Catalyst Capital Group to Finance Mobilicity AWS-3 Spectrum Bid

by Istvan Fekete on November 25, 2014

In an attempt to save the company’s value and make it more attractive to future buyers, Catalyst Capital Group is willing to go the extra mile: It will participate in the forthcoming wireless spectrum auction.

Newton Glassman’s Catalyst Capital Group Inc. is willing to finance Mobilicity’s bid for additional wireless airwaves, along with other willing creditors, in an effort to spur further consolidation among smaller Canadian carriers, reports Bloomberg.

Mobilicity has been under creditor protection for 14 months now, and Catalyst, Canada’s second-largest private-equity firm, is one of the struggling wireless carrier’s largest creditors.

In an interview with Bloomberg, Catalyst chairman Newton Glassman expressed his belief that Mobilicity’s future is a merger with a carrier. However, in its current shape, the carrier is losing value, so it needs to be re-energized to make it more appealing to participating players of the Canadian wireless landscape.

There is an issue though: The number of buyers is pretty limited, because the government has been very clear that it won’t allow a takeover by any of the incumbent players. You may recall that Telus has been trying to ink a deal with Mobilicity, but didn’t get Industry Canada’s approval.

As a result, Mobilicity has changed tactics and is now looking at the auction as pure game theory. By owning more spectrum, the wireless startup will become more attractive to either Wind Mobile or Quebecor.

The catch is that the forthcoming wireless spectrum auction limits carriers, bids to regions in which they already operate. So, Quebecor can only bid in Eastern Ontario and Québec, whereas Mobilicity and Wind Mobile can bid in other provinces.

The best thing of all is the government’s decision to set aside 60% of the auctioned AWS-3 spectrum for new entrants such as Wind Mobile and Mobilicity. The 700 MHz spectrum auction netted the government $5.4 billion from the participating carriers.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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