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TORONTO, Oct 16 (Reuters) - Egyptian telecom magnate Naguib Sawiris said on Wednesday the lack of clarity around Ottawa's telecom policy has put Wind Mobile, the largest new entrant in the Canadian wireless market, at risk of going bust.
Asked about the health of the company, a spokesman for Wind said by email: "We can't comment on Mr. Sawiris' statement as it is his personal opinion and he is no longer connected to Wind Mobile Canada."
Sawiris bank-rolled the start-up of Wind in 2008, but lost his ties to the firm after his controlling stake in Orascom was sold to European telecoms company Vimpelcom in 2011. Orascom had put up most of the funding for Wind's launch.
Sawiris suffered a major setback this month after the Canadian government blocked his attempt to buy Manitoba Telecom Services Inc's Allstream fiber optic network, citing unspecified national security concerns.
"Canada is behaving like a third-world country. It is not behaving like a Western developed economy," Sawiris said in an interview with Reuters on Wednesday.
"Our Government is open to foreign investment in all sectors of the economy, but not at the expense of the security of Canadians," Jessica Fletcher, spokeswoman to Industry Minister James Moore, said by email.
The market has become increasingly wary about Canadian foreign investment rules after Ottawa blocked a handful of high-profile transactions, including the 2010 attempt by BHP Billiton to buy fertilizer giant Potash Corp.
Last year Ottawa allowed a Chinese firm to buy domestic energy producer Nexen, but made clear it would block further investments in oil sands by foreign state-owned enterprises.
Sawiris, whose investment firm Accelero Capital Holdings had bid C$520 million ($500 million) for the Allstream business, said he was livid with the Allstream ruling and he vowed not to invest any further funds in Canada.
Sawiris said he now plans to redirect his investment focus toward other markets, including Italy where he has invested heavily in the past. He plans to invest as much as $1 billion in a range of industries in Egypt over the next 18 months.
"We are looking at other markets. We will look in Italy, we will look everywhere, but I will definitely not be wasting any more time on Canada," he said. "I will not waste another minute, or another penny on Canada."
The scathing comments come as the Canadian government launches a crucial auction of airwaves that has so far failed to lure any major foreign telecoms.
Sawiris said Ottawa's opaque policy has scared away investors, meaning that Wind would be hamstrung in the 700 megahertz spectrum auction and would struggle to survive in the long term.
Wind dismissed that view.
"The decision to participate in the 700MHz auction will be decided by the current shareholders of Wind Canada -- Vimpelcom and AAL Holdings Corp," the spokesman said.
AAL is the holding company of Wind CEO Anthony Lacavera, who holds a majority of voting shares but a minority stake.
Canada's Conservative government initially cheered for the success of Wind. But Ottawa dragged its feet on approving a change-of-control request from Vimpelcom, whose top shareholder is Moscow-based Altimo, controlled by billionaire Mikhail Fridman.
Vimpelcom, which has hired UBS to assess a possible sale of Wind, in June withdrew its request for a change in control that would have given it voting power equal to its equity stake, when it appeared that U.S. telecom giant Verizon Communications was keen to strike a deal and acquire Wind.
However, Verizon's interest has cooled, and while Wind is bidding in the spectrum auction it is unclear the extent to which Vimpelcom and its other backers will be willing to fund its bids - given the lack of clarity around whether they can eventually sell the business and who may be allowed to acquire it.
Wind is the fourth-largest telecoms player in Canada, but both it and other new entrants have struggled to turn a profit. Last month, Mobilicity, one of the smallest players in Canada, filed for creditor protection.
The startups appear keen to sell out to larger players, but Ottawa's ruling on Allstream makes it unclear who could buy.
The government has also indicated it does not want the big domestic players, BCE Inc, Telus Corp and Rogers Communications Inc, to acquire the startups. In June, Canada rejected the transfer of Mobilicity's wireless spectrum licenses to Telus, stating that it would not approve deals that led to undue spectrum concentration.
"Canada's not serious about having foreign direct investment and they are not serious about opening their telecom market," Sawiris said. "It's a waste of time, and investors like us we don't have time to pay lawyers and accounting firms and do due diligence and block our capital for six, eight months."