Industry Canada minister Christian Paradis has decreed that Telus will not be allowed to acquire challenger operator Mobilicity should a deal include the transfer of spectrum.
Mobilicity, currently struggling with its debt, was one of a number of…
Industry Canada minister Christian Paradis has decreed that Telus will not be allowed to acquire challenger operator Mobilicity should a deal include the transfer of spectrum.
Mobilicity, currently struggling with its debt, was one of a number of operators to purchase five-year AWS spectrum licences in 2008. Telus agreed to buy Mobilicity for C$380m (US$374m) last month, its key selling point being its spectrum assets.
“Spectrum set aside for new entrants was not intended to be transferred to incumbents,” Paradis said today.
“That is why I will not be approving this—or any other—transfer of set-aside spectrum to incumbents ahead of the five-year limit.”
From 2014 this spectrum can be sold, but Paradis said that he would still be looking to encourage competition. “Proposed spectrum transfers—including AWS spectrum transfers—that will result in undue concentration and therefore reduce competition will not be permitted,” he said.
Applications for licence transfers will be reviewed case-by-case and issued publicly for the sake of transparency.
Earlier this year Rogers Communications agreed to buy unused AWS spectrum from cableco Shaw Communications when the moratorium was up, and last week it agreed a similar arrangement with French Canadian quad-play operator Videotron.
In light of the announcements Paradis said Canada’s 700MHz spectrum tender, scheduled for November, would be pushed back to January 2014 so companies had time to digest the developments.
Paradis concluded by saying “our government will not hesitate to use any and every tool at our disposal” to promote at least four wireless providers in every region of the country.
RBC Capital Markets analyst Drew McReynolds said the minister’s announcement was not a major surprise, but that not being able to acquire Mobilicity will not adversely affect Telus.
“The denial of the Telus-Mobilicity deal along with stricter spectrum transfer rules and a delay in the 700 MHz timelines do increase the likelihood of the government ultimately meeting its four-player objective,” McReynolds said in a note.
Mobilicity, which launched a restructuring in April, previously said it would pursue a sale process first, and if the business could not be sold then a recapitalisation plan will be enacted. A consolidation play bringing together Mobilicity along with Wind Mobile and Public Mobile has been widely mooted but is yet to materialise.
