Canada's Mobilicity Facing Uncertain Future As Telus Walks from Takeover Bid
Published on: 23rd May 2014
Canada's Telus is reported to have dropped its latest attempt to buy smaller struggling rival, Mobilicity, citing regulatory difficulties.
The government has repeatedly blocked attempts by Telus to buy the smaller mobile network, saying that it would not block the sale itself, but would block the transfer of the radio spectrum licenses.
As the spectrum licenses are pretty much the main value left in the struggling company, if their transfer is blocked there is no point in Telus proceeding with the purchase.
Telus had offered C$350 million, which would have been used to settle Mobilicity's debt.
Now that Telus has walked away from the deal again, that leaves Mobilicity stuck in bankruptcy protection, but also without a viable buyer, and no way of paying down its debt.
A deal with Telus could have been arranged in a way that ensured Telus had to make regulatory concessions to preserve competition. However, the government action could now see competition shrink as the Mobilicity faces possible closure, and no concessions from Telus as it picks up customers from the bankrupt rival.
Mobilicity is estimated to have around 165,000 customers left on its network.
On the web: Globe and Mail