Does Killing Telus-Mobilicity Deal Keep Competition Alive?

Telus’ Burnaby Headquarters | BCBusiness
Telus’ Burnaby Headquarters

The federal government blocks key condition of Telus’s $380-million offer for Mobilicity

Industry Canada won’t allow the transfer of wireless spectrum from Mobilicity to telecom giant TELUS, a condition that effectively kills its $380-million takeover bid.

In 2008, the federal government specified that no spectrum dedicated to new entrants—eventually Mobilicity, WIND Mobile and Public Mobile—could be transferred until 2014. Yesterday’s decision means that spectrum transfers of this nature could be disallowed indefinitely. 

Telus issued a written statement in response to Industry Canada’s announcement:

“Today’s decision is unfortunate for Mobilicity’s 250,000 customers, 150 employees and debtholders, who now face considerable uncertainty due to the pressing financial challenges facing the company.”

“Telus will drive on with our proven strategy that has served us so successfully over the years. We will continue to focus on our sustained investment in wireless infrastructure, broadband data services and putting our customers first.”

The two wireless networks announced the deal on May 16, which was seen as a lifeline for Mobilicity by industry analysts. The struggling carrier may have to voluntarily enter bankruptcy or go through a restructuring deal, according to MobileSyrup, a mobile industry news site.

However, consumer advocacy group believes that Industry Minister Christian Paradis’ decision will ensure that there’s more competition in the cell phone market, and will lead to lower prices for wireless services. 

“Canadian businesses pay some of the highest prices for cell phone services in the industrialized world, and that’s acting as a really dead weight on our economy,” says spokesperson David Christopher. “The ministry’s decision yesterday was a step in the right direction certainly for choice and affordability.”