Canada’s wireless industry needs more foreign capital to support emerging challengers to the country’s established carriers, Industry Minister Christian Paradis said.
“What we want is to have more competition,” Paradis said yesterday when asked if he would prefer a foreign-backed company or a domestic carrier buying Wind Mobile, the largest recent entrant to the Canadian industry. VimpelCom Ltd. (VIP:US), the Amsterdam- based owner of Wind Mobile, is soliciting bids for the company, according to Canaccord Genuity analyst Dvai Ghose.
“We need foreign capital,” Paradis, 39, said during an interview in his office near Parliament in Ottawa. For the smaller players, “capitalization is a life and death matter.”
The government is looking at ways to help four new wireless providers, which also include Videotron Ltd., Public Mobile Inc. and Mobilicity. The smaller firms are challenging Rogers Communications Inc. (RCI/B), BCE Inc. (BCE) and Telus Corp. (T), which together control more than 90 percent of the market by subscribers.
VimpelCom, whose acquisition of Wind Mobile is pending approval by Canadian regulators, intends to sell the company and has begun collecting bids, Toronto-based Ghose said in a research note last week. Anthony Lacavera, the founder of Wind Mobile, is teaming up with his original backer Naguib Sawiris and his investment firm Accelero Capital to submit a bid, the Globe and Mail reported.
Alexandra Maxwell, a spokeswoman for Wind Mobile, declined to comment, as did VimpelCom spokesman Bobby Leach.
Paradis laid down new rules on March 7 designed to foster competition by preventing the biggest three companies from each buying more than one of four blocks of 700-megahertz airwaves in a wireless spectrum auction this year.
The format for the auction will ensure there are at least four wireless providers in each region of the country, Paradis said at the time. The government is determined to see that vision realized, he said in the interview yesterday.
“We have to continue to push,” Paradis said. “We have a less intrusive way for now in the market, but we are committed to go this way.”
Paradis said it’s “hard to speculate” how the government would respond to a bid for BlackBerry (BB), formerly known as Research in Motion Ltd.
“This is an aggressive market; you never know what can happen,” Paradis said. “When you have a national champion like BlackBerry, you hope they remain a national champion.”
Lenovo Group Ltd. (992), the Beijing-based computer maker, said in January it was assessing potential targets and strategic alliances and was looking at BlackBerry. Lenovo’s Chief Financial Officer Wong Mai Wing told Bloomberg in an interview “we are looking at all opportunities -- RIM and many others.”
Acquiring BlackBerry would require approval from Canadian and U.S. regulators because of the size of the transaction and the fact the company operates secure mobile networks for government agencies. Canada automatically reviews foreign takeovers of companies with asset values of more than C$344 million ($338 million) to determine whether the transactions are a “net benefit” to the country.
Chinese ownership of BlackBerry would also raise security questions. The company has been wary of widening its operations in China over concerns about protecting its sensitive networks, Chief Executive Officer Thorsten Heins told shareholders in July.
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