Canadia’s Rogers Communications has agreed to buy smaller wireless player Mobilicity for C$440m.
In a statement today, Rogers confirmed the Mobilicity deal and said it will also exercise an option to acquire Shaw’s unused AWS-1 spectrum for C$100m…
Canadia’s Rogers Communications has agreed to buy smaller wireless player Mobilicity for C$440m.
In a statement today, Rogers confirmed the Mobilicity deal and said it will also exercise an option to acquire Shaw’s unused AWS-1 spectrum for C$100m to meet its growing mobile video needs.
Rogers said the Mobilicity deal was facilitated by The Catalyst Capital Group on behalf of managed investment funds. The C$440m purchase price is offset by tax losses of about C$175m, which Rogers will acquire, the company added.
The transaction is subject to working capital adjustments and court and Competition Bureau approvals.
Following the acquisition of Mobilicity and the Shaw spectrum, Rogers will divest some non-contiguous AWS-1 spectrum to number four player Wind Mobile in several provinces. Rogers and Wind will also swap AWS-1 spectrum in Southern Ontario to create contiguous spectrum for Rogers.
Mobilicity, which has been under creditor protection since 2013, is seeking the approval of the Ontario Supreme Court of Justice to proceed with the deal.
In an affidavit filed with the court, Mobilicity chief restructuring officer William Aziz said that after numerous discussions with potential suitors, the board of directors has decided that the Rogers offer is in the group’s best interests and also offers “significant value” to creditors.
“The Mobilicity Group understands that the transaction is supported by substantially all of its secured debt holders,” Aziz said.
According to a recent Globe & Mail report, Rogers’ rival Telus had also filed an acquisition proposal with the government for preliminary approval.
According to the affidavit, Rogers would finance part of the consideration as a loan to repay all of the operating entity’s funded secured debt – excluding first lien notes held by Catalyst Capital Group and associated funds. Either the parent holding company or Ernst & Young, Mobilicity’s court-appointed monitor, would retain all remaining funds, to be paid out to creditors on a pro rata basis.
Aziz noted that the main obstacle to a sale of Mobilicity has so far been Industry Canada’s refusal to approve a spectrum transfer to heavyweights Rogers, Telus or Bell.
“It is my understanding, given recent developments in the Canadian wireless industry and specifically recent auctions of spectrum, that Industry Canada no longer has the same concerns … about ‘undue spectrum concentration’ among certain wireless carriers in Canada,” he said.
Earlier this week, Obelysk, the holding company of Mobilicity founder John Bitove, said it had filed a proposal with the federal government and Industry Canada to convert the company into an MVNO, which would use the network infrastructure of its acquirer. Obelysk would provide capital funding for the transaction.
Obelysk stressed that the proposal’s advocates, who include Mobilicity employees, do not want to block the sale of the company or spectrum, but rather ensure that it “continues to provide pricing competition in an industry that does not have enough low-priced customer alternatives”.
Telus’ previous attempts to buy Mobilicity – for C$380m in 2013 and C$350m in 2014 – were blocked by the government.
