Current Ottawa Regulations Could Delay Telus–Mobilicity Deal

by Istvan Fekete on May 28, 2013

The Telus–Mobilicity deal is currently pending approval on multiple fronts, which raises concern as to whether the deal will go through, and possibly highlights the need for new regulation. Some analysts say, though, that Industry Canada will likely let its current rules apply, which won’t allow the small wireless startup to be swallowed by Telus.

Furthermore, the government has the power to extend the five-year period that aims to prevent the early transfer of Mobilicity’s license for spectrum to an incumbent, Iain Grant, executive director of SeaBoard Group says.

Mobilicity, just like Wind Mobile and Shaw, bought wireless spectrum — rather than just receiving the spectrum for free like the incumbents — that was set aside for new wireless entrants to create a competitive cellphone market.

This means Mobilicity’s wireless licenses, just like Shaw’s, are prohibited from selling and/or transferring to any of the incumbents until 2014. Both Telus and Rogers wanted the deal for different reasons; Telus highlighted Mobilicity’s dire financial status while trying to obtain a faster approval and provide a lifeboat for the wireless startup’s quarter of million subscribers.

Industry Minister Christian Paradis’ reply was that he will take whatever time is necessary to review the Telus–Mobilicity agreement terms.
Some analysts suggested that Paradis will likely make public the result of the review process before June 11, the deadline for the 700 MHz wireless spectrum auction.

Meanwhile, one roadblock ahead of the Telus–Mobilicity deal was removed: debtholders of the wireless startup have approved the agreement.

But nothing is lost if the deal doesn’t go through: Grant suggests Accelero Capital could be interested in acquiring Mobilicity. His opinion contradicts Mobilicity’s earlier report about struggling to find a buyer.

Grant points to the Accelero–Allstream deal, but this time he could be misunderstanding the investment group’s position: there is a strong difference between Allstream’s and Mobilicity’s positions in the market. And an Accelero–Mobilicity deal could make sense only if the investment group is ready to merge the struggling wireless startups into a single player.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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Industry Minister Approves Telus Agreement to Acquire Public Mobile — TheTelecomBlog.com
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