VimpelCom accepting bids for Wind: Canaccord

VimpelCom Ltd. is looking to sell its Canadian Wind Mobile division and set a Friday deadline for initial bids, Canaccord Genuity analyst Dvai Ghose said. In a research note Thursday, Ghose said he heard from “several sources” that VimpelCom, the Amsterdam-based parent company of Wind, started a “formal sale process” for Wind, a new entrant carrier that had 590,000 Canadian subscribers at the end of 2012. Ghose, who said in October that financial markets assumed VimpelCom wanted an exit from the Canadian market, said a sale of Wind could be based on the parent company's desire to increase cash flow while de-leveraging its debt and focusing on emerging markets. “While a potential VimpelCom sale of its ownership of WIND Mobile Canada would come as no surprise ... we were surprised to hear that a formal sale process is underway with initial bids due tomorrow,” Ghose wrote. Bobby Leach, a spokesman for VimpelCom, which sells mobile services in several regions including Europe, Africa, and South Asia, said in an emailed statement that the company was not commenting on Ghose’s research note. “We have no comment to make,” Leach said. “This speculation arises from an analyst's report and not from any statement or comment made by VimpelCom.” Ghose said in the note that VimpelCom and its subsidiary Orascom Telecom Holdings S.A.E. have spent a combined $1.7 billion on Wind, including $442 million the company spent on AWS spectrum during a 2008 auction. He estimated the company would require another $1.5 billion in funding to secure 700 MHz and 2500 MHz spectrum licences, which Industry Canada will be auctioning off this year and next, respectively. Wind Mobile has said it needs 700 MHz spectrum licences to compete effectively against incumbent carriers BCE Inc., Rogers Communications Inc., and Telus Corp. In a research note released Monday, Scotia Capital analyst Jeff Fan said former Orascom owner Naguib Sawiris could be “the most obvious” suitor for Wind. He said Sawiris and his two investment companies, Weather Investments II and Accelero Capital, have “the capacity to make significant investments” and “are evaluating Canada’s prospects.” Fan speculated that Sawiris may be interested in buying Wind and fellow new entrant carrier DAVE Wireless Inc. (which operates under the Mobilicity brand), as well as MTS Inc. subsidiary Allstream Inc. MTS has not confirmed that division is up for sale though analysts have speculated about a selloff. “In total, to acquire Wind, consolidate Mobilicity and Allstream, we estimate Mr. Sawiris would have to invest around $1 billion before the 700 MHz spectrum auction,” Fan wrote. Ghose estimated that Accelero Capital has about $2.5 billion US in capital and that he wonders whether that would be enough to buy Wind, acquire new spectrum licences, and build out a fourth-generation LTE network for the Canadian new entrant. Ghose wrote that he “strongly question” whether Industry Canada would allow a Canadian incumbent telco to acquire Wind and has “heard nothing regarding foreign carrier strategic interest” in making a bid. VimpelCom said in January that it started a process to acquire a controlling stake in Wind from departing chairman and CEO, Anthony Lacavera, who founded the company in 2008. Fan said in his note that VimpelCom “is not in any position to sell” its stake in Wind until after Industry Canada approves that deal. “We expect the approval will occur sometime this spring,” he wrote. Alexandra Maxwell, a spokeswoman for Wind, said by email Thursday that the company does not usually comment on rumour or speculation. "It's business as usual in the office and that’s not going to change in the foreseeable future," she said. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca

VimpelCom accepting bids for Wind: Canaccord

News | March 21, 2013

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