The narrative of embattled new entrant Mobilicity, which has been under court-ordered creditor protection since late 2013, is about to come to a strange and amazing conclusion.
According to The Globe and Mail, which received two documents detailing the prospective deal, both Rogers and Telus are in the process of bidding for Mobilicity’s business for a price around $300 million.
Back in 2013, Industry Canada blocked a prospective purchase of Mobilicity by Telus based on newly-implemented rules regarding undue concentration of spectrum. In short, Telus wanted Mobilicity for its spectrum, not its customers, and the government didn’t think that was a competitive business decision, so it blocked the deal and implemented rules that prevented similar deals – incumbents purchasing new entrants for their spectrum – from happening in the future.
Under this proposed deal, Rogers or Telus would purchase Mobilicity’s current business, which comprises around 157,000 customers and under 50 employees as of last count, and transfer some of the company’s wireless spectrum in the AWS frequency to Wind Mobile. Specifically, Mobilicity’s Ontario-based spectrum would be given to Wind Mobile, and retained in the company’s other regions, Alberta and British Columbia.
Industry Canada appears to be changing its tune, according to letters issued by Industry Canada and obtained by The Globe, because much of Mobilicity’s spectrum is considered highly valuable, and if integrated into Wind’s network would be better utilized “for the benefit of Canadians.” The letter also points to that fact that recent spectrum auctions have vastly changed the competitive landscape for new entrants, granting companies like Wind a windfall that can and will be used to build larger national networks with newer LTE technology. The deal would be especially beneficial to Wind because it was unable to obtain precious spectrum in the recent AWS-3 auction in Eastern Ontario.
It’s unclear how far along the deal is, and which incumbent is the frontrunner for Mobilicity’s business. Under the deal, the winner would acquire all of its shares, debts and customers.
Source: The Globe and Mail