Mobilicity and WIND reportedly sought merger before AWS-3 auction deadline

WIND Mobile and Mobilicity were covertly engaging in merger talks right up until the January 30th deadline to submit deposits for the upcoming AWS-3 auction, set to begin on March 3rd.

Financial Post learned that Mobilicity has been seeking more creative ways to get out of its financial conundrum, even as it moves to raise the capital necessary to submit bids in the upcoming auction, for which it has access to some 30Mhz of set-aside spectrum.

The Post found that WIND’s leadership did not agree with Mobilicity’s purported valuation, which internally remains at the level it was when TELUS offered $350 million for its assets and spectrum back in mid-2013. Mired in debt and currently under court protection from its creditors, Mobilicity nonetheless believes its spectrum holds tremendous value, and is looking for ways to contravene the government’s legal decision to block the transfer of its holdings to an incumbent like TELUS.

Anti-collusion laws prevent WIND and Mobilicity was continuing their negotiations until after the announcement of the provisional spectrum auction winners, slated for March 6th, but Mobilicity’s counsel has been attempting to find ways to sell the spectrum to another player in the meantime. Mobilicity’s various creditors are at odds about a restructuring deal that would see company assets such as spectrum transferred to a new buyer under court protection, as a court would still have to approve the sale, and the transfer could, and probably would, be blocked by Industry Canada.

It appears that WIND continues to be Mobilicity’s best chance at survival, and with the AWS-3 auction presenting an opportunity for both companies to purchase high-value spectrum for a bargain, the wireless industry is primed for big changes in 2015.

Read more: What does TELUS want with Mobilicity? It’s all about the spectrum

[source]Financial Post[/source]