Struggling Canadian telco Mobilicity has filed a legal document asking a court to force through the sale of its spectrum licences in the face of government opposition.
In a submission to the Ontario Superior Court of Justice, the mobile operator – in…
Struggling Canadian telco Mobilicity has filed a legal document asking a court to force through the sale of its spectrum licences in the face of government opposition.
In a submission to the Ontario Superior Court of Justice, the mobile operator – in creditor protection – requests that the judge considers section 11.3 in the Companies’ Creditors Arrangement Act (CCAA) in relation to the sale of its frequencies.
The clause states that: “On application by a debtor company and on notice to every party to an agreement and the monitor, the court may make an order assigning the rights and obligations of the company under the agreement to any person who is specified by the court and agrees to the assignment.”
The act could allow Mobilicity to circumvent the government’s Spectrum License Transfer Framework, introduced last year, which is designed to stop the three largest mobile operators – Bell Canada, Rogers Wireless and Telus – from acquiring more frequencies from rivals.
Last June the business ministry, Industry Canada, blocked Mobilicity’s C$380m sale to Telus, to stop the transfer of airwaves. Telus is reported to still be interesting in the operator.
This latest move by Mobilicity is a long shot, according to sources cited by The Globe and Mail. There are precedents for affirming the jurisdiction of government regulators in such scenarios, the paper said. Citing an unnamed source, it added that the CCAA was not designed to protect investors’ interests ahead of broader government policy objectives.
Mobilicity paid C$243m for the spectrum and agreed to a five-year moratorium on selling its licences, which ends this February. However, under new rules introduced last year, Industry Canada can block the transfer of frequencies after this point.
The government argued that spectrum auctioned to new entrants to the market such as Mobilicity was never intended to end up in the hands of the big three operators.
Mobilicity went into creditor protection in early autumn due to mounting debts and its failure to sell itself to Telus. It has received extensions to the duration of its protection multiple times. The creditor protection is now due to expire on 18 February.
EY is acting as the court-appointed monitor to assist the mobile operator and its stakeholders.
