Wind Mobile CEO eyes Mobilicity

The head of wireless company Wind Mobile says he’ll look at buying struggling competitor Mobilicity if U.S. telecom giant Verizon doesn’t want it.

MONTREAL — The head of wireless company Wind Mobile says he’ll look at buying struggling competitor Mobilicity if U.S. telecom giant Verizon doesn’t want it.

Wind Mobile CEO and chairman Anthony Lacavera said Thursday that he’ll consider buying Mobilicity since there could be one less bidder.

“It puts me in a position to move on Mobilicity before the (spectrum) auction,” said Lacavera, who has made no secret in recent years that he wants to acquire Mobilicity.

The Globe and Mail reported Thursday that Verizon was putting off a potential acquisition of Wind Mobile and Mobilicity and contemplating participation in the next auction for wireless spectrum — the radio waves needed to operate cellphone networks.

If Verizon decides to participate in the auction, rules prevent it from continuing to negotiate acquisition deals until after the January auction.

Lacavera owns a 35 per cent stake in Wind Mobile, the company he founded, and would like to buy back the other 65 per cent from Dutch-headquartered VimpelCom, something he acknowledges will be challenging.

“I can’t outbid Verizon. So if they really want to buy it before the auction I’m not going to be successful. It’s just a mathematical reality,” he said.

However, Lacavera said he believes Verizon is keeping all doors open to enter Canada’s cellphone market until it has to put down a deposit on Sept. 17 to participate in the auction.

“I just don’t believe that Verizon’s doing anything other than playing all of its options,” he said from Toronto.

Verizon declined to comment Thursday on its possible entry into Canada.

Ottawa has opened up the telecommunications market by allowing foreign ownership of small wireless carriers that have a less than 10 per cent market share in hopes of increasing competition.

Lacavera has said more than once that Canada’s new wireless companies should consolidate and he’d like to be bring them together with his AAL Group to compete with major players Rogers (TSX:RCI.B), Telus (TSX:T) and Bell (TSX:BCE).

Wind has more than 600,000 cellphone customers and Lacavera has said it’s the fourth-largest wireless carrier in Ontario, British Columbia and Alberta. The federal government has said it’s policy is to have four carriers in every region.

There also has been a published report saying that a Toronto-based private capital company, Birch Hill Partners, was working on a plan with Rogers to buy a controlling stake in Wind Mobile.

Lacavera said if Verizon takes part in the spectrum auction it could set up a wireless business on its own in Canada without buying Wind Mobile or Mobilicity. As a new player in the Canadian market under current rules, Verizon is able to bid on two blocks of prime 700-megahertz spectrum, ideal for both congested urban markets and rural communities. Bell, Telus and Rogers will be limited to one block.

The big three telecom companies have launched a public campaign against Verizon being given what they consider preferential treatment in the auction.

“We stand ready to take on any competition, from Verizon or any other foreign or domestic carrier. We are only asking that we be allowed to compete on an equal footing, that our government close the loopholes giving huge foreign carriers preferential treatment over Canadian firms,” Telus spokesman Shawn Hall said.

Bell spokesman Mark Langton also said “wireless loopholes” are still in place giving big international carriers like Verizon an advantage.

“We welcome new competition but the rules must support a level, competitive playing field,” he said.

U.S. analyst Sascha Segan said the U.S. mobile market is getting saturated and one way for American carriers to expand is to “potentially steal customers from sleepy, less competitive local carriers.”

Canada is an attractive target for expansion because it’s close to the U.S. and the two countries generally use the same devices and radio frequencies, said Segan, lead mobile analyst for PC Magazine.

“So a step into Canada would be a first step for Verizon as an international player,” he said from New York, noting that big telecom companies globally are buying small telecom companies to expand.

It’s also possible that Verizon could enter Canada without buying either Wind Mobile or Mobilicity because it thinks it can do better “building something from scratch,” Segan added. “It’s an interesting question.”

British telecom Vodaphone Group owns a 45 per cent stake in Verizon Wireless.

Telecom analyst Eamon Hoey said Verizon may not want to operate as a wireless company in Canada and could go into the auction with a partner such as Wind Mobile to buy spectrum and use it to avoid network roaming charges from Bell, Telus and Rogers.

“Do you really think they want to build 7,000 or 8,000 towers in Canada to cover Canada,” asked Hoey, of Toronto-based Hoey Associates Management Consultants Inc.