Accelero only foreign player in four bids for Wind: industry sources

Accelero Capital, an investment firm owned by former Wind Mobile investor Naguib Sawiris, is the only foreign bidder so far for the Canadian new entrant carrier, among two bids from incumbent telcos and another from Fairfax Financial Holdings Ltd., industry sources said. The sources said Anthony Lacavera, Wind’s founder and outgoing chairman, has a relationship with Accelero and is involved in its bid for Wind Mobile. Industry sources familiar with the process said there are four serious bidders so far, which include Lacavera backed by Accelero, and Toronto investment firm Fairfax led by chief executive Prem Watsa. Canadian incumbents BCE Inc. and Rogers Communications Inc. have also bid and Telus Corp. could make a fifth bid, one of the people said. Wind’s Amsterdam-based parent company, VimpelCom Ltd., is soliciting offers for the Canadian carrier, with a soft deadline for bids passing last Friday. VimpelCom is considering the bids as the Industry Department launched a consultation this month on new rules that would impact the transfer of spectrum licences to national incumbent wireless carriers, and which could affect the incumbents' offers for Wind. The process is creating uncertainty about whether VimpelCom could sell to an incumbent, sources familiar with the process said. “If you're a Bell, Telus or Rogers, you probably say, 'Why not?' Give it a shot, and the worst they can say is, 'No,'” MacDougall, MacDougall & MacTier telecom analyst Troy Crandall said in a phone interview. Industry Canada plans to hold an auction of valuable 700 MHz spectrum licences starting Nov. 19, and any buyer of Wind may want to finalize the transaction before that auction. VimpelCom could also decide to hold onto Wind until after the auction. Len Katz, a former vice-chair of telecommunications at the CRTC, said in a phone interview that he is doubtful that Industry Canada would approve a sale of Wind to an incumbent, and that Industry Minister Christian Paradis sent a message to the industry when he announced the review of the rules for spectrum transfers to Canada's dominant wireless players. “I think Paradis was sort of sending a message,” Katz said. “If these players, the wireless incumbents, think they can go out and make a deal to buy Wind or Mobilicity or any of these companies, I think they're going to have a very, major uphill battle.” Paradis says the government wants to ensure a fourth wireless player in each market across the country. At the World Mobile Congress in Barcelona, Spain, in February, the minister called for more foreign investment in Canada’s information, communications and technology sectors, adding that players in the telecom sector require significant capital. Sawiris, founder and former owner of Egypt-based Orascom Telecom Holdings S.A.E., which is now owned by VimpelCom, helped fund Wind’s early operations in Canada through a non-controlling stake in the company and by backing it with lending. In 2009, Wind's debt with Orascom caused the CRTC to determine that it was controlled by non-Canadians, a requirement for Canadian telecom companies that the government has since removed for small carriers with 10 per cent or less of the national market share. Lacavera said in January that he had reached a deal to sell his equity stake in Wind to VimpelCom in exchange for an undisclosed amount of cash. In an interview with The Wire Report at the time, Lacavera 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.” The industry sources said a bid presented this week by Waterloo, Ont.-based voice-over-IP app maker Fongo Inc., which offered $1 and a 49 per cent stake in Fongo in exchange for Wind, is not being taken seriously. It's not clear whether Fongo would pay Wind's debt as part of that proposal. Crandall said he estimates Wind's debt to be between $500 million and $800 million and that the company would sell for $500 million to $1 billion. Under Industry Canada rules established for spectrum licenses in a 2008 auction, incumbent carriers BCE, Rogers, and Telus are subject to a five-year moratorium when acquiring the AWS spectrum that Wind’s mobile network operates on, and which expires in 2014. The Wire Report asked Industry Canada whether the industry minister should approve the sale of Wind to an incumbent carrier under the proposed spectrum transfer rules. "The government has taken strong action to support increased competition and is committed to sustaining this competition with at least four wireless providers in each region. The government recognizes that new competitors require sufficient spectrum and is committed to providing access to spectrum for 4 providers in each region," Lauren Hébert, a spokeswoman for Industry Canada, said in an emailed response. "Any transactions that require regulatory approval will be considered accordingly. In general, Industry Canada is responsible for the review of spectrum licence transfers, and the Competition Bureau for mergers between competitors," she said. Hébert pointed out that comments for the consultation on the new spectrum transfer rules are due April 3, with reply comments due May 3, and that the "government intends to finalize the approach shortly thereafter." Rogers, Bell, and Fairfax were not immediately available to comment Thursday afternoon, and Wind Mobile declined to comment for this story. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and reporting and editing by Simon Doyle at sdoyle@thewirereport.ca

Accelero only foreign player in four bids for Wind: industry sources

News | 03/28/2013 8:48 pm EDT

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