Wind Mobile considering a bid for Mobilicity under court-supervised sale
TORONTO, Cananda - The parent company of wireless startup Wind Mobile is taking another look at buying Mobilicity, a small rival that is operating under court protection from creditors.
Wind Mobile CEO Anthony Lacavera said Tuesday that Globalive Wireless Management Corp. has applied to bid in the court-monitored sale of Mobilicity.
The deadline to submit bids for Mobilicity is Dec. 9.
"We threw our name in the process," Lacavera said in an interview from Toronto. "We applied and hopefully the court will accept us as a qualified bidder."
But Lacavera said it's not definitive that Wind will bid and wouldn't comment on the possible value of Mobilicity, which provides cellphone service to about 190,000 customers in Toronto, Ottawa, Calgary, Edmonton and Vancouver.
However, Lacavera has said more than once recently that he would like to buy Mobilicity and believes the two companies would be stronger if they merged to compete against Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T).
"I have maintained the position since 2008 that we need to work together with other new entrants. This is just an another opportunity to try to put something together," he said. "We feel we're a very logical bidder."
Canaccord Genuity analyst Dvai Ghose downplayed a potential bid by Wind Mobile.
He said Wind Mobile's owner, Russian telecom VimpelCom, has made it clear that it wants a "clean exit" from Canada. VimpelCom put its 65 per cent ownership stake in Wind up for sale some months ago and Lacavera owns the remaining stake in the company he founded.
"While Industry Canada may want a successful Wind bid for Mobilicity, we cannot take such a potential bid seriously," Ghose wrote in a research note.
"We do not see any other realistic sources of financing for Wind when it comes to acquiring Mobilicity or 700 megahertz (spectrum) purchases, especially as Wind seems to have been less than successful to date."
Wind has only 637,000 subscribers, despite publicly stating it targeted 1.5 million at the end of three years, he said. Wind launched in December 2009.
But Ghose said if Wind does end up buying Mobilicity, he wonders if it would be a more effective competitor given its "consistent disappointments" to date.
"Either way, we believe that the incumbents remain well positioned and that Wind and Industry Canada have failed in their objectives."
Wind and Mobilicity were among new Canadian wireless carriers that emerged a few years ago to give consumers more competition.
Lacavera said Wind Mobile needs more spectrum â€” radio waves needed to operate wireless communications networks â€” to offer faster, next-generation services to compete with the big three telcos.
The federal government has blocked Telus twice from buying Mobilicity, which has spectrum that was specifically set aside for startup companies in a federal auction in 2008. But Telus was recently permitted by Ottawa to buy startup Public Mobile because its spectrum is considered less valuable and didn't have any sale restrictions.
Mobilicity has been operating under court protection from its creditors since September. The struggling carrier has said in court documents that it has a number of parties interested in some, or all, of its assets.
According to the court documents, Mobilicity has been seeking a buyer since July 2012. The documents say it has pursued a variety of financing, sale and restructuring options, including a sale to Telus and had an "expression of interest'' from U.S.-based Verizon.
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