Latest subscriber numbers hit 741,000. Does that make it more attractive to investors?

Those hoping that more wireless competition will mean the country’s biggest telecom providers will restrain their pricing plans may be cheered by the latest numbers from Wind Mobile — which may also improve its chances for attracting new shareholders.

The Canadian startup’s largest shareholder, VimpelCom Ltd., released its quarterly results Wednesday that included numbers for Wind showing it added 38,875 subscribers in the three-month period ending June 30. That brought its total subscribers in Ontario, Alberta and B.C. to 741,000.

Wind’s average revenue per user (ARPU), an important industry metric, rose to $31.60. In a note to investors, Dvai Ghose, director of research at Canaccord Genuity, noted that’s up 11.7 per cent over the same period a year ago.

No financial figures were released, but Wind has said its earnings before interest, taxes and deductions is break even before marketing costs. Wind has to make it on its own after VimpelCom said it will no longer put any money into the subsidiary.

VimpelCom owns about 65 per cent of the equity of Wind, with Toronto telecom entrepreneur Anthony Lacavera — who is also Wind chair and CEO — holding most of the rest. He is also the controlling shareholder.

In his analysis Ghose compares Wind’s performance to the wireless division of Quebecor’s Videotron, which only operates in Quebec and launched service almost a year after Wind. Videotron had 551,300 subscribers at the end of June, almost 200,000 less than Wind. On the other hand, its ARPU is better than Wind at $41,51.

Quebecor has owned unexploited spectrum covering Toronto since the 2008 AWS auction (although it has tried selling it to Rogers Communications; Industry Canada hasn’t approved the deal, and isn’t expected to) and in this year’s 700MHz auction it bought additional Ontario spectrum as well as frequencies in B.C. and Alberta.

Quebecor is believed to be pondering buying or partnering with Wind and possibly financially-troubled Mobilicity to quickly give it a presence beyond Quebec, as opposed to building a new network on its own in other provinces. That would also qualify it for bidding on setaside spectrum for new entrants in the March, 2015 AWS-3 spectrum auction.

According to a report last week in the Globe and Mail, VimpelCom has priced its interest in Wind at $300 million, arguably a bargain considering about $1 billion has been spent on Wind’s spectrum and network. Any new owner would have to also take over Wind’s debt.

However, Quebecor has said that before it makes a decision on expansion it wants to hear whether the Harper government or the Canadian Radio-television and Telecommunications Commission (CRTC) will clamp down on the wholesale roaming rates Rogers, BCE Inc.’s Bell Canada and Telus Corp. charge competitors when subscribers roam on their networks in Canada.

Ottawa has put a cap on the rates, and last week the CRTC slapped Rogers on its roaming contracts. However, the commission will only start a hearing into possibly setting wholesale roaming rates in September. As Ghose notes, that may mean Videotron won’t make a decision on buying Wind for at least six months.

 

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