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Amidst Canadian Government’s Bullying, TELUS Drops $350 Million Mobilicity Offer

May 21, 2014 - Written By Cory McNutt

According to the Globe and Mail, TELUS is abandoning its $350 million purchase of Mobilicity, which has backed out to its third attempt to swallow up the smaller wireless carrier and its 165,000 subscribers along with its spectrum.  Mobilicity has filed for protection from its creditors and would love nothing better than to be purchased up by TELUS – their high bid of $350 million would allow Mobilicity to pay off their creditors and seems like a real win-win for everybody.  However, a senior government source said:

“If Telus doesn’t drop efforts to acquire spectrum set aside for new entrants, the Harper government is prepared to change the rules of the upcoming wireless auction that could effectively bar Telus or any incumbent from acquiring that spectrum.”

TELUS claims that Mobilicity’s subscribers account for less than 1-percent of Canada’s 27 million mobile subscribers and that it would be in everybody’s best interests, but the government is adamant about ‘creating’ a fourth major player in Canada’s wireless structure to foster competition.  Another government source said: “If companies like Telus think the government will allow them to stockpile spectrum that was set aside for a fourth player, and access new spectrum in future spectrum auctions, they are kidding themselves.”

A source said that TELUS sent word to Mobilicity of its decision to withdraw its offer because certain terms were not met – although no one knows exactly what terms were ‘not met,’ however, it could just be the refusal of the Canadian government to approve the sale.  TELUS has not sent out any official word to the press at this time.  TELUS had run into a stonewall with Conservative government officials and then repeatedly tried to buy Mobilicity even though the government sternly objected to the purchase and implied it would take measures to hurt the incumbent.

Sources say that Ottawa’s message was to not only for TELUS, but was intended to send a warning to all major incumbents, Bell and Rogers, not to buy spectrum they were trying to allocate to a new, fourth player in their wireless market.  So far, the government’s attempts have failed to foster any new competition or save the consumers $1 billion with a fourth wireless service. Recent studies wonder if the widespread price gouging by the Big Three is the one thing that can unite the Canadians.