June 4, 2013 8:38am
The Conservative government’s Industry Minister, Christian Paradis, has announced his intention to deny a license transfer request from TELUS to purchase Mobilicity’s AWS spectrum before the appointed due date.
In statement this morning, the Minister said, “Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents. We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit.”
During the 2008 spectrum auction, during which the government raised $4.25 billion, it was codified that no spectrum set aside for new entrants — those that would eventually form WIND Mobile, Mobilicity and Public Mobile — would be transferable for five years. This approbation expires in early 2014, but Paradis implied that a spectrum transfer of this nature — from a new entrant to an incumbent — would be disallowed indefinitely.
The move, ostensibly to ensure a competitive wireless market throughout the country, will be further clarified in the coming weeks, but the statement claims that “proposed spectrum transfers that result in undue spectrum concentration-and therefore diminish competition-will not be permitted. This policy will apply to all commercial mobile spectrum licences, including the 2008 AWS licences.”
As for the TELUS-Mobilicity deal, it looks dead — at least for now. There is no value to the country’s second-largest carrier in moving forward with the $380 million deal if the spectrum is not included.
We’ll wait to see what TELUS says later today, but without the company as a lifeline it looks like Mobilicity may have to voluntarily enter bankruptcy or go through with a major restructuring deal — if their debt holders allow it. Mobilicity is reportedly losing around $1.5 million every week, making for a seriously hard sell. Especially now.
Update: TELUS has issued the following statement on their proposed, but denied, acquisition of Mobilicity:
“Today’s decision is unfortunate for Mobilicity’s 250,000 customers, 150 employees and debtholders, who now face considerable uncertainty due to the pressing financial challenges facing the company. TELUS will drive on with our proven strategy that has served us so successfully over the years. We will continue to focus on our sustained investment in wireless infrastructure, broadband data services and putting our customers first.”