Wind Mobile’s financial backer will soon become the wireless startup’s biggest shareholder, meaning it will be Canada’s only foreign majority-held telecommunications carrier.
However, Wind chairman and CEO Anthony Lacavera said Monday that he and the Canadian-dominated board of directors still have control over the parent company, Globalive Wireless Management.
“There are no management changes, no board changes, no shareholder agreement changes, no business plan changes, no financing plan changes,” he said.
It is not takeover, Lacavera said.
The shareholders’ agreement – as approved by the federal cabinet, he stressed – says that all Globalive Wireless board decisions have to be unanimous.
So in effect that means Lacavera has a veto – although so does its partner, Amsterdam-based VimpelCom Group through its Orascom Telecommunications division. Toronto-based Lacavera owns 35 per cent of Wind.
“I have no interest in selling,” Lacavera added. “A takeover would mean I’m out.”
However, he admitted that a significant change -- such as a new equity investor -- could change things.
Still, he said "this is a big win because it gives us a green light to purse those financing discussions on a clean footing with a very clear structure."
Wind has been struggling to find more investors ever since its inception, leading to speculation that the shareholders’ agreement is an obstacle.
Since it was created in 2008, to conform to the then telecom foreign investment rules Orascom held 32 per cent of the voting shares of Wind’s parent, and 65 per cent of the non-voting shares, representing its financial interest.
But Orascom issued a press release Sunday saying that in November it will ask its board to convert the non-voting shares into voting shares.
It was an expected move after the Harper government changed the Telecommunications Act so foreign companies can own all of a telecom carrier that has less than 10 per cent of the market.
“This is an alignment of voting and economic rights that was contemplated since inception of the company,” Lacavera said.
“It does not in any way change our shareholders agreement,” he said. “There are still extensive Canadian-related provisions in there, including Canadian board control.”
More importantly, he said “from an accounting standpoint” it means VimpelCom can consolidate Wind Mobile’s results into its books rather than Orascom’s.
It also means VimpelCom is firmly committed to Wind’s future, he said, and therefore could help Wind raise money to buy more spectrum.
Wind had ambitious growth plans, with Lacavera saying it hoped to sign 1.5 million subscribers in the first three years of operation.
But now approaching its third anniversary Wind has only 500,000 subscribers. Meanwhile, it will expanding its network in southern Ontario to include Windsor, Peterborough and Kingston in the next few weeks.
Wind also operates in Vancouver, Edmonton, Calgary and Ottawa.