Wind Mobile was officially taken over by its foreign financial backers on October 21 as a part of a deal that will create the first fully foreign-owned wireless carrier in Canada. The struggling start-up will also get the advantage of having half a billion dollars worth of interest written off as part of the agreement. Egypt-based international wireless operator, Orascom Telecom Holdings SAE, gained control of Wind Mobile when it converted its 65% economic interest in the company to voting equity. The move effectively moved the reigns of the company from Globalive Communications Corp to Orascom on Sunday.
The Egyptian firm made their move after the Canadian government made some changes in legislation. According to the new regulation, a foreign firm can own local “Internet, wireless and phone providers” if their market share is less than 10%. Even though Wind Mobile was the largest of the new entrants into the Canadian wireless market, it is nowhere close to the size of heavy weights like Rogers Communications Inc., BCE Inc. and Telus Corp and does not have a 10% market share, allowing for the deal to go through within the legislative parameters.
When Wind was being launched in 2009, the big three wireless providers including Rogers, BCE and Telus were against the start up because it had Orascom in the driver’s seat. Initially, the CRTC had banned Wind Mobile from getting started when the government stepped in and cleared the launch of the company. Ever since its start, Wind has received hundreds of millions of dollars in funding along with expertise from Orascom.
The deal was made public thanks to papers filed in the Egyptian stock exchange. Orascom, which was bought by VimpelCom last year, will become the majority shareholder while Globalive will have a minority stake. Orascom will also forgive $450-million in interest to Canadian units. Orascom gave further details of the matter by stating that, “The changes will involve, amongst other things, the restructuring of OTH’s shareholder loans to the GIHC group and the cancellation of accrued interest of approximately 450 million Canadian dollars ($458.13 million).”
Source: Financial Post
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