Canada blocks Telus’ $380-mn bid to acquire Mobilicity

The Canadian government yesterday decided to block the proposed acquisition of struggling mobile carrier Mobilicity by the country's second-largest telecom company Telus Corporation, saying that it would reject spectrum transfers that would reduce competition in the wireless market.

The federal industry minister Christian Paradis said that the government will be committed in its policy to block any sale of spectrums that were reserved for new entrants in 2008.

In its efforts to increase completion in the domestic wireless sector that has been dominated by Rogers, Telus and Bell, the Canadian government had kept a aside additional spectrum for upstart wireless carriers. The policy barred the new operators to sell their spectrum until at least 2014.

The plan attracted many new players including Vimpelcom's Wind Mobile, Mobilicity, Public Mobile, Videotron, Shaw Communications etc, but most of them turned unsuccessful in the market. In addition to Mobilicity, Wind Mobile and Public Mobile are also currently up for sale.

In an interview with Canada's CTV, the minister said, ''We had to send a clear signal to the market if there are any proposals resulting in undue concentration of spectrum, it will not be approved.''

Particularly, with regard to killing of the Telus-Mobilicity deal, Paradis said, ''We have a consumer approach.''

Mobilicity chief executive Stewart Lyons said he was reviewing the minister's announcement and will "be speaking with Telus and other stakeholders and will have more to say in due course."

Vaughan, Ontario-based Mobilicity is a wireless carrier which began operation in 2010. It provides wireless mobile services in Toronto, Ottawa, Calgary, Edmonton and Vancouver.

The government decision comes a day after the Canadian Radio-television and Telecommunications Commission (CRTC) introduced a new wireless code aimed to protect consumers.

The new code bans three-year contracts and customers will be allowed to cancel their contracts at no cost after two years, besides putting a cap on charges for domestic data plans and roaming outside the country.

Last month, Mobilicity debt holders and the Ontario superior court have approved the acquisition of the struggling wireless company by Telus.

In a statement, Telus said, ''Today's decision is unfortunate for Mobilicity's 250,000 customers, 150 employees and debt holders, who now face considerable uncertainty due to the pressing financial challenges facing the company.''

 In the December quarter, Mobilicity's cost of maintaining its network and paying distributors and financing costs exceeded its revenue by around $30 million.

 Refusing to accept that the government's policy failed, the minster said since 2008, price for wireless services have declined by 18 per cent.

"We will not allow this progress to be lost or undermined. I will not hesitate to use any and every tool at my disposal to support greater competition in the market," he further stated said.

It is also believed that the government may postpone its proposed auction of 700 MHz spectrum from November to January, in order for the industry to adjust to the new code.