Quadrangle Group, a significant investor in struggling Canadian operator Mobilicity, has filed a statement of claim against business ministry Industry Canada seeking damages of C$1.2bn (US$1.1bn).
Quadrangle has alleged that Industry Canada breached…
Quadrangle Group, a significant investor in struggling Canadian operator Mobilicity, has filed a statement of claim against business ministry Industry Canada seeking damages of C$1.2bn (US$1.1bn).
Quadrangle has alleged that Industry Canada breached the assurances it gave the private equity firm which formed the basis of why it “invested hundreds of millions of dollars” into Mobilicity.
Specifically, the investor has claimed that the government promised to “enforce foreign ownership rules, require incumbent carriers to provide roaming and access to cell towers at reasonable rates and terms, prevent unfair and anti-competitive competitive practices and allow spectrum to be transferred”.
It filed the lawsuit with the Ontario Superior Court of Justice.
Responding to the lawsuit Jake Enwright, the press secretary of Canada’s industry minister James Moore, commented: “Our government is committed to protecting Canadian consumers and we will continue to support policies that lead to more choice and greater competition in our wireless sector. As a result of our government’s actions, average wireless rates have fallen by 22 % since 2008.”
Quadrangle’s final point regarding spectrum transfers has been a particularly contentious issue. When Mobilicity won AWS frequencies in 2008, which were set aside for new entrants, there was a five-year moratorium on the sale of the licences. After that period expired in 2013, larger rival Telus moved to acquire Mobilicity for C$380m, principally for the minnow’s spectrum.
However, Industry Canada blocked the acquisition and moved to introduce a new piece of regulation called the Spectrum License Transfer Framework, as it did not want Canada’s big three operators – Bell, Rogers and Telus – acquiring any more spectrum.
Instead, it would like to see a fourth nationwide operator emerge as it believes the added competition would benefit consumers. The department now reviews every spectrum transfer and can block a transaction if it is worried about the competition implications.
Industry Canada has justified its decision by saying that 2008’s set-aside licences were never meant to fall into the hands of incumbent operators.
Mobilicity has been under creditor protection since April 2013. It has received numerous extensions, the latest one granting it a stay of execution until 26 September.
