Mobilicity Considers Takeover Bids, Wants to Avoid Shutdown if Sold

Last week Telus confirmed its interest in acquiring Mobilicity (again), but this time the situation is different: Besides offering an “incentive” to the government to approve the deal, Rogers also expressed interest in the struggling wireless carrier. As a result, the past weekend was hot for the creditors and directors of the small players, who met to assess the offers the incumbents have put on the table.

mobilicity.jpg

Sources speaking with the Financial Post claim the offers already exceed the $350 million previously offered by Telus. That’s particularly interesting because, by comparison, Wind Mobile sold for $300 million last year, and the carrier has more than 800,000 subscribers and more cell sites than Mobilicity.

Actually, what the latter has are 157,000 active subscribers and roughly 450 leased cell sites. Also, Mobilicity has been extended at least $248 million in secured credit and another $292.5 million in unsecured credit.

The sources also spoke about the different approach new Rogers CEO Guy Laurence has, compared to the previous leader. Laurence has expressed willingness to spend money “in ways Nadir Mohamed was much more hesitant to”, they say.

The government’s position has remained unchanged regarding such transactions: It won’t allow deals that cut into Canadian mobile competition.

“We’ve had a clear position on these types of transactions for some time,” Minister Moore’s press secretary Jake Enwright said Sunday, “We’ll not approve spectrum transfer requests that decrease competition in the wireless sector.” Ultimately, the Ministry would assess the conditions of a final deal – if there ever is one.

Fact is, a transfer of spectrum to Wind Mobile would benefit the wireless player. The carrier has opened talks with Mobilicity, but since they couldn’t agree on a price, negotiations failed. But everything changes if the spectrum licences end up at Wind, and now it remains to be seen how much that “some spectrum” licences means for Telus. This topic is particularly sensitive, since Mobilicity owns spectrum incumbents weren’t allowed to bid for seven years ago.

It looks as though the meeting yielded significant results: Mobilicity’s founder and employees sent an offer to the federal government with the aim of preventing the shutdown of the carrier if it is acquired by any of the incumbents.

Founder John Bitove offered to buy Mobilicity’s 155,000 currently active subscribers, its dealer network of 150-plus distribution points, the existing call centre operators by setting up a “Mobile Virtual Network Operator (MVNO) relationship” with the new owner.

“The Big 3 telecoms want Mobilicity spectrum and this Group is not objecting to that sale,” the release says. “We owe it to the customers, dealers, contractors and employees to stay in business going forward and not face uncertain demise like Public Mobile or other past wireless operators in Canada.”

As the release highlights, Public Mobile was shut down two months after acquisition, and that’s exactly what Bitove wants to prevent. Funding would be provided by Bitove’s holding company Obelysk Inc.

P.S. - Like our news? Support the site with a coffee/beer. Or shop with our Amazon link. We use affiliate links when possible--thank you for supporting independent media.