orascom Telecom Holdings S.A.E. moves to convert its non-voting stake in the new entrant carrier into full operational control, Wind said Friday. In a release, Wind said Lacavera, who founded the company in 2008, has reached a deal to transfer his equity share in the company to Orascom, which is owned by Amsterdam-based VimpelCom Ltd., in exchange for an undisclosed amount of cash. He will also retain Globalive Communications Corp.'s original wireline assets including discount home phone and long distance company Yak Communications Canada Corp., and business and cloud services company OneConnect Services Inc. He will also retain control of the Globalive name, the Wind press release said. In a telephone interview Friday, Lacavera said the time was right for him to sell his stake in Wind after the federal government eased restrictions on foreign ownership of small telecom companies in June, and following a “blow-out” fourth quarter that saw the company increase its subscriber base by approximately 15 per cent. “I got the company on a great growth track, we had a blow-out fourth quarter, operation is stable and I’m comfortable turning it over to operational management now to go onto my next venture,” Lacavera said, adding that Wind had more than 600,000 subscribers at the end of 2012, up from 510,000 at the end of September. Lacavera, who will remain as Wind’s chairman and CEO until the deal gains regulatory approval, said he will serve as an honorary chair once the deal is completed and will retain a “substantial economic participation” in the company. He declined to provide details on what type of economic interest he would maintain, and said his role as honorary chair will likely be as a figurehead. “I’ve been the face of the company and I’m going to continue to be an ambassador for it, but no longer in an operational capacity.” MacDougall, MacDougall & MacTier analyst Troy Crandall said in an interview Friday that Orascom’s bid to gain operational control of Wind is designed to simplify the company’s financial structure. He said that simplified structure would make it easier for the company to invest more money in Wind in advance of the 700 MHz spectrum auction, expected to take place in the first half of this year. “Simplifying your structure also makes it easier if you want to buy, sell or merge with ,” Crandall added. Analysts have speculated that Wind is a potential candidate to consolidate with competing new entrant carrier Mobilicity. Crandall said a more direct financial structure could also make it easier for Orascom or VimpelCom to sell Wind to one of the three large incumbent carriers, BCE Inc., Rogers Communications Inc., or Telus Corp., once a five-year moratorium on those companies obtaining Wind’s spectrum expires in September 2014. Even at that point, he noted, any deal would have to gain the Competition Bureau’s approval. “And there’s no guarantee that it would be approved,” he said. Canaccord Genuity analyst Dvai Ghose said in a research note Friday that Vimpelcom would likely be allowed to sell Wind to one of the incumbent carriers if Industry Canada does not block an agreement announced earlier this week that would see Rogers purchase Shaw Communications Inc.’s spectrum once the moratorium is lifted. “If Rogers is allowed to buy Shaw’s new entrant spectrum, we wonder why Bell, TELUS or Rogers would not be allowed to acquire WIND or Mobilicity from September 2014,” he wrote. Lacavera said Cairo-based Orascom could also choose to move operational management of Wind to Egypt if the deal is approved, but said he had not had direct discussions with either Orascom or VimpelCom management to determine their intentions for the company. He said he would be “absolutely” interested in purchasing Wind again if the company was put up for sale. “At the VimpelCom level, they’ve said publicly that it’s not a strategic asset and that they want to look at selling it,” he said. “I will be following it very closely and if I need to step back in, that’s always a possibility down the road.” He added that Wind is on a “great growth track” but is still a “small asset” for a multinational telecom provider like VimpelCom, which said it had 212 million worldwide wireless subscribers at the end of September 2012. Lacavera said his next step after leaving Wind will be to launch a new venture capital firm, to be called Globalive Capital, which will focus on making “strategic investments” in “early-stage” technology, media and telecom companies in Canada. He said Canadian start-ups in those sectors are facing a dearth of available growth funding, and that he hopes to help bring more competition to the Canadian technology and media landscape. “That’s my next project over the next five years,” he said. “I’m going to do the same thing I did with the wireless industry and make the venture capital industry for TMT more competitive.” —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Danika Grenier at dgrenier@thewirereport.ca -- CORRECTION: An earlier version of this story incorrectly stated that Lacavera would retain control of some Globalive Wireless Management Corp. assets.

Lacavera steps aside as Orascom moves to gain control of Wind

News | 01/18/2013 8:48 pm EST

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