Canadian telco Telus has reportedly lost a court case against the country’s federal government over its spectrum transfer policies.
Last week, the Federal Court of Canada dismissed an attempt by the country’s third-largest telco to challenge rules…
Canadian telco Telus has reportedly lost a court case against the country’s federal government over its spectrum transfer policies.
Last week, the Federal Court of Canada dismissed an attempt by the country’s third-largest telco to challenge rules which prevent new entrants from transferring their frequencies to the dominant players, according to The Globe and Mail.
The court’s decision represented a final blow to Telus’ repeated efforts to acquire minnow Mobilicity, which has been under creditor’s protection since April 2013.
Mobilicity was set up in 2008, after acquiring AWS licences reserved for new entrants in Canada’s spectrum auction. At the time, the industry ministry moved to prevent new operators from selling licences to larger players for a five-year period.
However, when Telus first tried to acquire Mobilicity for C$380m in 2013, the government opposed the deal and introduced the Spectrum License Transfer Framework, which blocks the country’s three main operators – Bell, Rogers and Telus – from acquiring additional spectrum on an indefinite basis.
Telus reportedly argued that it had based its 2008 bidding strategy on the idea that it would eventually be allowed to acquire the set-aside licences, but the court ruled that the government did not state or imply that, after the five-year period, large players could freely buy spectrum.
The Canadian government, which has pushed for the creation of a fourth player in each region of the country, has since blocked further takeover bids by Telus for Mobilicity, voicing concerns that the deal would reduce competition and drive up consumers’ bills.
In January, the federal court ruled against a separate request by Telus to review the government’s decision to limit the amount of “prime spectrum” that the largest carriers were allowed to acquire in the 700 MHz spectrum auction held earlier this year.
In early September, US-based PE firm Quadrangle Group, one of Mobilicity’s main investors, filed a lawsuit against the industry ministry seeking C$1.2bn (US$1.1bn) in compensation.
Quadrangle alleged that the ministry breached the assurances it gave the private equity firm when it invested into Mobilicity, which in late November was granted a new extension of its grace period to repay creditors.
These assurances reportedly included conditions related to wholesale roaming, mobile tower sharing, foreign ownership restrictions and, that investors would be able to sell the business to the incumbent players after five years if necessary.
According to The Globe and Mail, the Ontario Superior Court of Justice will hear a motion by the government to dismiss the claim early next year.
Telus could not be immediately reached for comment.
