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Wind Mobile to bid in government spectrum auction

Anthony Lacavera, CEO of Wind Mobile, is flanked by Simon Lockie, chief regulatory officer for Wind, left, and Brice Scheschuk, chief financial officer as they meet with The Globe and Mail editorial board Sept. 16, 2013.

Moe Doiron/The Globe and Mail

Wind Mobile plans to participate in the auction of Canadian wireless spectrum, making it the first new-entrant carrier to confirm its intentions to bid.

Chief executive officer Anthony Lacavera gave that confirmation Monday, ending speculation about whether the startup carrier would compete in the auction of the 700-megahertz frequency. Carriers face a Tuesday deadline to file their applications and put down a 5-per-cent deposit to secure a place in the auction. Bidding begins on Jan. 14.

Until now, there had been doubts about whether any of the independent small carriers had the financial resources to participate in the auction process, leaving the federal government's wireless policies seemingly on the brink of failure.

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Although Globalive Wireless Management Corp., which operates the Wind brand name, will submit a deposit, Mr. Lacavera declined comment on how it will finance that initial payment or its broader auction plan.

Nor would he comment on whether Wind's foreign financial backers, Amsterdam-based VimpelCom Ltd., plan to remain in the Canadian market. Smaller-scale rivals Mobilicity and Public Mobile, meanwhile, still have not committed publicly to becoming bidders.

"We will be entering the 700-megahertz auction as Wind," Mr. Lacavera told The Globe and Mail's editorial board. "So, Wind Mobile is the first new entrant to officially confirm it is entering the auction."

For now, Wind is looking at the auction as a potential avenue to secure additional spectrum so that it can build a next-generation high-speed network to better compete with the Big Three incumbents.

Wind's participation might come as a surprise to those who have followed the company since it entered the Canadian market.

Nearly two years ago, Wind's original financial backer, Egyptian billionaire Naguib Sawiris, threatened to boycott the auction unless the federal government set aside spectrum for new entrants like it did in 2008.

"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 in late 2011. "But to say, 'We want to create competition, we want your money.' They take our money and they leave us to the dogs."

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After Ottawa opted to limit the amount of prime spectrum that incumbents could purchase in the 700-MHz frequency instead of setting aside a portion for new entrants, Wind went silent on its plans. When asked what has changed since that time, Mr. Lacavera pointed to recent regulatory changes including new rules on spectrum transfers between carriers, enforcement of tower sharing and roaming rules, and the CRTC's decision to effectively eliminate three-year contracts.

"The regulatory framework has evolved from being very difficult to much more favourable for new entrants," said Mr. Lacavera, adding that Wind has emerged as a viable fourth carrier in the key Ontario, B.C. and Alberta markets.

Beyond the auction, Wind could choose among "multiple" equity and debt sources, both Canadian and international, that could provide financing, he added.

During that last auction, Globalive spent $442-million on Advanced Wireless Spectrum licences. In total, roughly $1.3-billion has been invested in the business to date. Wind, which had initially targeted 1.5 million subscribers within three years, now has more than 650,000 wireless subscribers after launching service nearly four years ago.

Still, there is lingering uncertainty about Wind's long-term ownership structure. Earlier this year, VimpelCom (which has a 65-per-cent "indirect economic ownership" stake in Wind through its Orascom subsidiary) put Wind up for sale. Executives said as late as last month that VimpelCom was considering "disposing of the business."

New York-based Verizon Communications Inc., which sources said tabled an initial $700-million offer earlier this summer, is no longer interested in entering Canada. Even though he declined comment on Verizon's previous interest in Wind, Mr. Lacavera slammed Rogers Communications Inc., BCE Inc. and Telus Corp. for behaving like "raving lunatics" as part of an "aggressive PR campaign" against Ottawa's policies to stimulate more wireless competition.

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"Canadians are smarter than that," Mr. Lacavera said. "I think that was a very unfortunate move by the incumbents that was way outside the realm of rational behaviour."

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