Struggling Canadian minnow Mobilicity has not yet secured funding from its creditor or third parties to take part in the upcoming AWS-3 spectrum auction, due to start on 3 March.
According to a court filing published by its court-appointed monitor EY,…
Struggling Canadian minnow Mobilicity has not yet secured funding from its creditor or third parties to take part in the upcoming AWS-3 spectrum auction, due to start on 3 March.
According to a court filing published by its court-appointed monitor EY, Mobilicity, which has been under creditor’s protection since September 2013, has been holding talks with several parties that expressed interest in “a potential transaction or financing agreement”, as well as one of its main noteholders, Catalyst Capital Group.
However, the company has so far failed to strike a deal, the document said.
The carrier is keen to take part in the AWS-3 auction, in which 60% of the spectrum available will be reserved for smaller players and new entrants. But it has yet to secure the C$62m (US$50m) refundable deposit required to apply for frequencies in all the regions it operates.
The fees need to be paid in cash or by letter of credit by 30 January, which is also the expiry date of Mobilicity’s grace period against creditors.
The Ontario-based operator, which had 158,600 subscribers as of 31 December 2014, has asked the Ontario Superior Court of Justice for a further extension of the stay period of proceedings until 8 May.
Mobilicity has decided to opt out of the 2,500 MHz auction, planned for April, which does not set aside spectrum for new entrants. If it does not participate in the upcoming tender, other small operators such as Wind Mobile, Eastlink and Videotron could acquire the entire spectrum available.
In an interview with TelecomFinance in mid-December, Wind Mobile chairman Anthony Lacavera did not disclose whether the operator would take part in the auction, but said management was reviewing its options.
“If new entrants already have LTE spectrum, then we can potentially work with one of those players to acquire the spectrum we need, or we can participate in the upcoming auctions. We are assessing a couple of alternatives,” he pointed out.
The total reserve price for the spectrum is C$162.5m (US$140m). In the US, the ongoing auction of AWS-3 airwaves, which kicked off last November, has so far reached US$44.87bn, far beyond expectations.
Canada’s conservative government has had a policy over recent years of promoting competition in the Canadian mobile market to challenge the dominance of the big three operators: Bell Canada, Rogers, and Telus, encouraging the creation of a fourth telecoms carrier in each region.
However, critics of its fourth-carrier policy have argued that it puts off foreign investments and impose restrictions which are detrimental to a free-market economy.
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, Telus moved to acquire Mobilicity for C$380m, principally for the minnow’s spectrum.
However, business ministry Industry Canada blocked the acquisition and moved to introduce a new piece of regulation to prevent the country’s incumbent players from acquiring any more spectrum.
The department now reviews every spectrum transfer and can block a transaction if it is worried about the competition implications.
