Indebted Canadian telco Mobilicity is reportedly set to transfer all of its 200,000 customers to fellow challenger Wind Mobile.
Mobilicity is looking to shut down its loss-making consumer operations before October and creditors would hold on to the…
Indebted Canadian telco Mobilicity is reportedly set to transfer all of its 200,000 customers to fellow challenger Wind Mobile.
Mobilicity is looking to shut down its loss-making consumer operations before October and creditors would hold on to the spectrum licences in the hope of selling them on later, The National Post reported citing two separate industry sources.
Under the proposal, which would have to be approved by Mobilicity’s bondholders, Wind would pay next to nothing for the subscribers that would take its base up to around 800,000.
The report follows confirmation from the CEO of Verizon Communications earlier this week that it would not be entering the Canadian wireless market. Lowell McAdam said that the press made too much of its interest and that setting up mobile operations in Canada would not be in the best interests of Verizon shareholders.
The disclosure itself came hot on the heels of Verizon’s US$130bn agreement to buy Vodafone out of their joint venture Verizon Wireless.
McAdam’s company had reportedly been in talks with Mobilicity earlier this summer and was said to have made a bid for Wind Mobile ahead of Canada’s 700 MHz spectrum auction scheduled for January.
Mobilicity, legally known as Data & Audio-Visual Enterprises Holdings, agreed to be acquired by Telus for C$380m in the spring with the large operator keen to bolster its spectrum holdings.
However the government blocked the transfer of the frequencies due to competition fears and later presented a fresh policy on spectrum licence transfers. This limited Mobilicity’s sale options and forced Telus to withdraw its acquisition proposal.
The small operator then decided to pursue a recapitalisation plan. That was set to be voted on in late June, and later got pushed back so that creditors could see the government’s new spectrum policy.
In July Mobilicity said it had adjourned the recapitalisation plan and was negotiating with multiple parties to secure its sale. At the time its COO Stewart Lyons said it was “working diligently to reach an acquisition agreement” in a bid to remunerate creditors.
Update: Mobilicity denies report
In the wake of the report Mobilicity’s chief restructuring officer William Aziz was widely quoted in the Canadian press as saying that a deal was not happening.
It was not clear as to whether talks had taken place or if the mooted transaction could take place in the future.
