Wind Mobile’s Vimpelcom takeover agreed; speculation rife on consolidation

21 Jan 2013

Orascom Telecom Holding – a majority owned unit of Vimpelcom – and Wind Mobile’s founder, chairman and CEO, Anthony Lacavera, have entered into an agreement to transfer Mr Lacavera’s controlling shares of the Canadian cellco to Orascom. Upon closing the deal, the Vimpelcom division will own an indirect 99.3% stake in Globalive Wireless Management Corp (trading as Wind Mobile), and Lacavera will step down from his current posts to continue in a non-operational capacity as Wind Mobile’s honorary chair, while retaining a small economic stake in the company. Under the terms of the agreement, upon obtaining certain necessary regulatory approvals, Orascom will indirectly acquire all of the Globalive Wireless Management Corp shares currently held by AAL Corp, a holding company that is majority owned by Anthony Lacavera. As part of the consideration to be paid to AAL Corp (which includes cash consideration and a continuing economic participation in Wind Mobile for AAL Corp), the Globalive group’s fixed line assets (including the Globalive name and trademark) will be transferred to AAL Corp.

Completion of the transactions is subject to satisfaction of certain conditions, including Canadian regulatory approval of the conversion of Orascom’s non-voting shares into voting shares, which would result in Orascom holding an indirect 65.1% voting and economic interest in Globalive Wireless Management Corp immediately before completion of the transactions with AAL Corp. Orascom currently holds an indirect 32% voting interest and 65.1% economic interest in Wind Mobile. AAL Corp currently holds an indirect 66.7% voting interest and 34.3% economic interest. Orascom is acting on recent law changes in Canada allowing 100% foreign ownership in telcos with a revenue market share of 10% or less. Vimpelcom – owned by Russian and other investors including Norway’s Telenor – revealed in October 2012 that Egypt-based Orascom Telecom Holding was changing its name to Global Telecom Holding, although the title change is yet to take effect.

Mr Lacavera will retain the Canadian fixed line businesses of the Globalive group which include Yak Communications, One Connect, Canopco and Globalive Carrier Services. In a press release on the Globalive Holdings website, the private group also said that it will launch a new venture called Globalive Capital in 2013 to focus on strategic investments in technology and telecoms companies.

Launched in December 2009, Wind Mobile’s commercial 3G mobile network covers Southern Ontario (including Toronto), Ottawa, Vancouver, Calgary and Edmonton, and currently serves approximately 600,000 subscribers. Industry sources quoted by Canadian newspaper The Globe & Mail speculate that a move by Vimpelcom to sell Wind Mobile to one of Canada’s three incumbent nationwide mobile operators is likely, as the Amsterdam-based group looks to cut its losses. Sources added that merger talks with a rival second-tier operator Mobilicity have recently gone cold, while Rogers is mentioned as the most likely buyer for Wind ahead of nationwide peers Bell or Telus. However, an immediate takeover is hampered by the legal ban on Rogers, Bell or Telus acquiring the frequency licences of market newcomers before 2014. Last week Rogers announced an agreement to purchase the 2100MHz spectrum of cableco Shaw, to be implemented in 2014.

Canada, Freedom Mobile, Global Telecom Holding (GTH, formerly OTH), Mobilicity, Rogers Communications, VEON