Wind secures up to $425M for network
Three-bank deal to build out LTE
toronto • Building a robust wireless network is an arduous task, requiring an arsenal of spectrum licences and capital — preferably at a low cost — to pay for pricey equipment purchases. Now, Wind Mobile Corp. has both.
The upstart carrier said Thursday in a release that it has closed a round of senior secure debt financing for up to $ 425 million from a syndicate co- led by three of Canada’s largest banks to construct a faster, sturdier network using equipment from Nokia Corp. Wind plans to deploy an LTE network over the next 18 months that it hopes will entice new cellphone subscribers and keep satisfied the estimated million it serves today.
Alek Krstajic, chief executive at Wind, said that this credit arrangement, which was co- led by TD Securities, BMO Capital Markets and Canadian Imperial Bank of Commerce, took five months to negotiate and has an interest rate in the three per cent range. It is a far cry from the annual rate of nine per cent that Wind had paid to service $150 million in debt since the company recapitalized under new ownership last September.
The release also states that its existing debt facilities have been refinanced under the new terms, meaning Wind will be paying less in borrowing costs and can devote those funds to repairing a network that’s known to drop phone calls, offer poor service inside buildings and tends to have spotty service outside them, too.
“This is a big deal for us. It says that Wind is here to stay,” Krstajic said during a telephone interview. “This endorsement by some of Canada’s top banks finally allows us to grow and broaden our network and deliver true competition. Between cash holdings and debt, this is enough to take us through the entire build.”
A financing deal like this became viable after Wind doubled its spectrum holdings this summer as part of the deal that saw Rogers Communications Inc., the country’s largest wireless provider, acquire Wind’s rival Mobilicity and exercise its option to buy valuable unused airwaves from Shaw Communications Inc. To get approval from Ottawa, Rogers transferred some of the licenses to Wind for just the price of consideration. Wind will be replacing antennae on the 1,500 existing cell sites that are scattered across the regions where it operates and it’ ll also be evaluating new site locations. Nokia will be Wind’s sole equipment provider for the next five years, a separate news release states. Together, they plan to build a strong, efficient network.
Wind has solidified its position as the closest thing to an alternative national wireless carrier to incumbents Rogers, BCE Inc. and Telus Corp. It operates only in major cities in Ontario, Alberta and British Columbia and offers services at a much lower rate than these providers but has been introducing higherpriced plans.
Still, analysts at RBC Capital Markets estimate that Wind is generating roughly $ 40 per user every month, a figure that Krstajic and his executive team will surely attempt to steadily increase in the coming months.
“With LTE, management expects to be able to justify the elimination of certain discounts and expects to potentially bolster the handset lineup, including the iPhone,” the analysts said in a recent note to clients.