The excitement surrounding Mobilicity continues – a couple of days ago we reported that both Rogers and TELUS were in the process of bidding on entrant Mobilicity…and apparently with the government’s blessing. Then earlier today, Obelysk Inc., a company controlled by Mobilicity founder and Sirius XM Canada majority shareholder John Bitove, wrote the government requesting that the new buyer be required to change Mobilicity into a MVNO (Mobile Virtual Network Operator). Now, The Globe and Mail are reporting that Mobilicity has accepted an offer from Rogers, which is reportedly between $400 to $450 million. Now we must wait to see if the government will approve the purchase.
The actual deal is far from done – TELUS reportedly offered at least $50 million more money than Rogers, but the bondholders apparently are backing the Rogers deal…believing it will have an easier time being accepted by the government. A source, speaking on condition of anonymity said, “Yes, it’s Rogers, yes it’s over $450 million, but Telus bid at least $50 million more than that.” All transfers of wireless spectrum must be approved by Industry Canada, but this purchase comes with a caveat – the Ontario based AWS spectrum must go to WIND Mobile…spectrum that Mobilicity paid over $260 million for in 2008.
Rogers is expected to end up in court tomorrow to seek its approval for the sale. Another court must also approve the sale as Mobilicity has been under court protection from creditors since 2013…although there will probably be no problem there. Then there is the chance that TELUS might fight the deal because they were offering more money than Rogers offered. The federal government has always fought to encourage a fourth carrier in every region in an effort to foster competition against the Big Three and ultimately lower prices. WIND has always been the best alternative in Ontario, British Columbia and Alberta, and if the deal goes through, WIND could gain some free AWS spectrum in Ontario. This could help WIND build out its LTE network, something it desperately needs to do in order to be competitive.
RBC Capital Markets analyst Drew McReynolds wrote in a weekend note to clients, “A potential acquisition of Mobilicity whereby Wind acquires Mobilicity spectrum would be consistent with our working assumption that a stronger recapitalized fourth national wireless player is likely to emerge in 2015/2016 in some shape or form. While directionally negative for the incumbents, we continue to believe the competitive impact should be manageable provided that regulators remain balanced.”