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Catalyst Capital Group is Willing to Back Mobilicity’s Bid for Spectrum

November 25, 2014 - Written By Cory McNutt

Mobilicity seems to have ‘knight in shiny armor’ coming to its rescue, once again.  According to the Financial Post, Newton Glassman’s Catalyst Capital Group Inc., along with other creditors, are willing to finance Mobilicity’s bid for additional wireless spectrum.  They believe that allowing Mobilicity to participant in the April 15, 2015 2500Mhz spectrum auction is the only way that it will “spur further consolidation among smaller Canadian carriers.”

It is no secret that Mobilicity is currently under creditor protection until December 1, which will be quickly upon them, although there is nothing to say that their 156,300 subscribers and modest increase in income that they reported as of the end of September, will not convince the courts to grant them yet another extension.  This is especially true when one of their largest creditors, Catalyst, is willing to financially back them with the spectrum auction.

Catalyst Capital Group is not doing this without benefit to them, of course.  Mr. Glassman said that the goal is to have Mobilicity in “as strong of a position as possible for what is the most likely outcome for a merger of two or more of these entities.”  It is also no secret that the Canadian Government is hoping that a few of the smaller carriers will merge together to offer a true large fourth carrier to create more competition between Rogers Communications Inc., BCE Inc. (Bell) and Telus Corp, although many, including the Big Three, disagree that another carrier will foster lower prices.

The Canadian Government even slants the spectrum auctions to benefit the smaller carriers or new entrants – in this next spectrum auction, they have set aside 60-percent of the spectrum for them alone.  Carriers are also forced to bid only in the regions they currently operate.  Mr. Glassman said he is looking at it from a strictly business sense and that by Mobilicity acquiring more spectrum, it would make them look more attractive to be taken over by say WIND Mobile – the largest of Canada’s upstart carriers – or Quebecor.  Mr. Glassman said, “If Mobilicity does not participate in that auction, both the value of existing or pre-existing spectrum, and its position in any negotiation goes down.”

It will be very interesting to see what happens come December 1 – will Mobilicity still be around, will someone come in and purchase them and create a new Big Four in the wireless community in Canada?  Please hit us up on our Google+ Page and let us know your thoughts on a fourth carrier in Canada and if it will really make a difference…as always, we would love to hear from you.