A top executive from VimpelCom Ltd. is determined to quash rumours that the sixth largest wireless carrier in the world intends to yank funding from fledgling Canadian carrier Wind Mobile.
In Toronto this week, Ossama Bessada was blunt: “We’re not going to pull the plug, for sure,” he said.
VimpelCom, which has 186-million wireless subscribers in 19 countries, remains firmly committed to the Wind operation in Canada, Mr. Bessada said in an interview.
Amsterdam-based VimpelCom merged last year with Wind’s original backer, Orascom Telecom Holding SAE, and announced its intention to divest “non-core” assets. Since the merger was announced in October, industry analysts have openly wondered whether Wind would be among those assets.
But Mr. Bessada, a veteran of Orascom’s Italian division who now heads the combined group’s European and North American units as group executive vice-president, said Canada fits nicely within VimpelCom’s balanced portfolio of wireless assets. Those assets span mature markets that need defending, such as Russia and Italy, as well as emerging markets primed for growth.
The company considers Canada a growth opportunity even though it’s a developed economy, Mr. Bessada said. The wireless penetration rate – the number of people who have cellphones – is much lower in Canada than similar countries where competition is more robust.
In Canada, “I think we’re [up]against a cartel,” Mr. Bessada said, referring to Bell, Telus and Rogers, and the regional “duopolies” of local phone and cable companies across the country.
He believes there is room for Canadian prices to drop further, even after decreases triggered by Wind’s launch in December, 2009 and a surge of new competitors that includes Public Mobile, Mobilicity and Quebecor Inc.’s Vidéotron Ltée.
Wind Mobile has already begun to benefit from the scale and buying power that comes from being part of VimpelCom, Mr. Bessada said. During next year’s Canadian government auction of high-quality wireless licences, for instance, the added financial firepower will be crucial as Wind bids against more established, well-capitalized incumbents such as BCE Inc., Rogers Communications Inc. and Telus Corp.
“There’s a lot more ammunition, okay? To do whatever,” Mr. Bessada said. “There’s ammunition to consolidate, to expand on infrastructure – the capabilities are far, far bigger, in all honesty,” than before, when the highly leveraged, pre-merger Orascom was Wind’s only backer.
On Tuesday, Mr. Bessada will attend an investor lunch at Canaccord Genuity, with Wind chairman Anthony Lacavera, where he will deliver his rehearsed message: VimpelCom is here to stay; the government should lean toward favouring new entrants in the upcoming auction, likely in late 2012, of new wireless spectrum licences; and Bell, Telus and Rogers should fear the damage Wind is doing in the market.
How much damage is being done, though, is debatable. Although the Big Three, and especially Rogers, have lost a lot of subscribers on prepaid plans, the higher value smartphone customers seem to be staying put, at least in the short term. And both Bell and Telus have been on a tear, filling up their new, shared network with smartphone users who are paying more than $60 a month for expensive data and voice plans. Wind, meanwhile, has been discounting heavily to gain a foothold in the market, and only gets on average $27 from subscribers – some of whom, analysts point out, are likely bargain-hopping from one discount provider to another.
Vimpelcom's man in Canada
Ossama Bessada, 39, is a top wireless industry executive and a veteran of Orascom Telecom Holding SAE, where he led the Italian division of Egyptian billionaire Naguib Sawiris’s global telecommunications empire.
When Mr. Sawiris merged his Orascom empire with Russian wireless giant VimpelCom Ltd., Mr. Bessada’s responsibilities grew. He was appointed group executive vice-president in charge of Europe and North America, as well as chief executive officer of Wind Telecomunicazioni in Italy. Born in Cairo, Egypt, Mr. Bessada has an MBA and a degree in telecommunication engineering.
Mr. Bessada jokes that he is “less aggressive” than Mr. Sawiris, who is known for his bluntness and once told The Globe and Mail that Bell, Telus and Rogers were “a joke.” But Mr. Bessada isn’t restrained when speaking about competition, likening Canada’s Big Three wireless companies to a “cartel.”