Wind Mobile backer threatens boycott of wireless auction

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The Egyptian billionaire who backs Wind Mobile has threatened to pull out of a coming government auction of wireless licences unless Ottawa sets some aside for new competitors and clarifies foreign ownership rules.

Naguib Sawiris, the brash telecom mogul who started an Egyptian political party after the revolution there, says he was misled by the Canadian government, regrets "totally" his decision to invest here and tells other international financiers not to invest in Canada.

"I tell you we will not bid – unless they set aside the frequencies, unless they really show seriousness that they want to create competition," Mr. Sawiris told The Globe and Mail's editorial board Thursday. "But to say, 'We want to create competition, we want your money.' They take our money and they leave us to the dogs."

In 2008, Mr. Sawiris bankrolled Wind's chairman Anthony Lacavera to buy $442-million in government wireless licences, and then pumped hundreds of millions more into building a wireless network in major Canadian cities.

Canada's wireless prices have dropped precipitously over all since Wind and other new entrants such as Mobilicity and Public Mobile launched and began offering cheaper plans than the incumbent providers. But the government now faces the possibility that Wind – the largest and most visible new entrant – might abandon wireless altogether, eroding Ottawa's attempt to introduce competition into the Canadian telecommunications sector.

Wind's lawyers have been tied up in courts ever since the company's launch, defending Wind from accusations that Mr. Sawiris's firm Orascom Telecom Holding – which has since merged with the Russian carrier VimpelCom Ltd., in which he's now a major shareholder – exerted too much control.

The case has wound its way all the way to the Supreme Court, which has not yet decided whether to hear it.

"Anybody who asks me, I tell him, 'Look, we are the stupid investors that poured a billion dollars into Canada here and created 1,000 new jobs, please don't do this mistake. Don't come here,'" Mr. Sawiris said. When asked whether he regretted his decision, he added, "Totally. I would actually, if they would give me my money back, minus 10 per cent, I would take it any day."

Industry Canada responded that "foreign investment rules are being considered together with policies for upcoming wireless spectrum auctions," as part of an "integrated approach." It has yet to announce a policy on the auction of wireless licences expected to take place in 2012.

Michael Hennessy, senior vice-president for government and regulatory affairs at Telus Corp., characterized Mr. Sawiris's comments as "blackmail by media," and "fundamentally wrong ... on the premise that it has to be either/or; that you either have a set-aside or three carriers will end up with everything."

He said Telus has favoured an open auction for licences, but also supports a process whereby the number of licences any one company can buy would be capped.

Mobilicity chairman John Bitove said new wireless competitors will die off without government help because they cannot bid against the giants without licences set aside.

"The government helped birth these new entrants and if they don't find a way to sustain our growth through the auction, it's like throwing babies in the bathtub and turning the water on."

Mr. Sawiris, who expanded Orascom Telecom in the Middle East and Africa, insinuated his Canadian rivals were coddled by foreign ownership restrictions.

"You have the most inefficient operators in the world. And why are they like that? If they were that good, why are they just in Canada here?" he asked. "Why don't we have Rogers in the U.K. or Germany? Why is Vodafone everywhere? Why is France Telecom everywhere?"

Rogers Communications Inc.'s senior vice-president for regulatory affairs, Ken Engelhart, dismissed Mr. Sawiris' criticism that Rogers is inefficient and said the company once operated a U.S. cable business but sold it in 1989 to invest further in Canada's wireless sector. "The fact that we are very efficient is one reason why I think [Wind]and the other new entrants are finding it so difficult to compete in Canada."