Mobilicity Agrees to Be Taken Over by Telus Again

by Istvan Fekete on April 21, 2014

After being under creditor protection since late September and unable to find a buyer, Mobilicity and its affiliates collectively agreed to accept Telus’ $350 million bid and have announced their hope that this transaction will get the government’s approval.

This is the third time we have received news of a Telus bid for Mobilicity. It was early last year when the two parties announced a deal in which Telus, Canada’s No. 2 wireless player, agreed acquire the struggling wireless startup for $380 million.

Following the announcement, all eyes were on Industry Canada, for the simple reason that the deal would theoretically undermine the government’s efforts to foster wireless competition in the country. But the verdict was as some expected: Industry Canada rejected the transaction and announced that it would reject every transaction that is against its outlined principles: it will not allow transfer of set-aside wireless spectrum between the parties (incumbents and wireless startups).

But Telus didn’t give up and reportedly placed another bid, but this time for only $350 million. This offer was also rejected by Industry Canada, and in September Mobilicity entered into the CCAA (Companies’ Creditors Arrangement Act). Since then, multiple parties have bid on the company, with Quebecor being in the game as well, with a lower offer – but since there was no evidence of the latter’s offer, we consider this a rumour only.

Fact is, however, that after more than six months under creditor protection, Mobilicity hasn’t found a buyer. And more importantly, the wireless spectrum transfer moratorium expired in February, so apparently every player is now free to place a bid on the company.

Now, after going though every offer it received during this time, the best seems to be the one placed by Telus, and they have 350 million reasons to believe that. Besides, there are a couple of poinys highlighted in the Mobilicity announcement:

  • the vast majority of Mobilicity’s one hundred and sixty five thousand active subscribers will be able to seamlessly migrate onto TELUS’ advanced HSPA network after the transition.
  • no foreseen changes to employee staffing levels as a result of the proposed transaction;
  • all of Mobilicity’s retail landlords and licensors will have their contracts honoured;
  • all of Mobilicity’s landlords and licensors who provide space for placement of Mobilicity’s dealers and their employees who sell Mobilicity’s products will continue to benefit from those arrangements;
  • all service agreements with Mobilicity’s business partners will continue uninterrupted; and
  • the trade claims of Mobilicity’s creditors will continue unaffected against the restructured Mobilicity and will be addressed in the ordinary course.

The main issue could be: the final word belongs to the government. And, by the way, Telus didn’t officially react to Mobilicity’s release, corroborating is willing for a company takeover.

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

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