March 27, 2013 11:02am
Things are getting interesting now. Last week it was revealed that VimpelCom, WIND Mobile’s parent-company, was seeking a buyer for the carrier. Early rumours pointed towards Orascom’s Naguib Sawiris and Globalive’s Tony Lacavera teaming up and swallowing the assets for about $750 million. In addition, there was some chatter about a United States carrier making a bid for WIND. Today, in a press release, it’s Waterloo-based Fongo decided to make a bid WIND’s subscriber base and spectrum.
If you’re unfamiliar with Fongo you might know them for powering such VoIP apps like Dell Voice that gives users a free Canadian phone number and the ability to make free long distance calls. Fongo currently has 250,000 sign-ups and Jody Schnarr, Fongo’s CEO, stated “WIND Mobile has done a fantastic job of signing up some of the most forward thinking mobile consumers in the country and has taught Canadians that there can be alternatives to traditional wireless service. By combining WIND’s wireless assets with Fongo’s proven ability to deliver innovative mobile solutions, Canadians will have true choice and a service that is radically different from anything else out there.”
Fongo said that WIND is currently limited in their offering as they only operate in various cities in Ontario, Calgary, Edmonton, Vancouver. A Fongo/WIND acquisition would “immediately extend the WIND Mobile service offering across the country to mirror Fongo’s coast-to-coast free calling network. Current WIND Mobile customers would be transitioned to Fongo over the course of 12 months.”
Fongo is apparently backed by VC’s and have been funded from our lovely Government. However, the offer that Fongo submitted to WIND is a “$1 purchase price and a 49% equity ownership stake in Fongo.” Not really sure that will cut it, but there are some early warning signs, namely job cuts. Fongo noted that they plan to “retain the majority of WIND Mobile’s employees” and “has pledged to re-think many aspects of the business.” The reason for the potential cuts is because “the modern consumer wants to purchase online,” and not visit a retail store.
WIND Mobile has amassed 600,000 subscribers and has over 335 retail locations. At the very least this gives Fongo some solid press and awareness about their app.