TELUS on the Mobilicity acquisition: “We don’t believe this transaction will have a significant impact on competition in our industry”

Earlier today it was revealed that TELUS has agreed to acquire Mobilicity, legally known as Data & Audio-Visual Enterprises Holdings Inc., for $380 million. The deal is expected to close by June 10th, 2013 and TELUS would integrate Mobilicity’s 250,000 subscribers and 150 employees into its organization.

The agreement still needs to be approved by all regulatory bodies — the Competition Bureau and Industry Canada — and Mobilicity’s debtholders. Industry Minister Christian Paradis acknowledged the potential transaction, but stated “The government will take the time required to review the proposal carefully.”

Jeff Fan, analyst from Scotiabank, communicated a note to his clients that several situations might occur, such as the government delaying the upcoming 700 MHz spectrum auction. However, his clear message was that, “in our opinion, the situation is getting messier for the government. The bottom line is this makes it less likely that a strategic investor will step up to consolidate the new entrants and participate in the auction to create a stronger fourth operator.”

In 2008 when the spectrum auction closed – which saw WIND Mobile, Public Mobile and Mobilicity all enter the wireless space – the Industry Minister declared, “Our government’s intentions are clear: to achieve lower prices, better service and more choice for consumers and business. We believe in relying on market forces to the maximum extent feasible because competition benefits consumers, and consumers benefit most when markets are as competitive as they can be.”

Fan also said that “The government may not approve the transaction but, in our view, it does not matter. We believe the best deal for Mobilicity (and Wind) stakeholders is a sale to one of the incumbents. If the government turns down the TELUS/Mobilicity transaction, Mobilicity will likely either fail or receive a lower offer from a strategic investor.”

TELUS posted a note on their corporate blog that said “we don’t believe this transaction will have a significant impact on competition in our industry… If approved, our agreement to acquire Mobilicity would be good news for their 250,000 customers. Importantly, their wireless service would continue without the risk of disruption. Moblicity’s customers would also join Canada’s most satisfied and loyal customers at TELUS and Koodo.”

We’ll have to wait and see how this all shakes out. An email to us from TELUS PR stated “TELUS will continue with the Mobility brand, customer rate plans and network.” So this gives hope that current Mobilicity subscribers will have their low-cost monthly plans grandfathered if/when the deal is finalized.