CALGARY and TORONTO – Shaw Communications announced late Wednesday it has agreed to purchase Wind Mobile.
After spending a number of years contemplating wireless, buying spectrum and then starting to build, then stopping and finally divesting its spectrum earlier this year (which it will now re-take ownership of with this deal), Shaw Communications will be the seventh Canadian communications carrier offering a quad-play of TV, internet, home phone and wireless (in its larger Alberta and B.C. centres, that is).
(Officially, Shaw has agreed to acquire a 100% interest in Mid-Bowline Group Corp. and its wholly-owned subsidiary, Wind Mobile Corp. for an enterprise value of approximately $1.6 billion. Mid-Bowline is owned by a consortium of investors, including funds managed by West Face Capital, Globalive Capital, Tennenbaum Capital Partners, the family office of Lawrence Guffey and certain others.)
"The global telecom landscape is quickly evolving towards 'mobile-first' product offerings as consumers demand ubiquitous connectivity from their service providers. The acquisition of Wind provides Shaw with a unique platform in the wireless sector which will allow us to offer a converged network solution to our customers that leverages our full portfolio of best-in-class telecom services, including fibre, cable, Wi-Fi, and now wireless," said Shaw CEO Brad Shaw in the press release announcing the transaction.
The purchase of a wireless company which has already gone through the many bumps and bruises of a startup is likely the most efficient way for Shaw to get into the wireless market in Canada. “Shaw has taken a disciplined approach with respect to our mobile strategy, and believe that the timing is right to enter the wireless market,” reads the company’s presentation to investors. During the company's conference call with financial analysts Thursday morning, the Shaw CEO said the company has been analyzing a wireless move for 18 months and settled on buying Wind as the best way to get into the business.
"This transaction represents a transformational step in the history of Shaw and we are excited about our future growth prospects in mobile. This growth will be accelerated by combining Shaw's existing customer relationships, trusted brand and wireline and Wi-Fi infrastructure with Wind's impressive asset base, including its existing spectrum position and mobile network."
Wind is Canada's largest non-incumbent wireless services provider, serving approximately 940,000 subscribers across Ontario, British Columbia and Alberta with 50MHz of spectrum in each of these regions. Approximately 75% of Wind’s customers are in Ontario and by the end of the year, Wind’s wireless network will cover 15 million Canadians in the three provinces. Wind also owns AWS-1 spectrum, but has no network as yet, in Nova Scotia, New Brunswick, Newfoundland & Labrador, Northern Quebec, Northern Ontario, Nunavut, the Northwest Territories and the Yukon.
In 2015, Wind is expected to generate $485 million in revenue and $65 million in EBITDA, adds the release. As Wind continues to reinvest in its network and service offering, including a scheduled upgrade to 4G LTE services by 2017 (announced just last week with $425 million in new financing), the company expects that its unique customer value proposition will result in continued strong growth in the future.
Wind's current management team, led by CEO Alek Krstajic, will remain with the company and will continue to drive the wireless opportunity. "We believe the combination of Shaw and Wind creates a wireless leader with immediate benefits for our customers and employees, giving them more choice, capabilities and opportunities to stay connected," said Krstajic. "With Shaw's long-term commitment, customer focus and breadth of product offering, this transaction enables us to enter into a new phase of growth."
In 2011, Shaw announced the launch of a carrier-grade Wi-Fi network, Shaw GO Wi-Fi, which has since expanded to over 75,000 hotspots, increasing the value proposition of broadband outside of the home. "The time has come to offer even more mobility to our customers," said Shaw. "By acquiring Wind, we now have immediate scale, spectrum, retail distribution and a network with a clear path to LTE that complements our existing fibre and Wi-Fi infrastructure."
Wind will be managed as a standalone entity, says the investors’ presentation, “but the offering will be integrated into Shaw’s current platform to offer converged services to all customers in Western Canada.”
Shaw will also now be able to cross-sell wireless services to its business customers, which was a key missing link for its burgeoning SME division.
The transaction is subject to the receipt of certain approvals, including those from the Competition Bureau and the Ministry of Innovation, Science & Economic Development (formerly Industry Canada) and court approval of the plan of arrangement. Closing is expected to occur during the third quarter of fiscal 2016.
