Canadian operator Telus has launched a new attempt to acquire struggling rival Mobilicity for C$350m (US$317.7m).
The deal has the support from Ernst & Young. The consultancy acts as court appointed monitor to Mobilicity, which has been in creditor…
Canadian operator Telus has launched a new attempt to acquire struggling rival Mobilicity for C$350m (US$317.7m).
The deal has the support from Ernst & Young. The consultancy acts as court appointed monitor to Mobilicity, which has been in creditor protection since last autumn.
The small telco said in a statement that an exhaustive process to find a buyer had resulted in five offers by mid December 2013, but “only the transaction with Telus was determined to be an acceptable transaction”.
Local media reports suggested previously that regional player Quebecor, owner of Videotron, was among the bidders, but that it had only offered around C$200m for the operator. Wind Mobile and Cogeco Cable had also been mentioned.
Mobilicity noted that an overwhelming majority of 95% of the holders of its 15% senior unsecured debentures due 2018 have already agreed to vote in favour of the proposed sale.
Telus has tried twice to acquire Mobilicity in the past, but both attempts were blocked by government body Industry Canada, which is worried about a lack of competition in the market if the leading players including Telus gain more market share.
In the meantime, Telus bought Public Mobile, another small operator that had struggled to survive without a strong partner.
But since Telus’ last attempt to buy Mobilicity a moratorium to transfer its spectrum licences has expired, potentially making a sale now easier than previously.
Mobilicity also noted that an auction of 700 MHz spectrum completed recently and that the government has announced plans for an auction of frequencies in the 2.5 GHz band.
“Mobilicity believes that the transaction will not affect competition in the Canadian wireless sector, satisfies the criteria considered by Industry Canada in determining whether to approve a transfer of spectrum licences and meets Industry Canada’s policy objectives in respect of utilising spectrum for advancing network expansion into non-urban areas,” Mobilicity said.
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.