June 14, 2013 / 2:16 PM / 5 years ago

CORRECTED-Canada delays Wind Mobile deals on security concerns -report

(Corrects Reuters instrument code for Huawei Technologies Co Ltd to HWT.UL from 002502.SZ in fifth paragraph)

TORONTO, June 14 (Reuters) - The Canadian government has delayed the approval of two deals that would solidify Vimpelcom Ltd’s control of wireless carrier Wind Mobile over national security concerns, a Canadian newspaper reported on Friday, citing unnamed sources.

Vimpelcom, an Amsterdam-based telecom company that is Wind’s largest shareholder, has been trying for months to take control of Toronto-based Wind after Canadian legislation was changed to allow foreign ownership of smaller telecommunication companies.

However, Canadian officials wary of giving control of Wind’s infrastructure to an entity with strong ties to Russia have hampered the closing of the deals, the Globe and Mail reported on Friday, citing multiple unnamed sources.

Vimpelcom’s top shareholder is Moscow-based Altimo, a company controlled by billionaire Mikhail Fridman, whom Forbes magazine ranks as the second-richest man in Russia.

The government is also concerned about potential spying or hacking because Wind’s network infrastructure was built by China’s Huawei Technologies Co Ltd, the Globe and Mail reported.

Huawei, founded in 1987 by a former People’s Liberation Army officer, has raised security concerns in the United States, Canada, Britain and Australia over alleged links between it and the Chinese state.

The company, the world’s second-largest telecommunications equipment maker, denies its products pose any security risk or that the Chinese military influences its business.

On Friday, the Canadian government did not immediately respond to an email seeking comment on the report on Wind. But Vimpelcom strongly denied any suggestion that its full ownership of Wind would increase the risk of a security breach.

Wind was started by Canadian entrepreneur Anthony Lacavera with the financial backing of Egypt’s Orascom Telecom, which Vimpelcom later took over.

Lacavera has indirect voting control of Wind, a stake Vimpelcom will buy out as part of the proposed deal that is awaiting approval.

That part of the deal is set to expire by the end of June, a source with knowledge of the matter said.

Lacavera was not immediately available to comment on the report.

Wind said its network had never been hacked, spied on or been the subject of any other security breach, and that it worked cooperatively and proactively with law enforcement.

Canada’s wireless industry is dominated by Telus Corp , BCE Inc’s Bell unit and Rogers Communications , which each have more than 7 million customers. Wind has about 600,000. (Reporting by Julie Gordon, Alastair Sharp and Louise Egan; Editing by Jeffrey Hodgson and Lisa Von Ahn)

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