Telus Corp. is buying urban-focused wireless upstart Public Mobile for an undisclosed price, eliminating an independent player that had struggled to attract a critical mass of customers.
Vancouver-based Telus said late Wednesday that it will take over the service of Public Mobile’s 280,000 wireless customers, assuming the transaction is approved by the Competition Bureau. The deal has already received the blessing of Industry Minister James Moore, only months after Ottawa blocked Telus from buying another wireless competitor, Mobilicity, for $380-million.
The deal comes at a time when the three large telecommunications companies are fiercely competing for customers and the rights to spectrum, the airwaves used to transmit data and voice traffic. The government has put in place new restrictions on their ability to buy spectrum from smaller rivals, in order to promote a policy of ensuring at least four wireless carriers in each regional market.
However, Public Mobile’s spectrum is considered lower quality and is of “significantly lesser value than other types of spectrum,” Mr. Moore said, making it eligible for transfer.
Telus said the airwaves could be combined with the company’s networks. “Public Mobile’s G block spectrum aligns well with matching spectrum Telus holds in western Canada,” said Eros Spadotto, executive vice president of technology strategy and operations at Telus.
“The spectrum was acquired by Public Mobile from the open part of the 2008 auction, not from that set aside for new entrants, so is not subject to a transfer restriction,” he said.
Public Mobile’s future became hazy after the company did not register for the government auction of prized 700 megahertz frequency spectrum set to take place in January, 2014, which competitors such as Rogers Communications Inc., BCE Inc. and Telus will use to build out their networks.
Mr. Moore said in his statement the deal would not decrease competition in the wireless sector or be to the detriment of consumers, and stated that the government would reject any spectrum transfer requests itfelt to compromise those interests.
Public Mobile was bought by a venture capital firm and a private equity group in firm in June, as other investors including a large pension fund backed away from the business they helped launch in 2010.
At the time it was thought that the capital from Thomvest Seed Capital Inc. and Cartesian Capital Group LLC would give Public Mobile the boost it needed to compete for more valuable spectrum, giving it a shot at competing with larger telecom players and other struggling independents.
Selling to Telus now was the right decision for customers and investors, said Alek Krstajic, Public Mobile’s CEO, in a statement. “This transaction is the best option to guarantee continued quality service for our customers and to maximize the opportunity for our employees and investors,” he said.
Anthony Lacavera, CEO of independant rival Wind Mobile, voiced his approval of the government’s decision to allow the sale. “This transfer [of spectrum] doesn’t affect the competitive landscape,” he said.
Wind had looked at combining with Public Mobile in the past, Mr. Lacavera said, but had never been interested in buying the company outright because the two companies’ networks weren’t compatible. Wind and Mobility both have AWS spectrum.
Mobilicity is currently operating under the protection of the Companies’ Creditors Arrangement Act while it restructures.
Sources have told the Globe that the wireless provider is again seeking a sale to Telus. Ottawa blocked a deal between the companies in June because of competition concerns.
|RCI.B-T Rogers Communications||47.60||
|Add to watchlist|
|BCE-T BCE Inc.||46.54||
|Add to watchlist|
|T-T TELUS Corp.||36.52||
|Add to watchlist|