Ottawa expected to nix Telus’ second attempt to purchase Mobilicity

Signs are emerging that Ottawa will look unfavourably on efforts by Telus Corp. to revive a scheme for purchasing struggling wireless provider Mobilicity and the spectrum it uses to carry signals.

As The Globe and Mail first reported this week, Mobilicity and Telus are in talks to rekindle a sale that the federal government publicly killed in early June before it introduced new rules that govern spectrum transfers between carriers. Spectrum licenses give a carrier the right to use particular frequencies for its mobile devices.

A set of e-mailed talking points sent to Conservative MPs this week from the Prime Minister's Office suggests the Conservative government's stated desire to stop further concentration in the wireless market will be a major hurdle to green lighting the proposed deal.

Separately, Thursday, a former Parliamentary Secretary to Prime Minister Stephen Harper, Ontario MP Dean Del Mastro, told an investor conference in Toronto that he believes Ottawa will block the transaction.

A Conservative note sent to Tory MPs Tuesday, titled Mobilicity Files for Creditor Protection, left no doubt how little desire Ottawa has for handing a greater share of spectrum to incumbent players.

"Mobilicity [has] filed for credit and bankruptcy protection," the note said. "Media report that Mobilicity and Telus have rekindled takeover talks and that Industry Canada is currently reviewing a new buyout proposal."

While noting that Industry Minister James Moore will review each proposed transaction on a case-by case basis, the note added, very bluntly: "Our policy on undue spectrum concentration is clear and isn't changing. Greater competition results in lower prices and better choice for Canadian families."

The Conservatives, who are dead set on spurring more competition in the wireless business, blocked Telus' last attempt to buy Mobilicity in June, saying they did not want to see a further concentration of spectrum among major incumbents.

Mr. Del Mastro, meanwhile, sat on a panel Thursday at a Toronto conference on Canada's foreign investment rules where he predicted Ottawa would nix a second proposal to merge Telus and Mobicility.

He said that's because the deal would be an unwelcome concentration of spectrum licenses in one company's hands.

In a later interview, he explained himself.

"The government has been clear: its policy is not changing which means undue concentration of spectrum is not something the government is prepared to support," Mr. Del Mastro said.

"My opinion is the government is of the view that the government's position is not changing," he said.

"If Telus becomes the owner of the [Mobilicity] spectrum, we have undue concentration of spectrum."

Mr. Del Mastro, a Conservative MP for Peterborough since 2006, left the Tory caucus last week after he was charged by Elections Canada for allegedly exceeding his campaign spending limit and filing a false accounting of the expenses incurred to win office in the 2008 federal election.

He has rejected the charges and said still backs the Conservative government agenda but will sit as an independent until the Elections Canada charges are resolved.

Mr. Del Mastro served as Parliamentary Secretary to the Prime Minister until September and was then transferred to serve as secretary to ministers and minister of state who are responsible for several economic development agencies.

He quit his Parliamentary Secretary posts when he resigned from caucus.

The Conservative industry minister's office distanced themselves from Mr. Del Mastro.

"Mr. Del Mastro is no longer a member of the Conservative caucus, he does not speak on behalf of the government and Mr. Del Mastro has never discussed this matter with Minister Moore or his officials," Jessica Fletcher, director of communications for Mr. Moore said.

"The minister reviews all transactions on a case by case basis."