VimpelCom abandons bid for Wind Mobile

Nestor E. Arellano

11 years ago

An Amsterdam-based telecom company seeking to take over Wind Mobile has abandoned its bid for the Canadian wireless carrier.

VimpelCom Ltd. has been quietly negotiating to gain 99.3 per cent control of Wind Mobile for nearly eight months now, but on Wednesday suddenly announced that it was abandoning its application with Investment Canada to acquire the Canadian company. VimpelCom is a subsidiary of Orascom, an international telecommunications company operating GSM networks in the Middle East, Africa and Asia.

“Further to its prior announcements of the proposed acquisition control of Wind Mobile Canada, Orascom Telecom Holdings S.A.E announces that, after a review process and discussions with the government of Canada, it has decided to withdraw its application for Investment Canada Act approval of its acquisition of control of Wind Mobile Canada,” Orascom said in a statement issued yesterday.

Orascom, however, did not completely close the door on possible future deals.

Mikhail Fridman of VimpleCom (Photo by Anton Nossik)

“Orascom Telecom continues to be interested in consolidating its interest in Wind Mobile Canada and in working with the government of Canada to achieve this goal,” the company said.

In an interview with the Canadian Press, Anthony Lacavera, CEO of Wind Mobile, said it was “business as usual” in his company, but added that he is going to raise money and approach VimpelCom “about acquiring their stake.”

He said VimpelCom can sell its stake in Wind Mobile, which is 65 per cent. He said he will retain his 35 per cent ownership stake in Wind Mobile.

VimpelCom’s bid for Wind Mobile came at a time when Ottawa had recently relaxed foreign investment rules and allowed full foreign ownership of wireless carriers that had a market share of 10 per cent or less as a way of developing a fourth carrier to serve Canadian wireless users in all regional markets. Currently, Bell Mobility, Rogers Communications and Telus Corp., control much of the country’s wireless market.

VimpelCom intended to buy out the stake of Lacavera, who, as CEO of Wind Mobile, holds indirect voting control of the four-year-old company. The deal would have been a test case of the government’s revamped policy.

Last week, it was reported that transactions were bogged down by Canadian officials, who were concerned over the prospect of handing over the company to Russian entity. The major stockholder of VimpelCom is Mikhail Fridman, an energy and telecommunications magnate from Russia.

There were also concerns about Wind Mobile’s network infrastructure being built by Huawei Technologies Co. Ltd., a Chinese telecom equipment manufacturer, which United States politicians have repeatedly accused of sponsoring cyber espionage activities or sabotage of foreign communications equipment.

The Globe and Mail reported that source said the offices of Industry Minister Christian Paradis and Public Safety Minister Vic Toews were also interested in seeing a transfer of ownership of Wind Mobile from VimpelCom that would protect Canada’s national security interest. The government wanted to find a suitable buyer that would eventually purchase Wind Mobile from VimpelCom, but the foreign company did not want to go with the plan.

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