Jan. 18 (Bloomberg) -- Orascom Telecom Holding SAE, an Egyptian wireless carrier, agreed to acquire shares of Canadian mobile phone startup Wind Mobile to gain voting control, the first test of the nation’s newly relaxed foreign-ownership laws.
Anthony Lacavera, Wind Mobile’s founder, is transferring his shares in the carrier to Orascom while retaining a “substantial economic” stake in the company, he said in an interview today. Financial terms of the deal, which will leave Orascom with a 99.3 percent indirect stake in Wind Mobile parent Globalive Wireless Management Corp., weren’t disclosed.
Canada’s main telecommunications regulator said in March it will allow foreign companies to buy operators with less than 10 percent of market share by revenue to stimulate competition by providing access to outside capital. Rogers Communications Inc., BCE Inc. and Telus Corp., Canada’s three largest carriers, control more than 90 percent of the market by subscribers.
Globalive, backed by Orascom, paid C$442 million ($445 million) in 2008 for Canadian wireless airwave licenses to start its mobile-phone business, later sparking a two-year legal battle to show that it wasn’t in violation of Canada’s foreign-ownership laws. The company was ultimately successful in winning court approval to continue operating in the country.
The transaction with Lacavera depends upon Orascom’s ability to win regulatory approval for the conversion of its nonvoting shares into voting shares, Toronto-based Wind Mobile said in a statement. Orascom will seek permission to increase its voting stake to 65.1 percent from 32 percent before it acquires Lacavera’s shares, Wind Mobile said.
Lacavera said he’ll remain as Wind Mobile’s chief executive officer until the transaction receives regulatory approval, which he estimated would happen later this year.
He chose to sell his shares now because he achieved his goal of creating “a competitive wireless dynamic in Canada,” he said.
Wind Mobile now has more than 600,000 subscribers, with between 80 percent and 90 percent of new customers signing up for long-term contracts instead of prepaid plans, Lacavera said.
The new business he’s starting, Globalive Capital, aims to address a shortage of venture capital available to technology, media and telecommunications startups in Canada. It will use both the firm’s money and some outside partners.
“There’s great VC for mining and resources here but not in TMT,” he said.
To contact the reporter on this story: Hugo Miller in Toronto at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Turner at email@example.com