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Wind Mobile says path clear for foreign investment

Tags: Wind Mobile

Fresh on the heels of a Supreme Court win that declined an appeal from a competitor on its foreign ownership, Wind Mobile tells BNN it's moving ahead on talks with foreign investors and pushing for consolidation among its rivals.

Anthony Lacavera, CEO of the Canadian wireless upstart,  tells BNN that he's already in talks with U.S. and European companies about investing in the company.

"We have been approached by a number of parties…now that all of this is sorted out, I feel very good and I think you'll see some announcements soon from us," he says. "Getting this whole legal and regulatory battle behind us once and for all and winning it certainly gives us a more solid foundation to attract more foreign capital."

On Thursday, the Supreme Court ruled that it would not hear an appeal from Public Mobile -- a competitor in the low-cost wireless space -- on whether the government should have allowed Globalive, Wind's parent company, to operate in the country even though it had the backing of Egypt's Orascom Telecom.  Orascom has since been sold to the Amersterdam-based Vimpelcom.

Under current legislation wireless firms must be majority-owned and controlled by Canadians.

The country's telecom regulator initially ruled that Orascom's investment in Wind Mobile's parent company violated that legislation, but was overruled by the federal government. Public Mobile wanted the Supreme Court to hear the case and determine if Wind Mobile's foreign backing violated those rules.

"We're thrilled with this decision," Lacavera tells BNN. "The Supreme Court…has sent a clear message that the time for complaining is over and the time for competing is in full force."

But the decision may be moot now that the federal government is moving ahead with legislation that will lift foreign investment in wireless companies with less than 10 percent of the market -- which would include upstarts such as Wind Mobile, Public Mobile and Mobilicity.

It also comes as the government is preparing to auction off valuable wireless spectrum, which is expected to take place either late this year or early 2013. The spectrum is so valuable because it allows coverage in difficult places such as underground parking lots and rural areas.

Lacavera says the upcoming auctions are vital to the upstarts and may cause a shakeup in the industry.

"There needs to be new entrant consolidation, so if this government policy achieves anything it will force new entrant consolidation and we intend to lead that consolidation," he says.

Other analysts have also speculated recently that the upstarts, which are struggling to turn a profit in the cut-throat wireless industry, will have to band together to take on the major telcos such as Telus, Rogers Communications and BCE Inc.

Wind Mobile and other upstarts lobbied the government to set aside spectrum for the smaller players. The government instead established a set of "caps" that limit the amount of spectrum that can be bought by the major players.

Lacavera called the cap system a "disaster" and would starve the upstarts of much-needed spectrum.

Wind Mobile says it currently has 400,000 subscribers. Credit rating agency Moody's estimates that the three wireless upstarts together still hold less than 4 percent of the market.

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