Wind Mobile worth ‘more than zero’: Lacavera

Wind Mobile CEO Anthony Lacavera said it’s “business as usual” at his company following the decision by majority owner VimpelCom Ltd. to write down the value of its $768-million US stake in the Canadian wireless carrier. In a financial filing on Thursday, Amsterdam-based VimpelCom said it had written down the full value of its 65 per cent stake in Wind, leading analyst Dvai Ghose of Canaccord Genuity to declare the company “all but dead” in a note to investors. Such declarations, Lacavera said in a phone interview on Thursday, were premature and don’t reflect reality. “Clearly the assets are worth a lot more than zero,” he said. “The accounting decision that VimpelCom has made has absolutely no bearing on our business or operation.” In a presentation accompanying its financial filing made available on the firm’s website, VimpelCom cited “challenges” in Canada that led it to withdraw from the recent 700 MHz spectrum auction and still posed a problem for the future of its investment here. Lacavera, who owns the other 35 per cent of Wind through a holding company, said VimpelCom was dealing with continuing problems with Industry Canada over foreign ownership rules. “It's clear what the rules are but it's not clear how they're being applied,” he said. “I understand their concern was that they're having to invest into a relatively unclear regulatory environment, not from an operating standpoint but from a control and ownership standpoint.” VimpelCom tried to buy the share of Wind Mobile it does not own in 2013, only to have the deal blocked by Industry Canada over questions of foreign ownership. "Our government’s wireless policies are designed to benefit Canadian consumers, first and foremost,” said Jake Enwright, press secretary to Industry Minister James Moore, in an email on Thursday. “As a result of our policies, Canadians will soon benefit from a fourth wireless player in every region of our country." Ghose said in the note to investors that VimpelCom’s write-down was unsurprising, and questioned its future as co-owner. VimpelCom reported that Wind Mobile had gained 12,000 new subscribers since the last quarter, which Ghose said was well below estimates. At the same time, Ghose noted, VimpelCom gained almost 40,000 new subscribers at its subsidiary in Ukraine. “Despite the Government’s intentions, the national wireless incumbents appear to be in a strong position, while new entrant survival remains challenging with the exception of Videotron and Eastlink,” Ghose said. “With VimpelCom's announcement we wonder if it is prepared to finance significant incremental losses at Wind,” he said. Lacavara said Wind’s business is on “a very good trajectory” and that, outside of the control and ownership issue, there had been improvements in the regulatory environment as well as the company’s operations, including roaming, tower sharing and spectrum availability. He noted that Wind has outlasted its competitors such as Public Mobile, which was bought up by Telus last year, and Mobilicity, which is in bankruptcy protection and seeking a buyer. “The regulatory environment has improved at the same time the competitive intensity has declined,” Lacavera said. “I'd like to see some analysts look at the facts surrounding those realities. It's just a fundamentally flawed analysis in my view. It sounds a lot more like incumbent rhetoric than it does true analysis of the situation.” Lacavera said that if VimpelCom ever did decide to sell, he would be the first in line to buy. “I maintain my enthusiasm for the long-term opportunity,” he said. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Wind Mobile worth ‘more than zero’: Lacavera

News | March 6, 2014

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Wind Mobile worth ‘more than zero’: Lacavera

News | March 6, 2014

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