Mobilicity less attractive than Wind for Quebecor: analyst

New-entrant wireless carrier Mobilicity is in a holding pattern after the collapse of a buyout deal with Telus Corp. that could harm its chances of being rescued from bankruptcy protection, according to Macquarie Capital Markets analyst Greg MacDonald. MacDonald said in a phone interview Wednesday that Videotron owner Quebecor Inc. now appears to be the only serious bidder for the company and that Mobilicity’s continuing losses and a slide in subscriber numbers leave it in a poor negotiating position. "It's not being run for expansion," he said of Mobilicity's current state. "It's being run to conserve cash." Mobilicity said in a Wednesday press release that it was granted an extension for its bankruptcy protection until Sept. 26, almost a full year after it first filed for protection. Its protection had been set to expire on June 30. The court-appointed monitor for Mobilicity, Ernst & Young Inc., said in a report dated Tuesday that the carrier has "confirmed to the Monitor at this time that the contractual agreement in respect of the TELUS Sale has been terminated," and that "in light of the ongoing mediation, the Monitor is not in a position to comment further at this point on available next steps regarding any transactions or other restructuring alternatives." In affidavit dated Monday, Toronto businessman William Aziz, who is overseeing Mobilicity’s restructuring, said “contractual agreements in respect of the TELUS transaction have been terminated.” It is believed the federal government, which has blocked two previous attempts of Telus to acquire Mobilicity, was not in favour of the most recent agreement, which was announced at a value of $350 million. In April, a report from the Globe and Mail said Industry Canada had threatened to ban Telus from next year's 2500 MHz spectrum auction in retaliation for its continuing efforts to purchase Mobilicity and its wireless spectrum. MacDonald said Mobilicity is in a "tough position" relative to Wind Mobile, which was also created as a result of the spectrum set aside in the 2008 AWS auction for new entrant carriers. "Wind is the more important asset," he said. "It's got more spectrum, it's closer to break-even and it's got more subscribers. But spectrum's the most important thing." He said Quebecor could strike a deal with Wind and avoid Mobilicity altogether. "The negotiating power is in Quebecor's hands," he said. "Mobilicity's not necessary for a fourth-carrier scenario." The latest monitor's report said Mobilicity currently has 157,000 subscribers and expects that number to decline to 155,000 by the end of June. It had as many as 250,000 subscribers at the end of 2012, according to a report from the Globe and Mail. Mobilicity said it had around 165,000 when the latest deal with Telus was announced in April. In a speech at the Telecom Summit on June 17, Wind Mobile CEO Anthony Lacavera said his company now has more than 735,000 subscribers. At the same summit a day later, Quebecor CEO Pierre Dion said the company is interested in becoming Canada's "fourth wireless competitor." He added that "we are contemplating the possibility of consolidation with one or two of the undercapitalized new wireless entrants," in an apparent reference to Wind and Mobilicity. Mobilicity has let go 24 workers from its sales and network real estate departments, effective June 30, leaving it with 41 full-time employees and one part-time worker, according to the court documents. The monitor's report projected Mobilicity will lose $3.8 million between June 14 and Sept. 26. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Mobilicity less attractive than Wind for Quebecor: analyst

News | June 25, 2014

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Mobilicity less attractive than Wind for Quebecor: analyst

News | June 25, 2014

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