OTTAWA – The federal government has quashed another try by Mobilicity to sell itself to Telus.
According to a Globe and Mail report on Wednesday, Industry Canada confirmed late Tuesday that it provided a confidential answer to Mobilicity about a potential transaction that the small carrier was trying to complete while under court protection from its creditors. Although IC declined to comment on the substance of its response, the story says that sources confirmed that government officials turned down the proposed sale.
Telecom analyst Dvai Ghose, Managing Director/Head of Research for Canaccord Genuity, said in a note to clients that the move “comes as no surprise”, and the potential sale was likely thwarted because of the 2008 Advanced Wireless Services (AWS) new entrant set-aside regulations which prohibit the sale of spectrum within five years. Mobilicity's five year set aside expires in February 2014. The federal government has been quite unwavering on this point.
“Given that we see no obvious non-incumbent bidders, if the Government continues to block incumbent bids for AWS new entrant spectrum, we believe that Mobilicity will cease operations in early 2014, leading to job loss and service disruption for 189,000 subscribers who will by and large migrate to Telus, Bell or Rogers anyway”, reads Ghose’s note. “Most of all, its scarce and valuable spectrum may just lie fallow. Surely this was not the aim of the 2008 set aside? Regardless, we believe that either the Government will be forced to change its mind and Mobilicity will be acquired by Telus, or it will cease to operate – either scenario is positive for the incumbents and negative for the Government.”
