Mobilicity and Wind Restart Merger Talks Ahead of AWS-3 Auction

The struggling Mobilicity has a potential buyer in Wind Mobile, sources speaking with the Financial Post have revealed. The two carriers have restarted merger talks in the past few months, but they haven’t been able to figure out “how to get it done”, according to people familiar with the matter.

“[The companies] have been spending the better part of the past few months trying to figure out how to get it done,” said a source familiar with discussion, who asked not to be named.

The most obvious obstacle is the price, a source says. While Mobilicity’ debtors await an incumbent-level paycheck, the harsh reality is that (1) Wind Mobile will never be able to pay the money, and (2) Mobilicity is losing value every day.

wind mobile unlimited talk text data.png

According to the latest figures available, Mobilicity has less than 150,000 subscribers and is valued at $130 million. That’s a bit far from the $350 million deal it was ready to sign with Telus, but that was in May 2014, and we are now in 2015.

Fact is, this isn’t the first time Wind and Mobilicity have talked about a merger: They first sat down and discussed this in 2009. Since then, Wind has succeeded, and now has 800,000 subscribers and is hungry for spectrum, while Mobilicity . . . well, it has been under creditor protection since September 2013.

Some of the Mobilicity debt holders are still dreaming of an incumbent takeover, and they might have found a legal base to do so by filing a motion under Section 11.3 in the creditor protection act forcing Ottawa to argue in court instead of making a political decision.

But not everyone at Mobilicity agrees with that, since the procedure is time consuming and with uncertain result. There is more potential in a Wind Mobile takeover, but now talks have been suspended until May since both carriers have filed applications to bid for AWS-3 spectrum licences.