Editor’s note: Story updated at 12:55 PM ET
A Waterloo, Ont.-based voice over Internet protocol (VoIP) firm is offering to buy Wind Mobile for $1, it announced this morning. But whether the deal goes through or not, Fongo says it will have a wireless offering on the market by year’s end.
Fongo Inc. bills itself as “Canada’s fastest growing mobile telecommunications company” and has previously offered a VoIP service on the Web and via mobile apps that is similar to Skype, but also allows Canadians to create a phone number using the service and place free calls across Canada. Now it’s looking to expand into the wireless market by making a public offer to buy Toronto-based Wind, currently controlled by Dutch-based VimpelCom.
Fongo’s offer? $1 in cash and a 49 per cent equity ownership stake in Fongo. In a telephone interview, Dave Bullock, president of Fongo Inc., wouldn’t put a dollar value on that equity stake.
“We’ve built our success to date on the back of our free app service,” Bullock says. “Our customers are asking us to marry up the Fongo service with a well-priced data plan.”
Fongo would retain the majority of Wind’s employees and expend the service across the country to mirror its existing network, a press release says. Fongo was spun out of Cambridge, Ont.-based Fibrenetics in 2011 and has access to the competitive local exchange carrier’s infrastructure. Wind customers would be transitioned to Fongo over a 12-month period.
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Wind’s customers are “forward-thinking” according to a press release from Fongo and Canadians will have a “true choice and a service that is radically different from anything else out there” by combining the firms.
“A lot of people have tried and failed to replicate the success of the incumbents, but we want to do something wildly different,” Bullock says. “We’ve effectively removed the need for voice minutes… all you’re going to pay for is data.”
Whether the deal with Wind Mobile goes through or not, Fongo will enter the wireless market by offering a data-only plan to Canadians by the end of 2013, Bullock says. “If we’re not successful here, what I can tell you is we’ll still absolutely, positively be entering the wireless space with a solution within the year for our customers.”
Earlier this month, a note from Canaccord Genuity’s Canadian research head, Dvai Ghose, indicated VimpelCom had begun the process to sell Wind. The revelation came after Wind’s CEO Anthony Lacavera resigned from the company Jan. 18. Lacavera said he plans to launch a venture capital firm, and is rumoured to be one of the possible bidders of a takeover of Wind.
Wind has attracted more than 600,000 subscribers to its wireless service and Fongo says it has signed up 250,000 Canadians to its mobile phone VoIP service since Februrary 2012. Many Wind customers have the Fongo app installed, Fongo says.
When reached for comment, Wind Mobile declined to do so.