The board of Egyptian Orascom Telecom Holding (OTH), a subsidiary of VimpelCom, is planning to take control of Canadian operator Wind Mobile following the liberalisation of foreign investment laws in the country earlier this year.
During the summer…
The board of Egyptian Orascom Telecom Holding (OTH), a subsidiary of VimpelCom, is planning to take control of Canadian operator Wind Mobile following the liberalisation of foreign investment laws in the country earlier this year.
During the summer Canada’s government legislated an amendment to the Telecommunications Act that now allows 100% foreign ownership of telcos with a current market share of 10% or less by revenue.
Currently, in a complex arrangement, Orascom Telecom Holding Canada owns 32% of the total outstanding voting shares and 65% of the total outstanding shares of Globalive Investment Holding Corp (GIHC), which in turn is the parent company of Globalive that operates using the Wind brand.
Orascom plans to convert its non-voting shares in GIHC into voting shares, as a result of which OTH will take control of Globalive. Orascom will put the proposition to shareholders at an EGM in November.
When Wind first entered the Canadian market it faced strong opposition from the three incumbent operators – BCE, Rogers and Telus – which claimed that Orascom controlled the company in violation of foreign ownership rules.
The Canadian Radio-television and Telecommunications Commission (CRTC) blocked Wind’s entry but that was overturned by the government which decided that its intricate ownership structure meant it fell within foreign investment parameters.
If the change in ownership is approved by shareholders it will then be subject to scrutiny from Canada’s investment authorities.
The Egyptian telco said it expects approval by late 2012 or early 2013.
As part of the move a portion of GIHC’s debt will be restructured.
“The changes will involve, amongst other things, the restructuring of Orascom shareholder loans to GIHC and the cancellation of accrued interest of approximately C$450m,” Orascom said in a statement.
The company added that it believed the move would create synergies and operational efficiencies for Orascom and Wind.
OTH also announced that it is planning to change its name from “Orascom Telecom Holding S.A.E.” to “Global Telecom Holding S.A.E.”, in line with the conditions of its sale to VimpelCom last year, subject to shareholder approval.
