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Mobilicity chairman John Bitove. The wireless upstart has scoured the globe to find a buyer, contacting ‘more than 30’ potential purchasers, according to court documents filed as part of the company’s restructuring. But the Vaughan, Ont.-based carrier has yet to clinch a binding sale agreement. And time is running out for it to do so.

Peter Power/The Globe and Mail

The federal government's decision to deny Telus Corp.'s request for an exemption from wireless rules so it could buy the struggling new entrant known as Mobilicity has rekindled speculation that somebody has a plan to create a big fourth cell phone competitor.

The thinking goes that one of two things must have happened. Either Ottawa decided that it just simply could not bend the rules and look like it was going backward on wireless competition, even if it meant Mobilicity would be doomed, or someone convinced Ottawa that there is another way to do this that keeps Mobilicity alive in some form.

Who would that be?

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It's been well established that at least a few months ago, everybody but Telus took a pass on Mobilicity. Has that changed? Would Ottawa have thrown Mobilicity, one of its cherished new entrants, off a cliff otherwise?

"We wonder if the government would have considered blocking a TELUS-Mobilicity deal now if a willing new entrant consolidator was absent from the mix; a government decision that aids in the liquidation of a financially pressured carrier would fly in the face of the minister's stated objective," Macquarie analyst Greg MacDonald said in a note Wednesday.

So if there is a willing consolidator, who is it? One option is some new telecom investor that has yet to surface. Just because Mobilicity's sale process didn't draw wide interest, that does not mean bankers are not pitching other ideas constantly.

Another option is Newton Glassman's distressed debt firm Catalyst Capital Group. It controls a large block of Mobilicity bonds and, depending on how some votes and court decisions go, could end up having a say in the company's fate. Then, could he turn around and negotiate a deal to put Mobilicity and fellow new entrant Wind Mobile together? A couple of months ago, it looked like that was what Mr. Glassman was planning, perhaps in concert with the Accelero group of Wind founder Naguib Sawiris. Word was Mr. Glassman was talking to Ottawa about the idea. (He also talked to the Globe and Mail.)

Then came the Telus bid for Mobilicity. Catalyst put out a statement saying that it supported the transaction, and had no interest in ever buying Mobilicity "outright." However, Catalyst went on to state that "Catalyst still believes that the Canadian wireless market can support an independent, strong, national fourth carrier that will offer consumers real choice, while meeting the government`s priority to provide greater wireless coverage at better rates for consumers."

Now with Telus gone, Mr. Glassman's original plan may be back in play. Especially as the government also delayed the wireless spectrum auction, which had some rule quirks that would have made rolling Mobilicity and Wind together pre-auction problematic.

And in the meantime, Acceloro has agreed to buy business network operator Allstream, a business Mr. Glassman knows well as his firm restructured AT&T Canada, which was then turned into Allstream. Analysts have noted that Allstream plus Wind (which Mr. MacDonald dubbed Windstream) starts to look like a much stronger competitor in wireless because it can offer a wider suite of services. Toss Mobilicity into the mix, and you get added scale.

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It all starts to add up to something resembling a real fourth competitor. If that's the case, Mr. Glassman may not be the only one interested.

(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)

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