Feds Study Telus, Rogers Bids for Mobilicity; Founder Proposes Alternative MVNO Strategy

Canada’s two largest mobile operators by users, Rogers and Telus, have recently tabled takeover offers for financially struggling smaller cellco Mobilicity, although any potential deal is subject to federal government approval under strict wireless spectrum transfer rules aimed at preserving competition, the Financial Post reports. According to sources quoted by the paper, a group of creditors and directors of Mobilicity met over the weekend to assess offers from both national operators exceeding the previous CAD350 million (USD285 million) offer from Telus rejected last year by Industry Canada under the spectrum transfer rules designed to prevent nationwide incumbents gaining smaller competitors’ 3G/4G frequencies. Telus spokesperson Shawn Hall confirmed that the company remains interested in purchasing Mobilicity and put forth a proposed transaction to Industry Canada for review, while talks remain ongoing and confidential, with Rogers currently unwilling to comment. A key part of a potential deal would involve agreeing a free-of-cost transfer of Mobilicity’s AWS-1 frequencies to mid-tier cellco Wind Mobile post-purchase to circumvent the government’s competition-guarding policy. Telus confirmed that its latest proposal includes this free-transfer clause, and although this idea has previously been rejected by Industry Canada, there could be federal backing for a move bolstering Wind’s position following March’s AWS-3 spectrum auction in which Wind raised its profile against nationwide players Rogers, Telus and Bell by winning set-aside licences in Ontario, Alberta and British Columbia for minimal prices after Mobilicity failed to find the funding to participate. So far, the government is remaining opaque on the latest prospects for a deal, with Minister of Industry James Moore’s press secretary Jake Enwright saying on Sunday: ‘We’ve had a clear position on these types of transactions for some time. We’ll not approve spectrum transfer requests that decrease competition in the wireless sector.’

Meanwhile, a separate proposal has been aired by Mobilicity founder John Bitove – backed by his holding company Obelysk – and a group of Mobilicity employees who have made an offer to Industry Canada to become a mobile virtual network operator (MVNO). Mobilicity itself is not involved in the MVNO bid.

Mobilicity has around 157,000 remaining subscribers and a network of around 450 3G cell sites in Toronto, Vancouver, Edmonton, Calgary and Ottawa, operating under court-sanctioned creditor protection since September 2013 as it continues to seek an optimal exit strategy for creditors and investors.

Thanks to TeleGeography for the article. 

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