Two Bidders Competing to Buy Canada's Mobilicity
Published on: 30th Jan 2014
By: Ian Mansfield
The Canadian mobile network operator Mobilicity is said to be mulling takeover bids from two potential suitors.
The company is currently in court-supervised bankruptcy protection and is seeking a buyer to pay off some of its debts.
One of the country's big-three networks, Telus is reportedly offering C$350 million for the company, which would pay off most of the company debt. Telus had previous agreed to a purchase, for a higher $380 million, but that was blocked by the government.
That deal would have seen Mobilicity's radio spectrum transferred to Telus, which was not permitted under Mobilicity's operating license. However the transfer ban expires in a few weeks, so if the government tries to block the deal again, as it has hinted it would, it could face legal action.
The other bidder, as previously rumoured is Qubec based Quebecor which appears to be eying up the potential to become a national mobile network. It is however offering just C$200 million, according to a report in the Globe and Mail newspaper, which would barely cover even the senior debt held by the company.
Quebecor appears to be hoping that the Telus bid would be blocked, leaving it as the only bidder available, and hence able to pick up Mobilicity's assets at a knock-down price.
The ongoing radio spectrum auction adds doubt to Quebecor's bid as it might be able to acquire spectrum for less than the cost of buying Mobilicity and then deploy newer network infrastructure later.
In addition to its radio spectrum, Mobilicity is also sitting on around $500 million of tax losses, which could make the deal sweeter for a buyer if they can find a way of utilizing them.
On the web: Globe and Mail