Mobilicity Considers Quebecor and Telus Takeover Bids

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After two rejected bids, Telus apparently believes in “third time lucky”, as it has reportedly placed a third bid for the struggling Mobilicity. But this time, it isn’t alone: Quebecor is also on the wireless startup’s list of potential buyers.

But as time has gone by, Mobilicity’s worth has dropped while it has managed to rack up 175,000 subscribers and $500 million in tax losses as of the end of 2013. Telus’s third offer isn’t as generous as the previous two: this time it has offered only $350 million, according to sources speaking with the Globe and Mail.

However, $350 million sounds better than the (maybe opportunistic?) roughly $200 million offer from Quebecor, according to the same source.

Bill Aziz, Mobilicity’s chief restructuring officer, would not comment on the Telus or Quebecor offers. But he said Ottawa is not encouraging Mobilicity to accept any specific offer. “We continue active discussions with multiple parties. The process remains confidential and is before the courts,” he said in an e-mail.

“We believe QBR [Quebecor] is being opportunistic and is assessing this more for financial reasons rather than strategic reasons,” wrote Jeff Fan, an analyst with Scotia Capital Inc., in a research note to clients. “If it does not make sense financially we do not believe QBR will pursue the opportunity.”

Now, if you are in Mobilicity’s situation choosing between the two, I think it would be a no-brainer. But there is one issue with opting for Telus: while this would strengthen the latter’s position in the market, the government will have the last word. And as the reaction to the previous two attempts shows, this isn’t positive. Or maybe? The spectrum transfer moratorium vanishes next month, and so does Mobilicity’s cash.

While other companies have participated in the bidding process, they aren’t considered viable bidders, and considering Wind Mobile’s surprise withdrawal from the spectrum auction, it is pretty clear why.

There are multiple scenarios for how Quebecor could benefit from a Mobilicity takeover, but now it remains to be seen whether the latter accepts the $200 million offer or not. The wireless startup paid $243.1 million for its wireless licences way back in 2008, so it is a low-ball offer.

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