Wind Mobile head Anthony Lacavera has been hunting for investor partners for five years. Now that he has several, he’s not shy about touting them.
“It’s a validation of our business plans,” he said in an interview Tuesday after announcing Canadian and U.S. private equity firms will help him buy out Wind’s biggest indirect equity shareholder, VimpelCom Ltd., to recapitalize the startup carrier.
“Very sophisticated investors have come in and put their money behind our business plan,” he said of Toronto-based hedge fund West Face Capital, California-based private equity firm Tennenbaum Capital Partners, LG Capital Investors, Novus Wireless Communications of Vancouver and Serruya Private Equity. They bring ” a good mix of long term and potentially shorter-term capital,” he said.
“This announcement makes it clear that Wind is viable and here to stay.”
However, there are a number of questions that will remain unanswered until regulatory agencies and the Harper government give their blessing.
One is after spending some $135 million in cash plus the assumption of at least as much debt whether the new partners will put more money in to expend Wind’s network, which is grounded in Vancouver, Edmonton, Calgary and the Toronto area. Wind also has unexploited frequencies in the Maritimes. In addition, it has to eventually expand its existing HSPA+ network to handle the faster LTE data technology increasingly wanted by subscribers and offered by Bell Mobility, Rogers Communications and Telus Corp.
Adding LTE will in effect mean building a new network, because it can’t be a simple upgrade over the existing network. In the short term there isn’t a rush — although Bell, Rogers and Telus sales staff undoubtedly point out to potential buyers they have LTE and Wind doesn’t. But in the long term the world will switch to LTE and handset manufacturers will stop producing smart phones that can’t take it.
“We need to expand our coverage, we need to improve speed and that means LTE,” Lacavera said, adding, “That’s all for another day.”
Since the Harper government will block carriers like Wind and Mobilicity from selling their spectrum to to the big three carriers “any new investor has got to be thinking, and they are thinking , of a further investment for an LTE rollout,” he said. “Does that mean money is secured? No. We have to continue to post good (subscriber) loads and additions and good operating performance.”
Now Wind can think about alternatives, he said, including whether to participate in next year’s two spectrum auctions, or buy unwanted spectrum from financially-troubled Mobilicity, Shaw Communications or from Quebec cableco Videotron.
He didn’t say, but another option is to raise money for operations is by selling Wind’s Maritime frequencies to Eastlink Wireless.
The other question is Lacavera’s future. Under the existing structure, Lacavera and a partner are the majority shareholders of Wind through Globalive Capital, with two-third of the voting shares. Lacavera has the largest stake in Globalive. The other shareholder is VimpelCom, with a one-third voting share and 65 per cent of the equity.
It is unlikely the new shareholders will merely assume VimpelCom’s spot. What then will Lacavera’s shareholdings be? Will he continue to be both chairman and CEO, the latter a position he assumed after Ken Campbell left as chief executive in 2011?
West Face is believed to have been looking at investing in Wind for some time. Lacavera called the firm “very successful, very smart.”
