TORONTO – Wind Mobile’s future appears cloudy after its Amsterdam-based financial backer wrote off its investment in the five-year old Canadian wireless company.
VimpelCom announced the write down with its Q4/13 results early Thursday morning. The global telco reported a 2013 net loss of USD $1.4 billion that it attributed to non-cash impairments of USD $3.0 billion mainly related to its assets in Canada and Ukraine.
“The company fully impaired its assets in Canada, mainly relating to the challenges the company is facing in the country, which resulted in the strategic decision to withdraw from the 700 MHz spectrum auction and the reassessment of the prospects for continuing operations in the country”, reads its financial report. “These were partly offset by the positive impact of declining amortization applied to intangible assets associated with customer relationships as part of the Wind Telecom acquisition”.
VimpelCom’s impairment of Canadian assets was USD $768 million during the fourth quarter versus $328 million during the same period of 2012. The company reported that Wind had 649,000 subscribers at quarter-end, a 10% increase from 590,000 in the same period last year, though Wind told Cartt.ca that number was actually 676,209, an increase of 14.5% (39,382 customers) from Q3 2013. Wind’s average revenue per user (ARPU) of CAD $29.80 was up 6% from $28.10 last year.
Dvai Ghose, managing director/head of research for Canaccord Genuity, said the move did “not come as a surprise” given Industry Canada’s refusal to allow VimpelCom to control Wind, despite the relaxation of foreign ownership restrictions; and VimpelCom’s decision not to finance Wind’s 700 MHz spectrum purchases.
“With VimpelCom's announcement we wonder if it is prepared to finance significant incremental losses at Wind”, Ghose wrote in a note to clients. “Consequently, we may see a contraction in its subscriber base over time, especially as we assume high churn.”
When contacted by Cartt.ca, a Wind Mobile spokesperson played down VimpelCom's decision, saying "the reported shareholder accounting decision has no impact on our day-to-day operations in Canada and we would like to highlight that it remains business as usual at Wind Mobile."
"As we enter our 5th year, we have grown into an established fourth carrier in our current markets and at Wind Mobile we remain firmly committed to serving our customers and the Canadian market by providing great service at transparent prices while making bold and industry-changing moves, such as the recently introduced unlimited U.S. roaming add-on, a first, once again, for the Canadian wireless industry", reads the emailed statement. "We remain focused and committed to this market and we look forward to bringing True Mobile Freedom to even more Canadians in the future."
