Telus wins court approval on Mobilicity purchase
The Ontario Supreme Court today approved Telus Corp.’s offer to purchase financially troubled wireless carrier Mobilicity for $380 million.
The nod from the court follows last week’s decision by debtholders of Mobilicity to okay the deal. However, Telus still needs to obtain consent from the Harper government to finalize the acquisition.
“Following on last week’s vote in favour of the proposal but Mobilicity’s debtholders, today’s court decision takes us another important step closer to completing this acquisition,” said David Fuller, chief marketing officer of Telus, said in a statement today. “This will allow Telus to save the jobs of Mobilicity’s 150 employees and continue service for their 250,000 customers without the disruption that company’s current financial issues could cause.”

On May 16, the two companies announced that Telus has agreed to acquire Mobilicity for $380 million, subject to the approval of smaller carrier’s debtholders, the Competition Bureau and Industry Canada. Last Thursday, Mobilicity’s debtholders voted in favour of the agreement.

Despite the court’s decision that the proposed acquisition can proceed under the Canadian Business Corporations Act, permission from the Harper government is still required to push the deal through.

Mobilicity entered the wireless carrier market in 2009 as an alternative player following a spectrum auction by the government. Mobilicity paid $243 million for its wireless spectrum. Ottawa is set to hold another spectrum auction in November.

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The company has since then managed to sign up 250,000 subscribers, but like fellow standalone carriers Wind Mobile and Public Mobile, Mobilicity continues to struggle to win market share from incumbent carriers.

Telus has more than 7.7 million wireless customers across the country.

The smallest of the three alternative carriers, Mobilicity had been preparing a restructuring plan, but was also reportedly looking for a new buyer before the Telus offer came.

At least two consumer advocacy groups say Telus’ purchase of Mobilicity is bad news for wireless customers.

“Consumers will lose more ground in the cell phone market unless the Industry Minister or the Competition Bureau stops the proposed acquisition of Mobilicity by Telus,” the Public Interest Advocacy Centre (PIAC) and the Consumers’ Association of Canada (CAC) said in a recent statement.

“Losing Mobilicity to Telus means we are that much closer to the big three (Telus, Rogers and Bell) being the only three wireless companies in Canada,” said John Lawford, executive director for PIAC. “Consumers will face noticeably higher prices and less choice if only three major players control the market.”

 



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