Egypt's Orascom increases control over Wind Mobile
Move could be a precursor to consolidation with smaller rivals
Egypt's Orascom telecom company has increased its voting stake in new telecom player Wind Mobile, simplifying the Toronto's company's ownership structure for investment and any consolidation among the new players.
Orascom will increase its voting shares to 65.08 per cent from 32.02 per cent, which aligns its voting interests with its ownership stake in Toronto-based Wind Mobile, Anthony Lacavera, CEO and chairman at Wind said Monday.
The changes are allowed after a recent easing of restrictions to foreign ownership rules for wireless companies than have a 10 per cent or less market share.
But Wind said in a statement the move is "purely an internal restructuring," with founder and CEO Tony Lacavera adding it doesn't give the parent company any more control over Wind.
"We've not been taken over any more than we were," he said.
"They've already got a 65 per cent economic interest. Now, they have a 65 per cent voting interest. Operations continue as they always were."
Though it was already the majority owner, the Egyptian telecom company had more restricted voting rights before changes to foreign ownership rules for small telecom players.
The change will give Orascom investors more confidence about investing in Canada, especially for the next federal spectrum auction, Lacavera said.
"Obviously, we need their support in the upcoming 700 megahertz auction."
All telecom companies will have to raise millions to bid in the next auction of radio waves to build their next-generation networks that are suited for the increasing use of video. The auction is expected to be held sometime in 2013.
Lacavera also reiterated that not all of the new wireless players can go it alone when it comes to bidding on spectrum.
"I think new entrant consolidation needs to happen before the auction," he said.
"I think given this change, we're well positioned to lead that consolidation, which obviously would give us more spectrum."
There has been speculation that Wind Mobile would like to buy new player and rival Mobilicity.
Wind Mobile has repeatedly said that the smaller telecom players such as itself, Mobilicity and Public Mobile should consider some kind of consolidation before the auction to have more clout.
Wind Mobile has been in business since December 2009 and has more than 500,000 wireless subscribers.
The CRTC had prevented Wind Mobile from initially entering the cellphone market. The regulator said Wind wasn't Canadian owned and controlled because most the debt owed by its corporate parent, Globalive, was held by Egyptian telecom company Orascom.
Then Industry Minister Tony Clement overruled that decision in 2009, allowing Wind to join the Canadian marketplace.
Orascom is now majority-owned by Russia's Vimpelcom.