Reported deal for Mobilicity faces regulatory hurdles
Canadian mobile operator Mobilicity reportedly has a pair of suitors ready to take over the beleaguered operator, though government regulators appear sour on such a deal.
According to Bloomberg Business, Canadian telecom giants Telus and Rogers Communications are both in the mix to make offers of at least $245 million for Mobilicity, which has struggled for solvency and is controlled by Data & Audio-Visual Enterprise Holdings. The report notes formal offers have not been tendered and that any potential deal would have to garner support from bankruptcy courts and the federal government.
Telus last year made a $350 million offer for Mobilicity, which came a year after a $370 million offer that while approved by a bankruptcy court was denied by government regulators. Last year’s proposal called for Telus to acquire virtually all of Mobilicity’s assets, including approximately 165,000 wireless customers and more importantly the carrier’s 1.7/2.1 GHz spectrum licenses.
According to the latest report, Telus remains interested in purchasing Mobilicity, while Rogers has not officially acknowledged an offer. The two carriers, along with Bell Canada, dominate the country’s telecom market.
That domination is at the heart of the government’s refusal to approve such a transaction as it looks to infuse competition into the market. A spokesman for Industry Canada told Bloomberg Business it “will not approve any spectrum transfer request that decreases competition in the wireless sector.”
Industry Canada’s attempts to increase competition in the market has included a trio of spectrum auctions over the past year and a half, as well as new regulations designed to boost the competitive position of new entrants into the space. Those spectrum auctions included last year’s 700 MHz auction, which raised $4.8 billion, but few failed to attract a new nationwide competitor; and this year’s AWS-3 and 2.5 GHz auctions, which were dominated by incumbents.
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