WIND Mobile Owners Take $0 Writedown, “Reassessing” Canadian Market

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After failing to obtain financing for a 700MHz spectrum purchase from its Netherlands-based backer, the dark clouds are gathering above the struggling wireless player Wind Mobile: Its parent company, VimpelCom, has written down its investment in the Canadian company. And it did the same with its Ukraine investment as well (via the Globe and Mail).

Wind Mobile’s CEO, however, quickly balanced the news in a statement emphasizing that the decision won’t affect the carrier’s operations.

“First and foremost it has no impact on our ongoing operations. It is an accounting decision that our investors made for their own reporting or their own disclosures. I’m not privy to exactly what the rationale was,” he said. “It is obvious they are not willing to sell their position in Canada for zero, otherwise I’d already own it,” he said.

VimpelCom was interested in taking full control of Wind Mobile but backed off, as it is in loggerheads with the Canadian government over its foreign investment policy. Last year it made the strategic move to step back from taking over the wireless startup, as there were clear signs that Ottawa wouldn’t grant the merger, citing national security concerns.

VimpelCom indicated it is “reassessing” continuing involvement in the Canadian market.

“The company fully impaired its assets in Canada, mainly relating to the challenges the company is facing in the country, which resulted in the strategic decision to withdraw from the 700 MHz spectrum auction and the reassessment of the prospects for continuing operations in the country,” Vimpelcom said in the report to shareholders.

Although Lacavera is positive about Wind’s future, the carrier is for sale. In fact, VimpelCom has been shopping for a buyer for quite some time now. According to the numbers revealed by the carrier, it has more than 650,000 subscribers.

Lacavera, however, admitted that Wind Mobile needs more spectrum to grow, but you may recall that, despite being vocal about its participation in the 700MHz spectrum auction, it was forced to withdraw its application because of a lack of financing.

While the government’s roaming framework does enable a way to gain market share, its future remains uncertain.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • kkritsilas

    Its time for Videotron to stop playing games, and just buy out Wind and Mobilicity. Then unify them with its own AWS holdings in Quebec, and overlay all of that with the 700MHz spectrum it just bought in Quebec, GTA, and out West. It is clear that the Feds won’t be allowing any of the Big 3 to buy out any of the new incumbents. It is clear that Wind is a lame duck carrier right now without any 700MHz spectrum. The only other potential player is Shaw, but it is only in the West, and has shown NO inclination to deploy cellular service, and probably doesn’t have the money to buy out Wind or Mobilicity.

    If Videotron did by Wind/Mobilicity, it would have over 1M subscribers (figure 670K Wind, 150K Mobilicity, and 400K Videotron, probably closer to 1.2-1.3M). It could credibly become the 4th national carrier.

    Kostas

  • ????Dennis

    Hey Kostas, I enjoyed reading your reply. What you say makes sense and I hope something like that would happen.

  • D Kup

    Well… Sounds like Wind will be on its own from now on… Writing Wind off to zero does not bode well for any future expansion or development. LTE deployment is definitely out of the picture too.

    If there is someone out there that can buy Wind and Mobi and merge them into a single firm, then Wind as a credible player will have some hope. At this below $30 ARPU, it is hard to keep its business afloat and never mind about expansion.

  • kkritsilas

    WInd is actually slightly profitable. As I wrote above, the only real entity that could buy Wind and Mobilicity and seems would be able to get by the IC restrictions is Videotron. There may be others that are not part of the current cellular services field that could (as in a Venture Captial (VC) firm), and theoretically, so could Shaw. But realistically, Shaw, event with AWS spectrum in hand since 2008, has not shown any inclination to become a cellular services provider, nor do I think that the potential returns from buying Wind (or Wind + Mobilicity) would attract a VC firm. IC would probably kill any attempt by the Big 3 to buy out Wind and/or Mobilicity (as they already have with Telus). Videotron would not face these issues, in fact, the Wind and Videotron networks are sort of complimentary (Videotron inside Quebec, Wind everywhere outside of Quebec). The AWS spectrum should be compatible, and Videotron has not only bought 700 Mhz spectrum inside of Quebec, but also in Alberta and BC. And the AWS spectrum that Videotron has in the GTA would address the Wind bandwidth limitations in that area. Similarly, Wind hasn’t bought any 700MHz spectrum, while Videotron has.

    The big issue is financing. Videotron bought some 700Mhz spectrum which is a cost (I know, this doesn’t have to be paid for up front), and, while Videotron itself is profitable, the Quebecor holding company it is part of is having issues, so whatever profit Videotron makes may not be available to acquire Wind or Wind + Mobilicity. I don’t know what kind of cash Videotron has available, so this is just my own thoughts. This is however, the only scenario that actually works out well.

    Kostas