VimpelCom announced a deal to offload its stake in Canadian operator Wind Mobile, which is being bought by controlling shareholder Globalive Capital and “certain investment funds”.
VimpelCom and its Global Telecom Holding affiliate are selling the business for CAD135 million ($122 million), which will be used in repayment of part of the debt owed to VimpelCom. At the same time, Global Telecom Holding will be released from all of its obligations under the shareholder agreement, as well as certain debt obligations of Wind Canada.
“With stable, long-term ownership and secure financing, Wind Mobile is moving into an exciting new phase,” said Anthony Lacavera, chairman and CEO of the operator.
The ownership of tier-two operator Wind has been in question for some time, with VimpelCom having made a bid to win control last year, although this was subsequently dropped.
Earlier this year, VimpelCom wrote-down the value of its Canadian holding, “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”.
It was also reported that Verizon Wireless of the US had eyed the business, although again a deal never came to fruition.
With more than 740,000 connections, Wind Canada is the biggest of the country’s minnows, but still far smaller than the smallest of the ‘big three’ – Bell Mobility, which has 7.8 million connections.
The new players have struggled to gain ground against Bell Mobility and peers Rogers Communications and Telus Mobility, which jointly account for nearly 90 per cent of the country’s connections.
Backers of another new entrant, Mobilicity, recently took action against the country’s government, on the ground that pledges to help the new players compete more efficiently had not been met.
Greg Boland, president and CEO of West Face Capital, one of the companies involved in the new deal, said: “The federal government’s delivery on its promise to create the conditions for viable long-term wireless competition has not gone unnoticed by the investment community.”