TORONTO (Reuters) - Canada’s Wind Mobile is close to breaking even on a cash-flow basis and expects to turn a profit by 2015, its CEO said on Tuesday, improving its chances of raising much-needed capital as it strives to become the country’s fourth national wireless carrier.
Anthony Lacavera, chief executive of Globalive, which controls Wind Canada with the backing of Russian-led Vimpelcom Ltd, said the company has been signing up record numbers of new customers and only the cost of doing so at a discount is standing in the way of profitability.
“Wind is on a solid operational footing,” he said in remarks prepared for delivery to the Canadian Telecom Summit in Toronto. “I am confident our operating results and the positive momentum of the business will enable us to access the capital markets.”
Wind needs a fresh infusion of capital as Vimpelcom, discouraged by Canadian law that until recently barred foreign companies from controlling any domestic telecoms, has written off its investment in the company. Vimpelcom also refused to fund a Wind bid for 700 MHz wireless spectrum auctioned by the government earlier this year.
Wind will need financing for years to come as it pushes to compete on a national basis with the three large companies - BCE Inc, Telus Corp and Rogers Communications - that dominate the Canadian industry.
Wind currently operates in three of Canada’s most populous provinces: Ontario, British Columbia, and Alberta.
Lacavera said the widening gap in spectrum ownership between Wind and the country’s trio of dominant companies needs to be resolved soon.
With help, Wind could bid in further spectrum auctions on the horizon or buy airwaves on the open market, perhaps from fellow upstart Mobilicity, which is wallowing in creditor protection after Ottawa shooed away a takeover bid by Telus.
Lacavera said Wind would launch a domestic roaming plan this year to take advantage of a network-sharing framework the Conservative federal government aims to pass with its budget.
Dvai Ghose, an analyst at Canaccord Genuity, said that despite solid evidence of operational growth at Wind, the three established operators are likely feeling little concern. He noted Wind’s lack of funding, limited coverage and spectrum, fewer network upgrades, and the fact that it still has just 3 percent of the national market years after launch.
Wind has more than 735,000 subscribers, Lacavera said, with a little more than half of them postpaid users, who typically spend more on their phones than pre-paid customers.
By comparison, BCE, Telus, and Rogers have between 7 million and more than 9 million customers each, with all three of them skewing more towards lucrative postpaid subscribers.
Wind’s operations are close to breaking even in terms of earnings before interest, taxes, debt and amortization, Lacavera said. It is showing double-digit growth in service revenue and subscribers, he added.
Wind had 26,000 net subscriber additions in the first quarter, and has notched record sales in both April and May, he said. In May, it added 14,000 net postpaid subscribers.
Editing by Peter Galloway