Vimpelcom abandons Wind control plan

20 Jun 2013

Egypt-based Orascom Telecom Holding (OTH), a majority owned subsidiary of Russian-backed, Amsterdam headquartered Vimpelcom Group, issued a statement yesterday withdrawing its previous request to the Canadian government to acquire full control of its part-owned subsidiary in the country, Wind Mobile. The statement reads: ‘Further to its prior announcements on the proposed acquisition of control of Wind Mobile Canada, OTH announces that, after a review process and discussions with the government of Canada, it has decided to withdraw its application for Investment Canada Act approval of its acquisition of control of Wind Mobile. OTH continues to be interested in consolidating its interest in Wind Mobile and in working with the government.’

No further explanation for the move was offered by Vimpelcom, although it has been claimed by commentators that ‘national security concerns’ are behind the Canadian government’s delay in approving the full takeover of Wind, which was proposed in January. Negative factors could, it has been claimed, include the Russian majority ownership of Vimpelcom, or the usage of Chinese-built technology, which has recently come under scrutiny for national security reasons regarding other networks in North America (Wind has implemented solutions including a Chinese-supplied HD voice component in its core network). Wind’s CEO Anthony Lacavera reacted to yesterday’s announcement by confirming that he will continue to control two-thirds of the cellco’s voting shares, and added that: ‘Despite this speed bump, I’m going to continue to work with Vimpelcom toward our mutual objectives… It doesn’t change my long-term commitment to competition in the market.’ Quoted by Bloomberg in an interview, Lacavera also commented on the ‘national security’ rumours, saying that ‘Vimpelcom made statements about there never having been a [network security] breach… and I would echo those statements. Cybersecurity threats are by far one of the biggest threats facing our nation. This is an ongoing, iterative process.’ Meanwhile, Industry Minister Christian Paradis – responsible for federal telecoms policy decisions – simply confirmed in a statement that OTH’s application had been withdrawn and that the review process was finished, without elaborating on reasons.

Canada, Freedom Mobile, Innovation, Science & Economic Development Canada, VEON