33

Mobilicity says TELUS has officially terminated acquisition plans

mobilicityplanswall
Canada’s Industry Minister Christian Paradis denied TELUS’ $380 million bid to acquire Mobilicity last week, plus also declared that the upcoming 700 Mhz auction would be delayed until January 2014.

Upon hearing the news, which at one-time TELUS said “will benefit our customers and employees,” the carrier noted that the “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.”

TELUS officially decided to drop the hammer today and let Mobilicity’s “considerable uncertainty” come a bit sooner than later. In a press release “Data & Audio-Visual Enterprises Holdings Inc. and its affiliates (collectively, Mobilicity) today announced that TELUS has exercised its option to terminate the TELUS Acquisition Plan. Mobilicity also announced that it will now pursue its previously announced recapitalization plan, which will be voted on by debtholders at a meeting on June 25, 2013.”

WIND Mobile and possibly Public Mobile have expressed interest in merging with Mobilicity, however previous reports have indicated that Mobilicity is currently $450 million in debt and losing an incredible $30 million every month.

Source: CNW

  • Accophox

    So, at this point, they’re probably negotiating with Wind, but not getting the amount that the debtholders want, hence why they’re going to vote on recapitalization instead of “soliciting bids from potential buyers”.

    Mobilicity, it was nice knowing you… I highly doubt that recapitalization is going to save the company.

    (also: if they recapitalize, there’s pretty much no chance for them to participate in the spectrum auction – where are they going to get the money from, aside from taking out another loan… that their main debtholders are going to vehemently deny)

    (edit: worthwhile mentioning – if the recapitalization plan is voted against, there’s a very good chance that they’ll soon choose to liquidate remaining assets.)

  • Wowzers

    Worst government decision ever…

    • Doof

      Explain.

    • skullan

      Disagreed. While I feel horrible for the Mobilicity employees, the Government would be working against its own agenda if they gave the spectrum to the big 3.

      Personally, I think Industry Canada needs to have a full audit performed on the existing 850/1900Mhz spectrum to understand the utilization. If they do not appear to be using it realistically (as in they only use 20% of what they license) then it should be taken away from the company and put back on the auction block.

  • Super_Deluxe

    Personally I’d rather them acquire Mobi than Bell and Rogers.

  • Rich

    Embarassing for Telus. It really was a long shot.

  • Thomas C. Riddell

    When they go under Wind will Buy them for song

  • mccans

    Sad to say, but they just didn’t keep up with Public and Wind for expanding coverage. That was their demise.

    • chris

      That, and the lack of a post-paid option. A $300 tab isn’t much, but it helps.

    • deltatux

      While that may be true, at the same time it’s great for those of us who are smart and don’t like subsidies anyways. WIND’s “tab” is really not much different from a 3 year contract. If Mobilicity had coverage in my new place, I would have stuck with them instead of jumping to WIND. I had a much better experience with Mobilicity than I had with WIND.

    • chris

      Oh I don’t doubt that, and I agree with you 100% regarding the subsidies. But the fact is, as a business model, it’s very hard to compete on a full scale without offering subsidies while others do. I respect the fact that Mobilicity kept with the full prices, just like the laptop and tv industries, but it just didn’t work on a mass market scale in Canada, hence why Wind switched over a couple years ago. I think that it’s at the very least a part of why Wind has been more successful. Not the whole story, but part of it. You have to take every kind of subscriber into account, not just those in your situation. The general public seems to like cheaper things upfront, even if it’s not good for them.

  • mick

    Could Mr Thomson be the secret lender ?

  • Anthony W

    Right from the start when Mobilicity came in, I told my friends that they are not going to last. It sounds exciting for consumers to get low fee everything plan but it’s not realistic. First they need to find a way to gain back around $250 millions from the spectrum auction they spend on. They have spend tons of money having to hire employees, open stores, pay for ads, and etc. Don’t even talk about expanding network as they have no money. It just looks like they just came in then look for quick sell out in the future like now.

    • deltatux

      They don’t have their own stores, all the Mobilicity stores are just franchisees.

  • hoo dat

    WIth the shape they’re in I doubt recapitalisation will work. They’re losing money to the tune of $1M per day it’s hard to see how they can pull themselves out of this mess. A buyout or merger is pretty much the only chance they have.

  • Liberal Phone Person

    30m in operations costs is bloody outrageous. That’s 120 dollars per customer. Where the hell is that money going?

    • CADDMan71

      Maybe Mike Duffy could find someone to help them with a loan.

  • CADDMan71

    Anyone thinking that Wind Mobile is in any position to purchase Mobilicity first needs to explain how they’re going to solve their own SIGNIFICANT debt problems. From the Globe and Mail March 6, 2013….

    ‘Orascom (which is majority-owned by Amsterdam-based VimpelCom Ltd.) announced that it would restructure a loan to Globalive and forgive roughly $450-million worth of interest.’ and ‘The principal balance left on its loan to Globalive, which remains due, is about $770-million’. That means that without the loan forgiveness Globalive (aka Wind Mobile) would be in debt of AT LEAST $1.22Billion. How the heck is that possible???? Who is running that company?

    The amount forgiven was more than Mobilicity’s total debt and what remains is still TWICE what Mobilicity presently owes. If these two complete business failures merge then they will become the definition of ‘Two Wrongs Don’t Make a Right’. And the FACT is that neither company has EVER been able to even remotely turn a profit. This is unfortunate as early on I really hoped we’d have true competition in the Canada wireless market. Too bad it just turned into a repeat of the Canadian startup airlines debacle of the ’90s.

    • Vin Diesel’s cousin

      You actually believe that any wireless company that would start out in Canada would be given equal footing? How naive. Globalive and Mobilicity are going up against three companies that not only own wireless; they own almost everything media related in this country. They own sports teams, TV stations, stadiums, newspapers and more. We’re talking companies whose profits total in the billions and rising. Then we have people posting like yourself who truly believe that these companies could run things right out of the starting blocks. Rome wasn’t built in a day.

    • ABCONMan

      That would be Bell and Rogers who own media, sports teams, and venues.

      TELUS doesn’t own anything but it’s own infrastructure.

    • Techie01

      Telus owns Naming Rights, Convention Centers and JR A sports teams so try again.

    • CADDMan71

      So what is it, not equal footing because the startups aren’t as big as the incumbents, like you’ve said above, or because they don’t have reception, as you’ve said below?
      The size of their company should have no bearing on their success or failure, it’s all how they execute their business plan. Mobilicity was created to be sold, ask anyone in the industry and they’ll say that’s been common knowledge since 2009. Wind bit off WAY more than they could chew. Ask anyone in the industry and they’ll say that’s been common knowledge since 2009.
      As for reception, that could have been easily solved by negotiating a proper ‘soft’ handoff roaming agreement instead of the cheap ‘hard’ handoff agreement they signed with Rogers. Going with a soft handoff agreement, new providers would have saved themselves from the reputation of having little to no coverage when they started by allowing customers to handoff from their towers to Rogers, and back without being cut off, but that didn’t happen. Oh, and don’t get me started about how Wind would charge customers for roaming while still in their Home Zone. Wind most definitely has better coverage now, problem is the reputation remains.
      Mobilicity’s demise was inevitable, Wind’s could have been prevented.

    • Vin Diesel’s cousin

      Again my point being; can we have competition in Canada? The answer is no. Better business plan? Are you serious? First Wind had to fight with CRTC regarding foreign investment. Investment that they needed to start up in this country. Then you can talk about how it was only until recently that they couldn’t use certain phones on their network like an iphone perhaps. While a companies success isn’t dependent on the iphone; it certainly helps when it’s one of the best selling phones for the oligopoly that is Robelus. I own a nexus 4 before you make up another quote from what I wrote. Then you can add in the fact that Rogers and Bell offer other services that can be bundled. I could go on and on. So you’re talking about a business model? Clearly you have no clue what you’re talking about if you think any business model could compete when you’re trying to build a network and offer cheaper services when the big 3 have been maximizing profits for years by ripping us off. That’s like someone from a third world country with no schooling, limited funds and expecting them to succeed in an industrialized country. No matter how many facts or figures you put in; you can’t ignore reality son.

  • CADDMan71

    Quite possible the only thing worse than Mobilicity & Wind’s business plans to make a profit was this ATTEMPT at marketing. Probably lost more customers than gained.

  • Vin Diesel’s cousin

    It was a decision made in the best interest of the consumer for a change. People keep on complaining about the new entrant’s reception. These are new companies going up against 3 companies who have monopolized wireless for decades. Then the rules are stacked up against them so they can’t build on their infrastructure. I was in Port Union the other day and I couldn’t get any signal with Wind. Apparently, it’s protected lands or some garbage. However, you can get great signal with Bell/Rogers/Telus. How fair is that? Now they’ve pushed back the spectrum auction yet again.

    • CADDMan71

      You really need to get your facts straight when ranting…

      ‘they can’t build on their infrastructure’…the fact is that none of the incumbents have prevented any of the new startups from building on their towers. The problem has been the local municipal governments preventing the building of new towers or upgrading of existing. Others on this site have blamed the federal government for this, but the fact is the federal government has zero jurisdiction when it comes to public consultation on local matters and if the people don’t want towers, tough luck. I’ve had to deal with the same problem when working with the big 3, so don’t think that they’re having it any easier.
      ‘protected lands or some garbage’, what kind of a comment is that? Don’t know the area your talking about, but are you saying screw the environment and just build towers because you can’t get reception?

    • Vin Diesel’s cousin

      Who are you quoting? My point which you are making in one statement and don’t get in the other is that the entrants essentially have their chips stacked against them. They offer cheaper services but are building on their infrastructure at the same time. Then the oligopoly that is Bell/rogers/telus start up sub brands to make it even more difficult for the new entrants. The sub brands while being cheaper than Robelus’ mainstream plans offer the consumer better service because they’re subsidiaries and have access to everything that the big three have. So who would you go with? Robelus has much more revenue because they made it by ripping us off for decades with system access fees and such.
      No I’m not saying screw the environment to put up towers but that’s another example of how a growing company would not be able to compete.

    • CADDMan71

      When I quoted you, I thought you had implied that the new entrants weren’t allowed to build on existing towers that the big 3 had already constructed, hence their lack of coverage you described in your next sentence.

      Regarding the rest of your response, what you’re describing as unfair is called capitalism. Those who exist want to expand. Those who want to start need to take away customers. Those who exist then adjust to retain their customers. If the new entrants can’t figure a way making their own niche in the market, tough luck. If you think it can’t be done (as it appears you’ve already given up) then think of WestJet. They started up small, built up a reputation, and expanded as economics dictate. Mobilicity never had a plan to expand, Wind thought it could compete nationally right away and is now paying the price with a huge debt.

    • Vin Diesel’s cousin

      you can’t quote someone if they didn’t say it. First and foremost. Then at the same time I, like most people don’t like to be ripped off. So while you’re talking about the new entrants, please understand that Robelus was forced to lower their pricing because of these new companies. However, you can expect Robelus to raise their rates and continue screwing the consumer as soon as the new guys are gone. You can’t compare a west jet to this situation as it’s only competition is pretty much air canada. We’re talking about media barons who own and control a large chunk of what you see and hear in this country. It’s only natural for Wind to incur a huge debt because they are starting out. You build a business and for the most part you’re in debt. A restaurant for instance starts out by getting permits, zoning, building it, furnishing it, adding the necessary things but it can’t make revenue because it’s closed. Then eventually you’ll turn a profit when people start going. However, imagine your restaurant is across the street from a more well known chain type restaurant in a town where it was the only restaurant.

    • CADDMan71

      Firstly, here’s the quote you say you didn’t make that I mentioned.

      “Then the rules are stacked up against them so they can’t build on their infrastructure. I was in Port Union the other day and I couldn’t get any signal with Wind.”

      Secondly, you have a very short memory about the airline industry in Canada in the ’90s and early 2000s. We used to have Wardair, Canadian Airlines, and Air Canada as the big 3 which then became just Air Canada because the other 2 couldn’t compete in Canada’s limited market. WestJet arose from the new startups that included Roots Air, Greyhound Airlines, Canada 3000, Canada West Airlines, Harmony Airlines, and the list goes on.
      Thirdly, I know how businesses work. I understand that they all start off with debt, but it’s manageable debt that has a foreseeable end. Do you honestly see Mobilicity and Wind’s debt as manageable in Canada’s limited market? Regarding your restaurant example, most restaurants don’t make it because it’s reputation that makes them succeed or fail, funny how you used that example in this instance.

  • ABCONMan

    So long, Mobilicity!

  • kroms

    I call BULL SH$T on the $30 Million a month loss.

    Remember folks , these people with suites always like to play the #s game when it come down to Money. It cost them NOTHING to over exaggerate the figure.

  • Conception

    I need to ask fellow Syrups a couple of questions:

    If Mobilicity goes out of business, can I still keep and transfer my phone number to another carrier? I bought my phone outright at the beginning and was never locked. It also has the ability to go on several networks so I’m not worried about that. I just don’t want to lose my phone number…

    I haven’t been in this situation before with a carrier so I’m not sure how it all works if Mobilicity dies. Would you wait to see what happens with Mobilicity in the next few months or would you port over now to another carrier now? Just curious…

Trending News

Other Articles