Spotlight on Quebecor after Telus reportedly ends Mobilicity bid

Analysts speculated Wednesday about the possibility of Quebecor Inc. stepping up to purchase Mobilicity following a report that Telus Corp. has withdrawn its offer. An article, which appeared on the Globe and Mail’s website on Wednesday, said Telus has taken its $350-million bid for Mobilicity off the table. Drew McReynolds, a telecom analyst with RBC Dominion Securities, told The Wire Report in a phone interview: “All of this puts Quebecor into the spotlight. They will continue to try to be opportunistic, and it increases the probability of them pursuing a national wireless strategy.” Dvai Ghose, an analyst with Canaccord Genuity, recalled in a research note issued Wednesday that Mobilicity has said five companies had made bids for the company, and he “assumes” Quebecor Inc.’s Videotron unit was among them. However, Ghose added that Videotron will likely wait until new federal roaming and wholesale rules are in place before deciding to go national, and that the larger Wind Mobile would be a more attractive target if it is looking to make an acquisition. Martin Tremblay, Quebecor’s vice-president of public affairs, said in an email Wednesday that the company “won’t comment on this subject.” Jean-Francois Mezei, a Montreal-area telecom consultant with Vaxination Informatique, said Videotron would be a good fit as a potential buyer, given the spectrum the company acquired in key regions across the country in this year’s 700 MHz auction. He noted that Videotron has said in the past it planned to discuss with the federal government conditions that would make it possible to expand beyond Quebec. “And I think one of those conditions was probably getting Mobilicity,” Mezei said in a phone interview. He said questions that remain include how much Videotron would pay for Mobilicity, and whether it is interested only in Mobilicity’s spectrum and customer base or in buying the company “lock, stock and barrel, as Telus was doing.” The Globe article, based on information from an anonymous source, said Telus had informed Mobilicity on Tuesday it was withdrawing its offer because certain “conditions of the deal” had not been met. The source did not say what specific conditions were at issue, the article said. Last month, the Globe reported a senior federal government source had said that retaliatory measures, such as changing the rules to effectively bar Telus from next year’s 2500 MHz spectrum auction, would be taken if Telus did not back down from its efforts to purchase Mobilicity. Mobilicity was among the new entrants that emerged from the 2008 auction of AWS wireless spectrum, along with Wind and Public Mobile, the latter of which was bought by Telus in 2013. Two previous attempts Telus made to purchase Mobilicity have been stymied by Industry Canada, which cited spectrum-transfer rules that prevented Mobilicity from giving up its AWS spectrum to one of the big three incumbent carriers. The spectrum-transfer moratorium expired in February, though Industry Canada has maintained its authority to approve or veto all transfers of wireless-spectrum licences. No one from Telus, Mobilicity or the federal government would confirm Wednesday whether Telus had indeed dropped its bid for Mobilicity. Mobilicity entered bankruptcy protection in September and has been seeking an acquisition ever since. In his Wednesday note, Ghose said: “Given that Industry Canada has given every indication that it will reject incumbent acquisitions of AWS new entrants, even though the 5 year AWS new entrant spectrum set asides have expired, this story is not a surprise, although we are awaiting confirmation from TELUS.” Ghose added that this development, if true, could leave Mobilicity bondholders with “no choice but to close up shop.” Mezei said Mobilicity now has “less time to strike a deal with someone else, because their cash is eventually going to run out. … My guess is that after six months, seven months now, they’re probably really starting to feel the end coming. So they’re going to have to get a deal very soon.” Ernst & Young, the court-ordered monitor in Mobilicity’s bankruptcy filing, has said in court documents that the proposed sale to Telus is “the only alternative likely to provide them any meaningful recovery.” OpenMedia.ca, a group that advocates for open Internet access, issued a press release Wednesday that said the report of Telus ending its efforts to purchase Mobilicity is “welcome news.” OpenMedia executive director Steve Anderson said in the release: “Our already sky-high prices could have increased even further if Big Telecom succeeded in grabbing yet more scarce wireless resources.” — With reporting and editing by Anja Karadeglija at akarad@thewirereport.ca, Peter Henderson at phenderson@thewirereport.ca and Derek Abma at dabma@thewirereport.ca

Spotlight on Quebecor after Telus reportedly ends Mobilicity bid

News | May 21, 2014

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Spotlight on Quebecor after Telus reportedly ends Mobilicity bid

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