Canada’s third largest telco, Telus, is in discussions to acquire new entrant Mobilicity, according to a document obtained by the Globe & Mail.
Telus could pay between C$350m (US$345m) and C$400m (US$395m) for the fledgling operator, the report said…
Canada’s third largest telco, Telus, is in discussions to acquire new entrant Mobilicity, according to a document obtained by the Globe & Mail.
Telus could pay between C$350m (US$345m) and C$400m (US$395m) for the fledgling operator, the report said citing sources. The parties have reportedly signed an exclusivity agreement and the incumbent is looking to acquire 100% of Mobilicity, which bought AWS spectrum licences for C$243m (US$240m) in 2008.
Under the rules of that auction, the incumbent operators – Bell, Rogers and Telus – cannot buy spectrum acquired by the new entrants – Mobilicity, Public Mobile and Wind – until 2014.
When contacted, Mobilicity declined to comment on the report.
Public Mobile on the block too
The newspaper also reported that Public Mobile, the smallest of the new entrants, has hired bankers to engineer a sale. It could be worth between C$100m (US$99m) and C$150m (US$148m), and a couple of pension funds have looked over the books, according to a source cited in the report.
The developments follow Vimpelcom reportedly hiring UBS, in late March, to sell Wind Mobile. An analyst told TelecomFinance that Wind could sell for US$750m (US$740m), but that the parent may not be able to find a willing buyer. He said that it would be difficult to see anyone aside from incumbents coming in to acquire the new entrants due to the amount of capex required to remain competitive in the Canadian market.
He added that the government wanted four players in every region in Canada and would not want the larger players to acquire smaller operators, favouring foreign buyers coming in and investing in the new entrants.
Last summer, the government liberalised the laws on foreign investment in telcos to allow them to wholly own smaller telcos. But since then, the one foreign investor in Canadian telecoms, Vimpelcom, has begun the process of exiting the market.
