Again, rumours have surfaced WIND Mobile is up for sale, as a new analyst report claims its sources note VimpelCom is seeking a buyer for its Canadian investment (via The Globe and Mail).
The head of research at Canaccord Genuity, Dvai Ghose, says the sale process has started and the first round of bids is due as early as Friday, according to his sources.
“While a potential VimpelCom sale of its ownership of Wind Mobile Canada would come as no surprise, given Wind’s challenges in Canada and VimpelCom’s focus on free cash flow, debt deleveraging and emerging markets, we were surprised to hear that a formal sale process is underway with initial bids due tomorrow,”
“We estimate that VimpelCom/Orascom has invested approximately $1.7-billion into Wind Mobile Canada to date including $442-million for their AWS spectrum.”
As for possible bidders, Ghose says Accelero Capital could be in running with outside funding. It was founded by Egyptian billionaire Naguib Sawiris, the former chief of Orascom. However, given Sawiris’ previous vocal opposition to telco competitiveness in Canada, we doubt he would recommend an investment here.
The Globe and Mail corroborated the report by noting its own source has said VimpelCom is “on the verge of making a strategic move” with its Canadian business. In January the publication cited a similar report, noting Rogers was mentioned as a potential buyer.
VimpelCom spokesperson Bobby Leach downplayed the report, saying “It is the opinion of an independent analyst and therefore does not represent any official views or statements of or by VimpelCom Group.” During the company’s recent quarterly earnings call, VimpelCom noted numerous options for WIND Mobile, with one of them being an “in-market merger”.
In January, WIND Mobile became Canada’s first 100 percent foreign-controlled telco, as WIND CEO Anthony Lacavera sold his shares in the company, which observers noted it was a sign the company was set to put itself up for sale. Even if a deal was to go through, barriers include the purchaser taking on the $770 million USD outstanding balance of Orascom’s loan to Globalive.
New wireless entrants have helped push prices lower in Canada and also improve plans, putting pressure on our incumbents. But if history repeats itself, WIND Mobile could see it being acquired by an existing ‘Big 3’ carrier, similar to what we saw with Microcell before it was purchased by Rogers in 2004.