Two bidders are reported to be vying for Canadian operator Mobilicity, which has been in creditor protection since last autumn.
Nationwide telco Telus has come back in for the operator and has made a C$350m (US$313.9m) proposal, while regional player…
Two bidders are reported to be vying for Canadian operator Mobilicity, which has been in creditor protection since last autumn.
Nationwide telco Telus has come back in for the operator and has made a C$350m (US$313.9m) proposal, while regional player Quebecor is also interested but is only prepared to bid C$200m (US$179.3m), sources familiar with the situation told The Globe and Mail.
The disparity between the two offers can be explained by the regulatory difficulties Mobilicity faces in transferring its spectrum licences to a buyer.
The government department responsible for telecoms, Industry Canada, has taken an interventionist approach to stoking competition in the mobile market. This includes trying to prevent Mobilicity’s spectrum from ending up in the hands of Telus, one of the country’s three largest operators.
Industry Canada introduced the Spectrum License Transfer Framework last year in response to Telus’ initial C$380m offer for Mobilicity. The department now reviews every spectrum transfer and can block a transaction if it is worried about the competition implications.
Mobilicity is currently in the courts trying to circumvent the regulation using the Companies’ Creditors Arrangement Act (CCAA), which could allow it to sell its frequencies to Telus without government approval. However, local reports have suggested Mobilicity’s motion is something of a long shot.
Quebecor, which owns regional operator Videotron, would not face the same regulatory difficulties as Telus if its bid was accepted. The Quebecois operator is considering expanding nationwide, beyond south-eastern Canada, the report said.
However, its C$200m offer would not be enough to pay Mobilicity’s first-lien debt holders.
Wind Mobile and Cogeco Cable were also reported to have taken an interest in Mobilicity’s sale process, but neither is considered to be a serious bidder at this point.
Mobilicity went into creditor protection at the end of last September due to mounting debts and its failure to sell its frequencies. 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.
