• Just Announced: Telus Application to Purchase Mobilicity Denied

    The looks like the Canadian government isn't going to allow the TELUS purchase of Mobilicity to go through. Also; the license transfer denied, and the 700Mhz spectrum auction is now delayed until January.

    What does this mean for Mobilicity and the other incumbents?

    http://www.theglobeandmail.com/repor...ticle12329838/

    The Canadian government has rejected a deal between Telus Corp. and upstart wireless carrier Mobilicity, saying it’s committed to a “competitive marketplace and consumer choice.”

    “Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents,” said Industry Minister Christian Paradis.

    Mr. Paradis says he will not approve Telus's proposed purchase of Mobilicity or any other transaction that results in wireless spectrum set aside for new entrants in the 2008 spectrum auction before the 5 year moratorium on transferring licenses is up.

    “We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit,” he said in announcing the decision Tuesday.

    “Our government will continue to allow wireless providers access to the spectrum they need to compete and improve services to Canadians. We are seeing Canadian consumers benefit from our policies and we will not allow the sector to move backwards. I will not hesitate to use any and every tool at my disposal to support greater competition in the market.”
    This article was originally published in forum thread: Just Announced: Telus Application to Purchase Mobilicity Denied started by Mann Incognito View original post
    Comments 70 Comments
    1. Derfel's Avatar
      Derfel -
      So they'd rather a start-up crash and burn entirely? Perfect Conservative sense.
    1. motivotto's Avatar
      motivotto -
      Great news! Can't wait to see all new entrants figure out their next moves.
    1. will888's Avatar
      will888 -
      This was kind of expected. This should pave the way for other parties to step in and give it a go. Windicity potential is still alive. This would be the government's best hope for a fourth carrier.
    1. Mann Incognito's Avatar
      Mann Incognito -
      This was just added to the original article:

      For their part, executives at Telus initially played coy after the news was announced, giving nothing away about any potential next steps.

      “Did something happen in Ottawa this morning?” chief commercial officer Joe Natale said at the outset of a keynote address at the Canadian Telecom Summit in Toronto.

      At Mobilicity, president and chief operating officer Stewart Lyons said, “We’re in the process of reviewing what Industry Canada announced. We’ll be speaking with Telus and other stakeholders and will have more to say in due course.”

      Mr. Paradis played down the suggestion the rejection seals the fate for Mobilicity, which has warned it is in serious financial peril and needs the Telus deal to secure its future.

      “To say Mobilicity will be bankrupt (based on this decision)...I think it is not a foregone conclusion,” he said.

      “It now seems inevitable that Mobilicity will go bankrupt and Public Mobile may follow,” Canaccord Genuity analyst Dvai Ghose said in a note. “More importantly, if new entrants are not allowed to be sold to the only obvious buyers – the incumbents – we wonder why investors would want to fund the independent new entrants.”
    1. millergd's Avatar
      millergd -
      Quote Originally Posted by will888 View Post
      This was kind of expected. This should pave the way for other parties to step in and give it a go. Windicity potential is still alive. This would be the government's best hope for a fourth carrier.
      I fully agree with your perspective except I would use the words "least worst option" rather than "best."

      Evidently the government can't acknowledge a policy failure and reverse direction. What a bunch of goons.

      ~millergd~
    1. motivotto's Avatar
      motivotto -
      Quote Originally Posted by millergd View Post
      I fully agree with your perspective except I would use the words "least worst option" rather than "best."

      Evidently the government can't acknowledge a policy failure and reverse direction. What a bunch of goons.

      ~millergd~
      Exactly, if this government was going to be changing the rules until they somehow magically forced competition into this industry, why charge them for spectrum to begin with? It's not like our government has done anything other than make it increasingly challenging to be here as a new entrant regardless of what "protections" the consumers are perceiving.

      So not only did Mobilicity have to compete against Orascom's wallet and pay top-dollar for spectrum as a result, they are now not allowed to own it and do as they please. They'll be put in tough positions almost punishing them for trying.
    1. onewhofightsfoo's Avatar
      onewhofightsfoo -
      If the new entrants figured that the big 3 would bail them out when times got tuff they sure got a rude awakening! The CRTC did the right thing now, but will they change the rules after Mobilicity goes bankrupt? That is the question....
    1. motivotto's Avatar
      motivotto -
      Quote Originally Posted by onewhofightsfoo View Post
      If the new entrants figured that the big 3 would bail them out when times got tuff they sure got a rude awakening! The CRTC did the right thing now, but will they change the rules after Mobilicity goes bankrupt? That is the question....
      No to further send a message I hope Paradis doesn't allow mobilicity to go bankrupt either. It'd only make sense. We should start using government money to subsidize these private corporations until they make a profit. For an indefinite amount of time too.
    1. robsaw's Avatar
      robsaw -
      I must say I am surprised since Mobilicity will likely vanish as a viable competitor one way or the other. Time for someone else to step up with and get a bargain price now. If their re-capitalization alternative goes ahead I expect them to last another year and then Telus will swoop back in and take them over anyway once the 5-year limit expires. This means the other merger negotiations for Wind and Public are also dead-in-the-water as far as incumbents go.
    1. robsaw's Avatar
      robsaw -
      Quote Originally Posted by onewhofightsfoo View Post
      If the new entrants figured that the big 3 would bail them out when times got tuff they sure got a rude awakening! The CRTC did the right thing now, but will they change the rules after Mobilicity goes bankrupt? That is the question....
      The CRTC did NOTHING because the CRTC isn't involved in this. The regulatory agencies involved are Industry Canada (turned down via the Minister) and the Competition Bureau (no need to formally review now). Mobilicity will probably figure a way to hang on for another year so they can meet the 5 yr limit unless someone else swoops in, which now cannot be any other incumbent.
    1. robsaw's Avatar
      robsaw -
      Quote Originally Posted by motivotto View Post
      No to further send a message I hope Paradis doesn't allow mobilicity to go bankrupt either. It'd only make sense. We should start using government money to subsidize these private corporations until they make a profit. For an indefinite amount of time too.
      Thanks for the Monty Python routine. Paradis just improved the probability of Mobi going bankrupt.

      How about a major re-think on how we improve telecom competitiveness in this country - and please, no panacea, socialist options please. I'm not subsidizing peoples unlimited data with my tax dollars.
    1. pjw918's Avatar
      pjw918 -
      Quote Originally Posted by robsaw View Post
      If their re-capitalization alternative goes ahead I expect them to last another year and then Telus will swoop back in and take them over anyway once the 5-year limit expires.
      I wonder if there are any means by which Telus might 'carry' Mobilicity to 2014, directly or indirectly, at which point they could secure IC approval for the spectrum transfer? Would an agreement to purchase in 2014 require government approval now?

      I ask in light of that $10 million they provided to Mobilicity (as a non-refundable 'deposit' based on government approval by June 10, which they could not have been confident of), and they seemed remarkably unflustered by the news this morning.

      --
      Edit: Pointless speculation, it seems.

      In addition, the Government also outlined improvements to the policy on spectrum licence transfers that will be released in the coming weeks, which followed consultations launched in March 2013. Going forward, proposed spectrum transfers that result in undue spectrum concentration-and therefore diminish competition-will not be permitted. This policy will apply to all commercial mobile spectrum licences, including the 2008 AWS licences.
      - Marketwire

      Telus:
      In a statement later, the company said: “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.”
      - Globe and Mail
    1. nuclearbroccoli's Avatar
      nuclearbroccoli -
      Quote Originally Posted by robsaw View Post
      Thanks for the Monty Python routine. Paradis just improved the probability of Mobi going bankrupt.

      How about a major re-think on how we improve telecom competitiveness in this country - and please, no panacea, socialist options please. I'm not subsidizing peoples unlimited data with my tax dollars.
      Cap rates like we do with other utilities?
      Not saying that's the best option, just putting it out there.

      Sent from my HTC Amaze 4G using HowardForums
    1. will888's Avatar
      will888 -
      Quote Originally Posted by pjw918 View Post
      I wonder if there are any means by which Telus might 'carry' Mobilicity to 2014, directly or indirectly, at which point they could secure IC approval for the spectrum transfer? Would an agreement to purchase in 2014 require government approval now?

      I ask in light of that $10 million they provided to Mobilicity (as a non-refundable 'deposit' based on government approval by June 10, which they could not have been confident of), and they seemed remarkably unflustered by the news this morning.

      --
      Edit: Pointless speculation, it seems.

      In addition, the Government also outlined improvements to the policy on spectrum licence transfers that will be released in the coming weeks, which followed consultations launched in March 2013. Going forward, proposed spectrum transfers that result in undue spectrum concentration-and therefore diminish competition-will not be permitted. This policy will apply to all commercial mobile spectrum licences, including the 2008 AWS licences.

      (Marketwire)
      I don't think the feds view the 2014 deadline as a hard number even though on paper they need to provide a date. I sense they made the date up on the presumption that 5 years is sufficient time to allow the new entrants to be on solid footing. Otherwise, how is the current situation any different if this was playing out in 2014? Competition would be equally compromised. Perhaps the feds should grow some ballz and just say definitively Robellus is not allowed to buy the new entrants either now or next year.

      Sent from my Nexus 7 using HowardForums
    1. Turbo E's Avatar
      Turbo E -
      so the only thing left if for Mobi to declare bankruptcy and have Wind come in an scavenge the pieces for their own network? or would that be disallowed too?
    1. TelecomZombie's Avatar
      TelecomZombie -
      Heres guessing all the nonbelievers/ corporate whores will be the first scurrying to get the Unlimited plans Wind and Mobilicity offer.
      Hellus and Robbers don't get their way in "The Best Interest of the Consumers".
      Good Work Everyone!!! Time to retire my Sig!!

      Do The Correct SMART Ethical Thing Mr. Harper.
      Stop the so called rescue of Mobilicity by Telus and early spectrum transfers

      selling the spectrum to an incumbent does not come up until September of 2014
      MISERY LOVES COMPANY
      Join R.B.T.

      I Buy Wind & Mobilicity Balances or Wallet Funds For CASH!
    1. pjw918's Avatar
      pjw918 -
      Quote Originally Posted by will888 View Post
      Perhaps the feds should grow some ballz and just say definitively Robellus is not allowed to buy the new entrants either now or next year.
      Read what you quoted. Unless you're quibbling on "undue".
    1. robsaw's Avatar
      robsaw -
      Quote Originally Posted by TelecomZombie View Post
      Hellus and Robbers don't get their way in "The Best Interest of the Consumers".
      Good Work Everyone!!!
      There is nothing in this decision that improves competition. Mobi is dead either way and therefore a non-factor. The Fed's have left Wind's current ownership change hanging, which continues the uncertainty, which is simply bad for business and future investment.
    1. gun26's Avatar
      gun26 -
      Given the overall tone of Paradis' remarks, I doubt that they'll let Robelus have new entrant spectrum even after the five years are up.

      I must say that the feds have surprised me today. I really thought that with the Senate expenses mess refusing to go away, with questions about Canada's economy and the Loonie under attack by short sellers, and worsening relations with several provincial governments, Ottawa would go quietly on this one. Instead they've chosen telecom policy as a hill that they're willing to die on.

      It's clear that Mobi's board and debt holders are not going to get their $380 million. But there might be other possiblilities for less money. Half a loaf might be better than none, from their point of view. (Or, to be more accurate, perhaps a quarter of a loaf instead of half. )

      I agree with those saying that refinancing Mobi to operate for another year and then selling out to Robelus when the 5 years are up is a non-solution. For starters, that 5 years is looking increasingly nebulous as a deadline, assuming Paradis meant what he said today. If Mobi goes the refinance route, it's going to have to allow for the possiblity that a Telus deal in 2014 is as likely to be shot down by the feds as the 2013 deal proved to be.

      Meanwhile, there are other parties who said they were interested in the "Windicity" idea - Catalyst Capital, before they came on board with the Telus deal, and the "comedy team" of Lacaverra and Sawiris. Maybe Catalyst and Sawiris will join forces. It will be interesting to see if, with the Telus deal off the table, Catalyst will now get their way with the Mobi board and other debt holders.
    1. NotoBig3's Avatar
      NotoBig3 -
      Want competition? How about free spectrum giveaway for new entrants just like what RBT got when they started their network? If they grow to be more than 10% of market, then put a clause so they need to pay to renew the license.

      Talk about being fair. I'm fed up with RBT.