Verizon Communications Inc. (VZ:US) has expressed interest in acquiring wireless carrier Wind Mobile, a move that would let the leading U.S. mobile-phone service expand into Canada.
Wind Mobile is “one of many” options under consideration, Bob Varettoni, a spokesman for Verizon, said today in an e-mail. “We constantly evaluate a wide variety of business opportunities.” The remarks followed a comment at a Wall Street Journal conference by Chief Financial Officer Fran Shammo, who said, “This is just us dipping our toe in the water.”
Wind Mobile also has been approached by suitors from Canada and elsewhere, said two people familiar with the negotiations, who asked not to be named because the process isn’t public. UBS AG (UBSN) is advising Wind Mobile, the people said.
Verizon’s interest comes five years after the Canadian government began efforts to boost competition in the wireless sector with a 2008 spectrum auction. Wind Mobile and fellow new entrants Mobilicity and Public Mobile Inc. bought spectrum set aside for them in that auction. So far, the three have struggled against incumbent carriers Rogers Communications Inc. (RCI/B), BCE Inc. (BCE) and Telus Corp. (T), which control about 90 percent of Canada’s mobile-phone market.
The acquisition of Wind Mobile by Verizon could be a “potential game changer,” though it’s hard to tell if the deal makes sense, said Drew McReynolds, an analyst at RBC Capital Markets in Toronto.
“The key question is whether the capital and time commitment is worth the prize,” he said. “At this juncture, we are not convinced the prize is big enough.”
Shares of New York-based Verizon rose 1.7 percent to $51.55 today. Wind and Mobilicity are both closely held.
Telus agreed in May to pay about $373 million to buy Mobilicity before its bid was blocked by the government on June 4. Public Mobile said on June 6 it had been acquired by Thomvest Seed Capital Inc., an investment firm associated with Peter Thomson, and Cartesian Capital, a New York-based private-equity firm, for an undisclosed price.
Thomson is the brother of David Thomson, whose $24.6 billion net worth makes him the world’s 23rd-richest person, according to the Bloomberg Billionaires Index.
Wind Mobile, based in Toronto, has more than 600,000 subscribers, Tony Lacavera, the company’s founder and chief executive officer, said earlier this year. Alexandra Maxwell, a spokeswoman for Wind Mobile, declined to comment yesterday on the Verizon report, as did UBS spokeswoman Megan Stinson.
Verizon seriously began to consider a bid for Wind Mobile following the decision by Canadian Industry Minister Christian Paradis to block Telus’s purchase of Mobilicity, one of the people said. Paradis said at the time that he wouldn’t allow any of the incumbents to bid for spectrum owned by new entrants until a moratorium on such transfers ends next year.
The prospect of bidding for Wind Mobile without having to compete with one of Canada’s three biggest carriers further encouraged Verizon, the person said.
Verizon’s interest in entering the Canadian market was reported yesterday by the Globe and Mail.
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