After overcoming regulatory hurdles and enduring the slurs of rival wireless companies, Wind Mobile is near a deal to receive a fresh injection of cash - and is going on the offensive against its largest competitor.
In an interview, Wind chairman Anthony Lacavera said his company is in the final stages of securing several hundred million dollars of new financing from its existing operational and financial backer, Cairo-based telecom giant Orascom Telecom Holding SAE, which is headed by Egyptian billionaire Naguib Sawiris.
The brash Mr. Lacavera got more aggressive on Thursday, using a Toronto Board of Trade speech to announce that his company had filed a formal complaint with the Competition Bureau against Rogers Communications Inc. for advertising that mocks the quality of the new wireless companies' service.
Wind Mobile, which Mr. Lacavera said has been "dismissed" by Canadian investors, is finalizing details on the exact sum from Mr. Sawiris's global telecom business. Prior to its launch in December 2009, Wind's ownership structure and its reliance on Egyptian financing led to a CRTC ruling that the company violated Canadian ownership rules, a decision federal Industry Minister Tony Clement later overturned.
"I'm thrilled to have Naguib's and OTH's ongoing support and their global wireless expertise," Mr. Lacavera said. But, he added, "we're certainly very cognizant of the need to make sure that our ongoing financing complies with the [Industry Canada]approval."
New wireless players such as Wind Mobile and Mobilicity - which has already filed a Competition Bureau complaint against Rogers - are battling for market share in an industry where 95 per cent of the wireless customers are with just three companies: Rogers, BCE Inc. and Telus Corp. All of these companies have discount "flanker" brands, such as Rogers' Chatr or Bell's Solo Mobile, which they use to battle new competition without lowering prices on their millions-strong premium brands, in an attempt to contain the damage that price-cutting does to their bottom lines.
Both Chatr, which advertises "fewer dropped calls than new wireless carriers," and Solo, which argues it has "unlimited talk without all the dropped calls," are zeroing in on perceived network quality issues of their new rivals' networks.
However, Mr. Lacavera said Rogers has no access to Wind's internal network statistics, and that he has no access to Rogers', labelling their claim "misleading." He also said many dropped calls on Wind's network result from a regulatory matter: Wind subscribers often have their calls dropped when they roam out of a Wind "zone" and onto an incumbent networks. This is known as a "hard" hand-off, where calls are simply cancelled, as opposed to a "soft" hand-off Mr. Lacavera said is common in many other countries.
"They're creating more dropped calls, and then saying 'Wind has more dropped calls.'" Mr. Lacavera said. "To use that as a marketing advantage is far outside what I've understood to be Canadian business ethics."
Mobilicity's complaint to the bureau argued that Rogers was violating the Competition Act, which forbids the use of new brands designed to kill competition. But Mr. Lacavera said he thinks the tactics are focused solely on Wind, since his is the only company backed by a global telecom operator - an investor more likely to stay patient in the long road to profitability than institutional investors.
In an e-mailed statement, a spokesperson for Rogers defended its marketing. "There's no question our advertising reflects our competitive advantage and we stand behind it.
"Since 2005, we have conducted regular and rigorous testing comparing our network against our competitors'. The testing, which follows industry standard methodology, is independently validated and proves that we have fewer dropped calls.... We question Wind's motives in complaining to the Bureau and the announcement today."
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