Ottawa Expected to Block the Rumoured Second Telus-Mobilicity Deal

Telus and Mobilicity reportedly have started a second round of negotiations, the Globe and Mail reported earlier this week. While this could save the struggling wireless player — just like earlier this year when the first bid came to surface — the first signals aren’t looking positive, at least for now. This would mean that the government has changed its position, which is highly unlikely.

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Signs of Ottawa blocking the possible deal are coming from multiple places: there was a set of emailed talking points sent to Conservative MPs from the Prime Minister’s office this week, and another statement from a former Parliamentary Secretary to Prime Minister Stephen Harper, Dean Del Mastro. He believes the government will likely block the transaction, the Globe and Mail reports.

“Mobilicity [has] filed for credit and bankruptcy protection,” the note said. “Media report that Mobilicity and Telus have rekindled takeover talks and that Industry Canada is currently reviewing a new buyout proposal.”

While noting that Industry Minister James Moore will review each proposed transaction on a case-by case basis, the note added, very bluntly: “Our policy on undue spectrum concentration is clear and isn’t changing. Greater competition results in lower prices and better choice for Canadian families.”

From Del Mastro’s perspective, a Telus-Mobilicity deal would trigger an unwelcome concentration of spectrum licenses in one company’s hands, which is against Ottawa’s policy.

“My opinion is the government is of the view that the government’s position is not changing,” he said. “If Telus becomes the owner of the [Mobilicity] spectrum, we have undue concentration of spectrum.”

A spokeswoman of Industry Minister James Moore was quick to point out that Del Mastro’s opinion is his own, it’s not the government’s official position.

“Mr. Del Mastro is no longer a member of the Conservative caucus, he does not speak on behalf of the government and Mr. Del Mastro has never discussed this matter with Minister Moore or his officials,” Jessica Fletcher, director of communications for Mr. Moore said.

In the end, one thing is certain: the secret bid on Mobilicity and the creditor protection it was granted gives Mobilicity enough time to survive until next spring, when the federal ban for such deals expires for the wireless startup.