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Telus Pays $380 Million to Put Struggling Rival Out of its Misery

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Consolidation in the Canadian mobile phone market as Telus has agreed to buy its much smaller rival, Mobilicity for C$380 million.

Mobilicity is in financial difficulties and was due to hold a meeting with its lenders to reformulate a repayment plan. A complete sale of the company has been one of the options the board had also been investigating.

The entire purchase price will be used to satisfy Mobilicity's secured and unsecured debt.

Any deal between Telus and Mobicity will be subject to a wide number of regulatory checks, and presumed objection by the other mobile network operators.

If this transaction is approved, Telus will retain all 150 Mobilicity employees as it integrates the Mobilicity operation into Telus over the coming months. The employees would have the opportunity to review and secure permanent, long term roles with Telus.

"I am confident Telus will look after our employees and our customers, mitigating any disruption to their service, while offering the best outcome for all stakeholders." said Stewart Lyons , Mobilicity President.

Telus has already secured agreements from a significant number of Mobilicity's debtholders who have committed to vote for the takeover. The deal will also need approval from the Ontario Courts, who are overseeing Mobicity as it tried to refinance its debts.

William Aziz , Mobilicity Chief Restructuring Officer, continued, "Mobilicity has been losing a significant amount of money every month. The financial strength of Telus will allow the business to be continued in a way that will benefit customers and employees."

Telus and Mobilicity both said that they anticipate an expeditious legal and regulatory review in view of the current circumstances Mobilicity is facing.

Mobilicity contracted Ericsson to build and manage its mobile network, has a national roaming agreement with Rogers Wireless, and network infrastructure sharing agreement with Bell Canada.

The company holds licenses which cover more than half of Canada's population in 10 of the 13 largest markets including Toronto, Vancouver, Calgary, Edmonton and Ottawa.

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Tags: mobilicity  telus  Canada