YOU ARE AT:CarriersTelus gets green light to purchase Public Mobile

Telus gets green light to purchase Public Mobile

Less than six months after denying Telus’ $370 million acquisition attempt of Mobilicity citing competitive concerns, Canadian regulator Industry Canada has approved Telus’ acquisition of struggling operator Public Mobile.

In clarifying its position on the two deals, Industry Canada noted that the G-Block spectrum acquired by Public Mobile for $54 million during the 2008 1.7/2.1 GHz spectrum auction were not part of the spectrum bands set aside for new entrants into the space. Industry Canada had prevented Telus from acquiring Mobilicity earlier this year citing the licenses controlled by Mobilicity were purchased with the express consent of being used by a new entrant into the Canadian wireless market.

“G-block spectrum licenses were acquired in the 2008 spectrum auction, but were not part of the 2008 advanced wireless services (AWS) set-aside,” explained James Moore, Minister of Industry at Industry Canada. “G-block spectrum is not used for the latest data plans and smartphones in Canada and is of a significantly lesser value than other types of spectrum.”

Public Mobile, which serves approximately 280,000 customers across portions of Ontario and Quebec, does offer a handful of smartphones running Google’s Android operating system. The carrier’s no-contract rate plans include flat-rate, unlimited voice calling, messaging and data options.

Financial terms of the Public Mobile deal were not released, though Telus did say that proceeds from the sale would be used to satisfy Public Mobile’s debt and equity investors.

“Public Mobile’s G-Block spectrum aligns well with matching spectrum Telus holds in western Canada,” said Eros Spadotto, EVP of technology strategy and operations for Telus.

Public Mobile was acquired in June by Thomvest Seed Capital and Cartesian Capital for an undisclosed sum, helping to bolster the carrier’s struggling operations. At that time, the investment firms hinted that they intended to participate in Canada’s planned auction of 700 MHz licenses that is set to begin in January.

Shortly after the purchase, reports began to circulate that Verizon Communications was looking at possibly purchasing Public and its fellow beleaguered Canadian operator Wind Mobile in an attempt to enter the 700 MHz auction. Much of the spectrum set to be auctioned had stipulations that would encourage new entrants into the Canadian market, which established carriers continue to oppose.

Verizon opted out of a move into Canada following its announced plan to acquire Vodafone Group’s 45% stake in Verizon Wireless it did not already control for $130 billion. News of its planned to bypass a purchase in Canada sent stock prices of the country’s three largest operators – Rogers, Telus and Bell Canada – surging.

Along with the approval of the Public Mobile deal, Industry Canada said it will continue to enforce spectrum rules in regards to encouraging new entrants into the space.

“Our government will continue to enforce the moratorium on the transfer of set-aside AWS spectrum to incumbents,” said Moore. “We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers.”

Prior to enacting the moratorium, regional Canadian telecommunications provider Shaw Communications sold off 18 AWS licenses that were part of the set aside it picked up for $190 million during the auction to Rogers Communications. That deal also included Shaw selling its stake in Mountain Cablevision to Rogers, while in turn acquiring Roger’s 33.3% stake in the TVtropolis General Partnership. The financial aspects of the deal saw Rogers pay just over $700 million to Shaw, including $50 million as part of the spectrum license option.

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