Published: August 26th, 2010

Things aren’t blowing well for Wind Hellas, the sister brand in Greece to Toronto-based Wind Mobile, according to an industry analyst. How those breezes will hit the Canadian division and its ability to get financing from its major investor is a question.

Both companies share a major investor, Egyptian telecom mogul Naguib Sawiris through different wings of his empire.

According to Josh Gillet of Wireless Intelligence, a service of the GSM Association, Wind Hellas’ problems stem from Greece’s troubled economy as well as an order that wireless carriers deactivate unregistered pre-paid customers, a move that is cutting hundreds of thousands of connections from their books. Greek mobile penetration was estimated to be as high as 194 per cent, said Gillet, largely because the average cellular subscriber has 2.1 SIM cards.

This week Wind Hellas reported revenue dropped 28 per cent in Q2, said Gillet.

“The company’s large debts and dwindling cash reserves are now seriously affecting operational performance, forcing it to reign in handset subsidies and even close some retail stores in favour of telesales and door-to-door sales channels,” Gillet wrote in a research note.

“Its mobile customer base dropped to 4.2 million in the latest quarter from 5.2 million a year ago, as subscriber acquisition and retention initiatives were scaled back. According to our data, Wind’s customer base declined by 19 per cent year-on-year in Q2, considerably greater losses than the 3.2 percent decline at [carrier] Cosmote or the 9.3 per cent drop at Vodafone. WIND’s ARPU is also lower than at its two larger rivals.”

Gillet also cites a report from the GSMA’s Mobile Business Briefing news service that Wind Hellas is so cash-strapped it’s looking for a buyer.

Wind is a brand that Egyptian tycoon Naguib Sawiris stamps on three of his wireless investments, which are held through two vehicles: Privately-held Weather Investments (which owns Italy’s Wind Telecommunicazioni S.p.A), and publicly-traded Orascom Telecom Holdings SAE, of which Weather is the largest shareholder.

Recently Orascom reported a second half loss of US$17 million on revenues of $2 billion.

It’s true that Orascom still has a lot of cash coming in from carriers in Egypt, Pakistan, Bangladesh, Algeria and North Korea, but how much of it Wind Mobile Canada can tap may be limited by the health of Orascom and Weather. Orascom has already told Wind Mobile chair Anthony Lacavera it will invest about $750 million here, and it has already put in about $650 million.

“The sudden deterioration of Wind Hellas' financial situation shows, once again, the importance of taking a pro-active approach to addressing new trends and market opportunities in the industry,” Gillet wrote in a research note. “But the fact that the operator is now switching its focus to enhancing its brand awareness, switching to an added-value and customer-centric approach, investing in advertising and, most importantly, investing in “network development to bridge the coverage gap” might come a little late in such a saturated market.”

The three major carriers in Greece continue to report falling revenue.

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Jim Love, Chief Content Officer, IT World Canada

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