June 19, 2013 / 2:23 PM / 6 years ago

Vimpelcom unit drops bid to buy Canada's Wind Mobile

TORONTO (Reuters) - A subsidiary of European telecoms company Vimpelcom Ltd VIP.N has withdrawn its bid to acquire control of Canada’s Wind Mobile, a surprise move that creates further uncertainty about the future of the upstart Canadian wireless company.

WIND Mobile cell phones are displayed at a retail store before the official launch of WIND Mobile, a new cellular service for the Canadian market, in Toronto, December 16, 2009. REUTERS/Mark Blinch

Orascom Telecom ORTE.CA, an Egyptian company that is majority-owned by Vimpelcom, said on Wednesday it has dropped its application to the Canadian government for permission to take control of Wind. Orascom had initially bankrolled Wind Mobile’s operations in Canada before being bought by Vimpelcom.

Orascom said it remained interested in consolidating its interest in Wind and was working with Ottawa to this end.

The fate of Wind is being closely watched by the three big telecoms companies that dominate the Canadian market - BCE Inc (BCE.TO), Telus Corp (T.TO) and Rogers Communications Inc (RCIb.TO) - and the country’s Conservative government.

The government has said it wants to see a viable fourth wireless provider in every region of the country to break the stranglehold of the big three.

It had been reviewing Orascom’s move to take over Wind for months, and Industry Minister Christian Paradis confirmed on Wednesday that the government no longer has a transaction to review.


In January, Wind’s founder, entrepreneur Anthony Lacavera, announced plans to step down as chief executive as part of a deal that would give Orascom and parent Vimpelcom control.

Lacavera said in a statement on Wednesday that despite Orascom’s withdrawal he would “continue working with Vimpelcom toward achieving our mutual objectives”.

Vimpelcom spokesman Bobby Leach said that the company didn’t have much to add to its statement of withdrawal but “wanted to make clear that we may reapply”.

Due to previous Canadian rules restricting foreign ownership in the telecoms sector, Wind’s ownership structure is a complex web. The rules on foreign ownership were loosened for small players in 2012 to encourage competition.

Although Orascom owns a majority economic interest in Wind, it only controls a minority of the voting interest. The proposed deal would have given Orascom majority voting interest.

The deal, however, required approval of the conversion of Orascom’s nonvoting shares into voting shares.


More recently, Lacavera had teamed up with Egyptian telecom tycoon Naguib Sawiris to look at buying Wind back from Vimpelcom, a source with knowledge of the situation said last month.

Amsterdam-based, Russian-controlled, Vimpelcom, which is focused on the European market, has said the Canadian operation is not a part of its core business, suggesting it was open to divesting Wind once it gained full ownership.

Vimpelcom’s top shareholder is Moscow-based Altimo, a company controlled by billionaire Mikhail Fridman, whom Forbes magazine ranks as the second-richest man in Russia.

With additional reporting by Euan Rocha and Maria Kiselyova; Editing by Jeffrey Hodgson; and Peter Galloway

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