Verizon Communications (NYSE:VZ) has made an initial offer of somewhere between $600 million and $800 million to buy Canadian wireless carrier Wind Mobile, according to multiple reports.
The Globe and Mail reported that, according to unnamed sources, the deal values Wind at around $668 million. Reuters reported that, according to unnamed sources, the offer is between $600 million and $800 million, with a more specific price pending due diligence. Both reports said Verizon is also in talks with rival wireless startup Mobilicity over a possible deal. The Globe and Mail also said Verizon is considering whether to participate in a Canadian auction of 700 MHz spectrum licenses.
The reported offer comes as a subsidiary of European operator VimpelCom withdrew its bid to take control of Wind Mobile. Representatives of Verizon, Wind, Mobilicity and VimpelCom all declined to comment, according to the reports.
Canada's government last year relaxed restrictions on foreign ownership in small telecom companies with market share of 10 percent or less, in the hopes of increasing competition for incumbent carriers Telus, BCE's Bell Mobility and Rogers Communications. The Globe and Mail reported that the price for Mobilicity would likely be lower than that for Wind since Mobilicity is in a tougher financial position. Telus tried to buy Mobilicity earlier this year for around $363 million but the deal was blocked by the government.
Last week Verizon confirmed it is considering jumping into the Canadian wireless market and could purchase upstart Wind in order to do so. "We're looking at the opportunity" to get into Canada, Verizon Communications CFO Fran Shammo said in an interview with The Wall Street Journal. "This is just us dipping our toe in the water."
Shammo declined to comment on any specific talks with Canadian carriers. However, Verizon spokesman Bob Varettoni later confirmed in a statement sent to multiple news outlets that buying Wind Mobile is one of many options the company is considering.
In 2008 the Canadian government held a spectrum auction in which Wind Mobile and fellow new entrants Mobilicity and Public Mobile purchased spectrum. While the new entrants have helped put some downward pressure on prices, they have struggled against the larger carriers; the big three players control around 90 percent of the market.
Canada plans to hold an auction of 700 MHz spectrum in January, which could potentially align with Verizon's holdings. Verizon Wireless uses 700 MHz Upper C Block spectrum for its LTE network.
For more:
- see this Globe and Mail article
- see this Reuters article
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