Canada’s third largest mobile operator has admitted defeat in its latest attempt to take over indebted smaller rival Mobilicity for C$350m.
Telus withdrew from the process as unspecified conditions of the deal had not been met, according to a source…
Canada’s third largest mobile operator has admitted defeat in its latest attempt to take over indebted smaller rival Mobilicity for C$350m.
Telus withdrew from the process as unspecified conditions of the deal had not been met, according to a source cited by The Globe and Mail.
In April Telus launched its third bid to buy Mobilicity, which is in bankruptcy protection, in spite of the government rejecting the transaction twice before on competition grounds.
Business ministry Industry Canada does not want to see Mobilicity’s AWS frequencies transferred to one of the big three operators, which are already spectrum-rich. Instead, it wants the airwaves to go to a viable fourth player as it believes this will improve competition in the market.
Mobilicity launched a restructuring in April 2013 and has been pursued by Telus ever since. The interest in the company has allowed Mobilicity to get its bankruptcy protection extended numerous times, but now Telus has bowed out of the process it is left without an obvious white knight.
The proceeds from any sale would go to Mobilicity’s bondholders, which are owed hundreds of millions of dollars.
Mobilicity’s spectrum was set-aside for new entrants in the 2008 auction. There was a five-year moratorium on the sale of the licences. Since that expired the government has made it clear that those airwaves should not end up in the hands of the already-dominant telcos.
Following Telus’ latest attempt news emerged that the Vancouver-based telco could be effectively blocked from Canada’s auction of 2.5 GHz licences, scheduled for next year.
The government was reported to be unhappy at seeing Mobilicity’s AWS spectrum tied up in a legal battle when it could be in the hands of a new challenger.
Industry Canada was reported to be considering redesigning the 2.5 GHz auction in favour of new entrants, which could effectively exclude Telus from the bidding process.
The tender is seen as particularly important for Telus as it does not have a significant amount of 2.5 GHz frequencies, whereas rivals Bell and Rogers are close to their caps. That leaves it as the only sizeable player which can acquire a significant amount of spectrum in the auction.
