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Toronto-based hedge fund West Face is the biggest Canadian name to sign on to the Wind consortium and is well known for its shakeup of Maple Leaf Foods Inc. after taking an activist stake in the meat company in 2010.Deborah Baic/The Globe and Mail

Wind Mobile says operations will remain more or less the same following its sale to a consortium of investors, but the company still faces questions about whether growth plans could involve a deal with one of Canada's other wireless new entrants.

Wind, which operates only in major cities in Ontario, British Columbia and Alberta, needs more spectrum – the radio waves used for cellular service – to improve its network and eventually offer LTE or fourth-generation service. It said in July it has 750,000 subscribers, a number still far behind the projections called for in its original business plan. The carrier could merge with Mobilicity, which is under creditor protection, or work with Quebecor Inc. should the Montreal-based company decide to take its Vidéotron Ltée wireless business national.

Quebecor said earlier this summer it was still considering a national expansion of its subsidiary Vidéotron's four-year-old mobile business, and it has previously held talks with both Wind and fellow startup Mobilicity. Several analysts suggested that despite Wind's recapitalization deal, announced Tuesday, Quebecor could still get involved.

Wind founder and chief executive officer Anthony Lacavera said there are multiple sources of spectrum the company could take advantage of, including two auctions next year.

"In the coming months we're going to assess all of those alternatives and we have no determined path at this time," he said in an interview Tuesday. He declined to comment on specific partnership or merger possibilities.

It took Mr. Lacavera months of fundraising to finally pull together the money to buy out Wind's foreign owner, Amsterdam-based VimpelCom Ltd. Some have characterized the deal as an initial step toward becoming a stronger player capable of competing with the country's Big Three incumbents, BCE Inc., Telus Corp. and Rogers Communications Inc.

"We view this transaction as the first step in the 'clean-up trade' towards creating a fourth national wireless player in Canada," RBC Dominion Securities Inc. analyst Drew McReynolds said Tuesday. "We assume that Mobilicity and the spectrum owned by Quebecor will ultimately be combined with Wind to form a more sustainable fourth national wireless player."

Alternatively, Desjardins Securities's Maher Yaghi noted that the investor group itself could put up more cash. He said the consortium might share more detail about a refocused Wind brand and further capital infusions once it has won regulatory approval for the transaction.

For now, Mr. Lacavera insists the deal proves Wind's business plan is working and shows, "we're here to stay." The name will remain the same, as the Canadian operation reached a brand licensing agreement with VimpelCom, which also operates the Wind brand in Italy.

"For the longest time there was so much speculation that no new capital was going to come into new entrant wireless [companies in Canada]," he said. "Now a group of very sophisticated investors, including West Face Capital, have come in to recapitalize it and move forward."

Toronto-based hedge fund West Face, which is known for an activist approach and its involvement with Maple Leaf Foods Inc., is the biggest Canadian name to sign on to the deal.

"The federal government's delivery on its promise to create the conditions for viable long-term wireless competition has not gone unnoticed by the investment community," Greg Boland, the fund's president and chief executive said in a statement announcing the deal early Tuesday morning.

Also taking part are California fund Tennenbaum Capital Partners, which is one of Wind's current bondholders, and U.S. private equity player Lawrence Guffey, who is an adviser to Blackstone Group and a director on the TMobile U.S. Inc. board. The remaining two named investors are Canadian: Serruya Private Equity, an investment vehicle of the family behind the Yogen Fruz chain, and Novus Wireless Communications, which is controlled by Vancouver real estate developer Terence Hui, who has long had designs on the wireless industry.

VimpelCom confirmed Tuesday it is selling its interest in the Canadian company to Globalive Capital for approximately $135-million and will also be released from debt obligations of Wind Canada as part of the transaction. Sources say the total value is worth closer to $300-million, with slightly more than half of that due to the consortium of investors assuming Wind's debt. Globalive, which is an investment firm led by Mr. Lacavera, did not disclose the value of the investors' respective stakes.

The deal is still subject to regulatory approvals. Through Globalive Capital – which was formerly known as AAL Corp., Mr. Lacavera's holding company – the CEO currently controls two-thirds of the voting shares and has about a 35-per-cent economic interest in the company.

Although Globalive already has regulatory approval to own the company, Industry Canada and the Competition Bureau will have to approve the new ownership structure with control by the consortium, which will also include Globalive itself.

Wind, along with fellow startup carriers Mobilicity and Public Mobile, launched its wireless business after winning spectrum in the 2008 auction. It has been the most successful of the trio: Telus bought Public Mobile last year and Mobilicity is under creditor protection and its original investors are suing the federal government for $1.2-billion on the basis of alleged broken promises.

Wind Mobile offers wireless service in major cities in Ontario, British Columbia and Alberta. The maps below show its network coverage in Toronto and Vancouver. It also offers service in Ottawa, Kingston, Windsor, London, Edmonton and Calgary.