Telecoms group VimpelCom and its subsidiary Global Telecom Holding (GTH) have agreed to sell their stake in Canadian mobile operator Wind Mobile to its controlling shareholder Globalive Capital.
Owned by Wind Mobile CEO Anthony Lacavera, Globalive will…
Telecoms group VimpelCom and its subsidiary Global Telecom Holding (GTH) have agreed to sell their stake in Canadian mobile operator Wind Mobile to its controlling shareholder Globalive Capital.
Owned by Wind Mobile CEO Anthony Lacavera, Globalive will buy the stake together with some investment funds for C$135m (US$122.4m).
The funds are West Face Capital, Tennenbaum Capital Partners, LG Capital Investors, Novus Wireless Communications and Serruya Private Equity, according to a Bloomberg report citing Globalive.
The buyer will also acquire C$160m (US$145m) of outstanding third part debt, consisting of vendor financing, a VimpelCom spokesperson said.
He added that VimpelCom and GTH will be released from all obligations in connection with the vendor loans.
Globalive and GTH were not immediately available to comment.
Cairo-based GTH, formerly Orascom Telecom, financed Globalive when it first acquired spectrum in 2008. VimpelCom continued to fund the operator after it took a majority stake in the Egyptian group in 2011.
Lacavera currently holds an indirect 67% voting interest and 34.3% equity interest in Wind via Globalive Capital, formerly AAL Holdings. The rest is owned by VimpelCom via GTH.
Commenting on the deal rationale, the spokesperson said that Vimpelcom is interested in those assets where it has a possibility to control the operations.
He added: “Since we didn’t achieve any agreement concerning our operational control in Wind Mobile with the Canadian government we decided to leave this market.”
VimpelCom has been trying to divest its stake in Wind Mobile ever since its failed attempt to take full control of the operator in June 2013.
The deal, first announced in January 2013, reportedly collapsed on security grounds. Canadian officials were allegedly concerned about Wind’s network, built by China’s Huawei, being controlled by partly Russian-owned VimpelCom.
VimpelCom has since written off the value of its Wind investment.
A report in late July suggested that US investment firm Providence Equity Partners was examining the possibility of acquiring a stake in Wind.
Separately, Canadian media group Quebecor has reportedly been considering merging its Videotron mobile unit with either Wind Mobile or Mobilicity in a bid to scale up its operations across the country.
These rumoured interests and today’s news of Wind’s buyout follows the Canadian government’s surprise announcement that it will fast-track the auction of AWS-3 spectrum set to be held in March 2015.
The rules of the auction strongly favour smaller operators such as Wind because a 30 MHz block will be set aside, and only operators with less than 10% of national market share and 20% regional share will be eligible to bid for it.
The structure is designed to turn Wind and struggling Mobilicity into viable investments, and create an incentive for buyers that have been considering investing in the operators.
Wind Mobile is Canada’s fourth largest carrier, although the top three mobile operators – Rogers Communications, BCE and Telus – hold a combined 90% market share.
The government has made it clear that the three players will not be allowed to acquire the smaller operators. Instead, it has been attempting to nurture the creation of a fourth national player.
