Mobilicity has accepted a $440-million takeover offer from larger rival Rogers Communications Inc., which will sell off Mobilicity's wireless airwaves to secure the permission of various regulatory bodies for the deal.
A court monitor overseeing Mobilicity's restructuring plan since 2013 has given its approval to the deal, under which Vaughan, Ont.-based Mobilicity will be purchased by Rogers for a total price of $465 million — $440 million for the company's assets plus "certain adjustments" to make up the remaining $25 million.
Cash-strapped Mobilicity has about 157,000 customers clustered in Ottawa, Toronto, Calgary, Edmonton and Vancouver, and it owns valuable spectrum purchased in a government auction in 2008, one that gave birth to the company and many others, including Wind.
Mobilicity twice before attempted a sale to Telus before the federal government quashed those deals, saying it would have consolidated too much wireless infrastructure in the hands of too few players.
This deal is different, however, in that Rogers has agreed to sell off Mobilicity's spectrum to other smaller rivals to keep regulators happy.
Industry Canada gives approval
In a press release Wednesday, Rogers said it will sell Mobilicity's AWS-1 spectrum to Wind in exchange for some of Wind's own spectrum being transferred to Rogers. That appears to be enough to keep concerns about reduced competition at bay.
"The approval of these spectrum licence transfers is a win for Canadian consumers," Industry Minister James Moore said in a release. "A new wireless competitor has secured valuable spectrum it needs, and high-quality spectrum that went unused for almost a decade will now be deployed for the betterment of all Canadians."
While the deal has the OK of both the court and Industry Canada, it still needs approval from the Competition Bureau.
Deal for Shaw spectrum finalized
There's a third angle to the deal, in that Rogers says it will finalize a plan, previously announced in January 2013, to buy additional spectrum blocks that Shaw acquired in the 2008 spectrum auction but never used.
Rogers will pay $100 million in that move, and package some of Shaw's unused spectrum together with all of Mobilicity's spectrum to Wind to satisfy regulators.
In addition to the $440-million purchase price for all of Mobilicity's assets, Rogers gets $175-million worth of tax losses that the company has accrued over the years that Rogers can now use to reduce its corporate tax bill.
Consumer advocates have concerns that the takeover will harm Canadian telecom customers. "To let another small competitor fall into the hands of incumbents runs counter to government policy," said Geoff White, a spokesman with the lobby group Public Interest Advocacy Centre.
"There's a question of what's going to happen to customers of these alternative providers — when they get gobbled up by the big players … will they try to upsell them?"