Mobilicity recapitalisation vote moved to 3 July

Struggling Canadian cellco Mobilicity has delayed until 3 July the date on which its debtholders will vote on a proposed recapitalisation plan, replacing a previous date of 25 June, to ‘allow stakeholders the opportunity to review Industry Canada guidelines, regarding the transfer of wireless spectrum, prior to the vote.’ Earlier in the month larger rival Telus was blocked from acquiring Mobilicity under a federal policy not to allow the transfer of recent market entrants’ wireless spectrum to national incumbents.

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Bell-Astral deal deadline extended to 31 July

Bell Canada Enterprises (BCE) has extended its revised takeover offer for Astral Media to 31 July 2013, from a previous target date which passed on Saturday, as it awaits regulatory approval for the CAD3.4 billion (USD3.29 billion) transaction, CTVnews reports. The original takeover bid announced in March 2012 was rejected by the Canadian Radio-television and Telecommunications Commission (CRTC) over concerns it gave Bell an unfair level of control of the television market; the CRTC held a week of hearings earlier this month into the revised proposal. The sale has already been approved by the Competition Bureau, Quebec Superior Court and Astral’s shareholders.

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Rogers and Videotron ink LTE network sharing deal

Rogers Communications and Videotron have signed an agreement which will see the two companies build and operate a shared LTE network in and around Quebec and Ottawa. The 20-year deal, which also includes the sharing of some existing infrastructure, is a cost-saving arrangement under which Rogers and Videotron will maintain their own products, services, billing systems and customer data. Over the first ten years, Videotron will pay Rogers CAD200 million (USD194 million), and Rogers will pay Videotron CAD93 million, based on the fair value of the services each is providing, reports Reuters. Rogers is also set to pay CAD180 million to acquire Videotron’s unused spectrum in the greater Toronto area that the cableco acquired in a 2008 auction, although this is subject to regulatory approval. Rival operators Telus and Bell Mobility have had shared network agreements for several years.

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Telus’s acquisition of Mobilicity moves one step closer

The Ontario court which had been overseeing Mobilicity’s efforts to restructure its debts has approved Telus’s takeover of the beleaguered cellco. Mobilicity’s bondholders approved the proposed CAD380 million (USD366 million) deal last week, and now, following the court’s green light, the only regulatory hurdles remaining are for Canada’s Competition Bureau and Christian Paradis, Minister of Industry, to sanction the purchase.

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Telus agrees to buy Mobilicity

Nationwide Canadian operator Telus has entered into an agreement with Mobilicity to acquire the financially-struggling smaller cellco for CAD380 million (USD373.6 million), subject to regulatory, antimonopoly, shareholder and debt holder approval. If the deal is completed, the entire purchase price will be used to satisfy Mobilicity’s secured and unsecured debt. Mobilicity currently has around 250,000 customers on its network covering Toronto, Ottawa, Calgary, Edmonton and Vancouver.

William Aziz, Mobilicity’s chief restructuring officer, stated: ‘Mobilicity has been losing a significant amount of money every month. The financial strength of Telus will allow the business to be continued in a way that will benefit customers and employees. An acquisition by Telus is the best alternative for Mobilicity.’ Stewart Lyons, Mobilicity’s president, added: ‘A concern for our customers and employees led us to approach Telus, which has a reputation for a strong customer focus… I am confident Telus will look after our employees and our customers, mitigating any disruption to their service, while offering the best outcome for all stakeholders.’ If the transaction is approved, Telus says it will retain all 150 Mobilicity employees whilst integrating its operations over the coming months.

Mobilicity has begun proceedings in the Ontario Superior Court of Justice with a view to obtaining approval for a plan of arrangement under the Canadian Business Corporations Act. The plan of arrangement with Telus requires an affirmative vote by debt holders, after which Telus and Mobilicity will seek court approval of a transaction to make Mobilicity a wholly-owned subsidiary of Telus. Telus has entered into support agreements with ‘a significant number’ of Mobilicity’s debt holders who have committed to vote for the plan of arrangement pursuant to the terms and conditions of the support agreements. The statement adds that ‘Telus and Mobilicity anticipate an expeditious legal and regulatory review in view of the current circumstances Mobilicity is facing.’

However, necessary approval by the Competition Bureau and Industry Canada (the federal ministry responsible for telecoms) is by no means guaranteed, as the 2100MHz wireless spectrum bought by Mobilicity in 2008 is covered by regulations banning its transferal to a large incumbent wireless operator (i.e. Rogers, Telus or Bell) until early 2014, as part of a government strategy to raise competition. The authorities must decide whether to apply the letter of the law and block the transaction, or waive the condition and allow the purchase, which according to Telus’ chief marketing officer David Fuller, will ‘save Mobilicity from bankruptcy.’

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Bell Canada’s turnover creeps up 0.3%

Quadruple-play national operator Bell Canada has reported a slight year-on-year increase in its first-quarter revenues, which grew by 0.3% to CAD4.348 billion (USD4.334 billion) in the three months ended 31 March 2013, driven by an increase in service revenues of 1.3%, reflecting growth in wireless, TV, internet, media and business services such as data hosting and cloud computing. EBITDA increased 2.1% to CAD1.641 billion, driven by EBITDA growth of 11.6% at Bell’s mobile division and 21.0% at Bell Media, moderated by a 4.5% decline in wireline EBITDA. Bell Canada’s consolidated EBITDA margin expanded to 37.7% in Q1 2013 from 37.1% in 1Q12, due to strong wireless revenue flow-through, diminishing wireline voice erosion, subsiding wireline costs related to the growth of Bell’s ‘Fibe TV’ IPTV customer base, and continued wireline operating cost savings.

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Telus’s EBITDA up 5%; TV base climbs 29%

Canadian quadruple-play national operator Telus has posted its first-quarter 2013 results, in which revenue increased by 4.8% year-on-year to CAD2.76 billion (USD2.75 billion) while earnings before interest, tax, depreciation and amortisation (EBITDA) increased by more than 5% to CAD1.03 billion. During the three-month period Telus added a net 59,000 new post-paid mobile wireless customers, 34,000 TV subscribers and 16,000 fixed broadband internet customers, partially offset by ongoing expected losses of pre-paid wireless customers and wireline subscriptions. Telus’s total wireless base of 7.7 million at the end of Q1 2013 was up nearly 5% from a year earlier, and the Telus TV subscriber base of 712,000 climbed 29% year-on-year, while high speed fixed internet connections rose nearly 7% to more than 1.3 million at 31 March 2013.

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Mobilicity starts restructuring process

Canadian cellco Mobilicity (the trading name of Data & Audio-Visual Enterprises Holdings) released a statement on 26 April 2013 announcing that it will ask its debt holders to approve a restructuring plan that involves a recapitalisation of the company and a potential sale. Mobilicity obtained two orders of the Ontario Superior Court of Justice (Commercial List) authorising it to hold meetings on 21 May 2013 at which two arrangements will be voted on by security holders pursuant to the Canada Business Corporations Act. The relevant stakeholders entitled to vote at the meetings will be asked to approve both a recapitalisation plan and a sale plan. The two proposals are mutually exclusive, though the statement continued that: ‘both plans are being pursued in parallel so that one of the two plans can be implemented on an expedited timeline… If both plans are approved and the sale plan cannot be completed on the terms contemplated, then the recapitalisation plan would be engaged.’

The sale plan provides a structure for an as yet to be determined purchaser to acquire all of the outstanding shares of Mobilicity. The purchase price received would be applied to repay all of the outstanding first and second lien debt of Mobilicity, with the remainder being used to repay outstanding unsecured debt securities issued by Mobilicity.

Under the proposed recapitalisation plan, the share capital of Data & Audio-Visual Enterprises Holdings would be reorganised, certain existing second lien notes would be repaid and Mobilicity would receive additional liquidity to enable it to continue as a going concern, continuing to service its existing subscribers and dealers in its coverage areas.

According to TeleGeography’s GlobalComms Database, the company is currently owned by Obelysk (16.1% equity, 62.6% voting share), which is the diversified investment arm of Toronto entrepreneur John Bitove, and Quadrangle Capital Partners of New York (75.9% equity, 22.4% voting share), which is a global investor in the telecoms and media sectors.

One party with a vested interest, Catalyst Capital Group, released a statement on the same day as Mobilicity’s communication, saying that it ‘is encouraged to see that today’s court orders maintain the [debt holding] parties’ substantive rights. However, Catalyst is concerned that it is hard to see how the proposed plans would provide the capital required for Mobilicity to grow its business, acquire spectrum or provide viable, sustainable services to Canadian consumers… Catalyst is very concerned that neither the new financing nor the proposed plans will benefit creditors or result in a successful sale of Mobilicity, which, according to Mobilicity’s court papers, has apparently been attempted for many months… Catalyst wishes to see Mobilicity restructured in a way that fully respects its existing stakeholder rights and interests and that leads to a successful and viable major mobile player in Canada. Catalyst intends to take an active role in the restructuring with a view to achieving that result.’

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Rogers posts record quarterly results

Rogers Communications has posted revenue of CAD3.03 billion (USD2.95 billion) for the first quarter of 2013, up 3% year-on-year as sales growth in each of its wireless, cable and business divisions offset a decline in media revenue. Adjusted net income for the period grew 15% year-on-year to CAD414 million. Rogers added 32,000 post-paid wireless subscribers during the quarter, below the 47,000 added during the first quarter of 2012, amid increased competition from established rivals Bell and Telus, as well as from newcomers Wind Mobile, Mobilicity and Public Mobile. However, the company’s wireless division activated and upgraded approximately 673,000 smartphones overall, compared to 642,000 in the corresponding period last year. This growing take-up of smartphones helped produce a 3.5% year-on-year increase in monthly blended ARPU to CAD59.68, some 45.3% of which is now derived from data services (up from 38.9% in the first quarter of 2012).

‘The record first quarter levels of both revenue and adjusted operating profit which Rogers reported represents a solid start to 2013,’ said Nadir Mohamed, president and CEO of Rogers Communications. ‘The positive operating trends which we achieved during 2012 are carrying into the new year as evidenced by the continued improvements in ARPU, data and internet revenue, churn and margin profiles which we reported for the first quarter of 2013.’

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SaskTel expands LTE network

Saskatchewan telco SaskTel has announced that it has completed another 22 different 4G wireless network infrastructure enhancement projects across the province in March. The company says it is using a variety of infrastructure options to enhance its wireless service based on usage patterns and demands. In addition to traditional towers, SaskTel says it is also installing carrier antennae to increase coverage strength inside buildings. The communities to have received 4G network enhancements in March were: Regina, Saskatoon, Warman, Christopher Lake, Cowessess First Nation, Dalmeny, Chaplin, Herbert, Kelliher, Cudworth, Osler, Bruno, Shaunavon, Kyle, Estevan, Nekaneet, Mosquito First Nation and Goodwater.

Thanks to TeleGeography for this article