Canadian wireless challenger Public Mobile has been sold to venture capital vehicle Thomvest Seed Capital and private equity firm Cartesian Capital which predict consolidation in the country in the near future.
The acquisition comes two days after…
Canadian wireless challenger Public Mobile has been sold to venture capital vehicle Thomvest Seed Capital and private equity firm Cartesian Capital which predict consolidation in the country in the near future.
The acquisition comes two days after Canada’s industry minister blocked Telus’ takeover of Mobilicity and said that he did not want spectrum owned by smaller players to end up in the hands of the market’s three dominant players – Bell, Rogers and Telus.
“Circumstances in the Canadian wireless industry have created a window for Canada’s fourth wireless player to emerge,” said Stefan Clulow, MD of Thomvest, which is now the operator’s controlling shareholder.
Paul Pizzani, a partner at Cartesian, said: “In the coming months, the Canadian wireless industry will see consolidation, and an important spectrum auction.”
“Public Mobile is well-positioned to grow in scale by pursuing these consolidation opportunities and by bidding for national spectrum in the 700 MHz auction.”
In April it was reported that Public had hired banks to engineer a sale of the telco – a price of between C$100m (US$99m) and C$150m (US$148m) was touted. The value of today’s deal was not disclosed by the parties.
In a memo RBC Capital Markets analyst Drew McReynolds commented: “What remains unclear is the extent to which the new controlling shareholder is committed to growth and/or wireless consolidation longer-term.”
Of the new operators to enter the market after the 2008 AWS auction, Public is the smallest. It operates in Ontario and Quebec and RBC Capital Markets estimates it could have as many as 250,000 customers, close to fellow recent entrant Mobilicity but fewer than Wind Mobile, estimated to have around 600,000. Wind CEO Anthony Lacavera has said he would like his operator to lead the consolidation and has already expressed interest in acquiring fellow recent entrant Mobilicity.
Arguably Public’s real value lies in its spectrum, which a consolidated fourth player may look to acquire. McReynolds pointed out that due to the nature of Public’s spectrum holdings it is not subject to the same five year moratorium on selling its licences that many of the other acquirers in that auction are. However, given the government’s rhetoric it seems unlikely that it would allow the airwaves to be transferred to an incumbent at this point in time.
