Canada's Shaw Communications Inc to acquire Wind Mobile
17 December 2015
Canada's Shaw Communications Inc said yesterday that it is acquiring Wind Mobile, the country's fourth-largest wireless provider, a deal with which it would gain a much-needed presence in the cellular market.
According to Calgary-based Shaw, the deal valued Wind and its parent company Mid-Bowline Group Corp, at C$1.6 billion ($1.16 billion), much higher than the roughly C$300 million a consortium of investors paid for the young wireless carrier in 2014.
The takeover comes after Rogers Communications Inc's C$465-million purchase of smaller rival Mobilicity, which was under creditor protection, for several deals that allowed Wind to pick up a suite of airwaves at a discount price.
Shaw had acquired spectrum that was set aside for new entrants to the wireless industry in 2008, however it did not use the capacity. The airwaves were the sold by Shaw to Rogers as part of the Mobilicity deal in June. Rogers in turn passed on most of those plus some other airwaves to Wind to secure regulatory approval.
According to commentators, the move would see Shaw not only regain most of the spectrum it sold at a profit, but would allow it to enter Canada's highly competitive wireless market with an established cellular presence.
Shaw, present mostly in western Canada, gains Wind's wireless spectrum, 940,000 customers and wireless towers in urban centres in British Columbia, Alberta and Ontario, according to a statement yesterday.
According to Shaw, the deal provided ''the most efficient operating and financial entry point into the Canadian wireless landscape.''
The deal would allow Shaw to offer its services to Canadian consumers who, are increasingly turning to mobile devices for entertainment and information, like in the US. Wind, owned by private-equity firms, had expanded its customer base by 47 per cent over the past two years.
However, it still trails behind the country's three dominant players, Rogers Communications Inc, Telus Corp and BCE Inc. While the Canadian government supported the company with cheaper airwaves, the big three companies still controlled 90 per cent of subscribers.
''We think a well-funded Wind gives Canadians an opportunity to not have to choose between value and service,'' Jay Mehr, Shaw's chief operating officer, said in a phone interview.
Wind had taken the low pricing route, undercutting its competitors' prices, but due to the low level of funding, its network could not match its rivals on quality.
Canadian surveys placed the company much behind its rivals on network quality and customer service.