Mobilicity, Public Mobile up for sale: Report

Wind Mobile isn’t the only wireless startup that’s up for sale, according to a news report.

The Globe and Mail said Friday that the parent company of Mobilicity is in detailed negotiations with Telus Corp., while Public Mobile has hired investment bankers to find a buyer.

Mobilicity was silent on the report. “As a private company we don’t comment on speculation,” media director Sheryl Steinberg said to IT World Canada. Public Mobile couldn’t be reached for comment.

That means all three of the country’s standalone cellular firms could change hands in the near future, putting a risk the Harper government’s hopes for more carrier competition. 

It’s no coincidence that the three are looking for change: Ottawa has scheduled a spectrum auction for frequencies in the 700 MHz band in November and bidders will need access to tens of millions – if not hundreds of millions – if they hope to buy spectrum.

It is unknown whether Ottawa will allow incumbents to buy new entrants, some of whom – like Mobilicity and Wind – can’t sell their spectrum to an incumbent until 2014. Rogers Communications has signed an option to buy the spectrum of Shaw Communications, which also has to comply with a 2014 spectrum sale limitation. Industry Canada is reviewing that deal.

Wind, Mobilicity and Public Mobile came into the market after buying frequencies in the2008 spectrum auction, which set aside spectrum specifically to encourage new entrants to compete against the biggest of the country’s carriers, Rogers, BCE Inc.’s Bell Mobility and Telus Corp. Combined those three incumbents had 97 per cent of the wireless market.

That auction also brought well-funded cable companies into the wireless business, including Quebecor Inc.’s Quebec-based  Videotron, Bragg Group’s Martimes-based Eastlink and Western Canada’s Shaw Communications.

It was hoped that six new players would give Rogers, Bell and Telus a run for their money, particularly the cablecos because they have financial strength. It hasn’t turned out that way. According to Convergence Consulting, the big three held just under 94 per cent of the market, a mere three per cent loss of share after three years of increased competition. The combined new entrants had 6.1 per cent of wireless subscribers at the end of 2012, the research firm estimated, and will have 8.1 per cent by the end of this year.

While Videotron ‘s wireless business is thought to be in good shape — in part because it has Quebecor’s backing — Eastlink only launched service this year and Shaw decided not to get into the business altogether.
 Wind boasts of banner year
Mobilicity, Public Mobile mark 1st anniversaries 


As for the standalones, growth has been slow. At the end of 2012 Wind – with operations in Vancouver, Calgary, Edmonton, the Toronto area and Ottawa — had just under 600,000 subscribers.  Mobilicity – with a similar coverage area — and Public Mobile – which has operations in Toronto, Ottawa and Montreal –haven’t released subscriber numbers but are believed to have fewer subscribers than Wind.

Wind, which paid $442 million for its AWS spectrum in 2008, was initially almost entirely financed by Egyptian-based Orascom Telecom  — which has since sold most of its assets, including the Canadian division, to giant VimpelCom. But after pouring hundreds of millions into Wind, VimpelCom is now looking for a buyer.

Mobilicity, which paid just over $243 million for its AWS spectrum in 2008, is controlled by Toronto entrepreneur John Bitove, with investment from U.S.-based venture capital firms.

Public Mobile, led by CEO Alek Krstajic, is controlled by private Canadian and American investors. It spent only $52 million on spectrum in 2008 in the unwanted G band that doesn’t have as good propagation characteristics as the AWS spectrum. However, owners of spectrum in that band don’t face federal restriction on selling their frequencies to incumbents that new entrants with AWS spectrum have.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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