Telus is trying yet again to acquire struggling wireless company Mobilicity in a deal worth $350 million after being rebuffed by the federal government twice last year. The difference this time? The moratorium on spectrum transfers from so-called new entrants to big carriers that began five years ago is now up.
Under those original rules, Telus or any of the two other big cellphone companies (Bell or Rogers) would have been free to acquire Mobilicity and its prized airwaves, or even Wind Mobile for that matter, as of early this year. But in June last year, the government changed all that with a new set of rules that gave it the power to review all spectrum transfers. In no uncertain terms, Industry Minister James Moore has repeatedly and ardently stated, “We will not approve any spectrum transfer request that results in excessive spectrum concentration for Canada’s largest wireless companies, which negatively affects competition in the telecommunications sector.”
Not surprisingly, Bay Street is trying to make a case for why the Mobilicity sale should be allowed. Telus would get to take out a competitor – more on this in a second – and it’s also the best possible outcome for the smaller company’s investors. To this extent, some financial analysts are even overstepping their roles in trying to give Moore and the government a face-saving out. As TD Securities analysts wrote in a note to clients last week: Read the rest of this entry »