Mobilicity monitor says Wind promotion did little harm

New court documents show Mobilicity lost only 1,600 customers during the first four months of 2015 despite Wind Mobile’s offer of six months of free service to defectors from Mobilicity. An April 29 report from Ernst & Young Inc., Mobilicity's court-appointed monitor in its bankruptcy proceeding, said Mobilicity expected to have a "healthy" base of 157,000 active customers at the end of April, down from 158,600 at the end of 2014, despite “one of the Applicants’ main competitor’s offering six months of free service to any Mobilicity customers without restriction.” In January, Wind announced it would provide Mobilicity customers a half-year of unlimited talk, text and data, and would waive the usual $25 charge for new SIM cards for customers bringing their own phones. The monitor's report said Mobilicity's churn rate during the year's first quarter was 5.1 per cent, in line with the company's expectations. It said the company had 24 per cent more gross additions that it did in the same period a year earlier. Troy Crandall, a telecom analyst with 3Macs, said he is somewhat surprised so few Mobilicity customers have left the carrier, but speculated that relatively few customers were likely aware of the company's bankruptcy protection or of the offer Wind Mobile was making. "Also, I believe if most people are happy with a service and its cost, they tend to stick with it," Crandall said in an email. Mobilicity has been in bankruptcy protection since September 2013. It was seeking an extension of protection beyond a May 8 deadline until Aug. 31, which it announced in a press release Friday it was approved for. Crandall said he's not surprised by another extension of Mobilicity's bankruptcy protection, which will extend this status to almost two years. "There are a lot of moving parts right now in the wireless industry with many unknowns making it difficult for a potential investor to make a business decision," he said. "As an example, even fairly well established players like Quebecor won’t decide on national rollout until after it learns of the decision on Tuesday." According to the monitor's report, Mobilicity expects $22.5 million in revenue and $25.4 million in expenses between April 25 and Sept. 4, leaving an operational deficit of $2.9 million. It said that if business stays consistent and its lenders don't demand immediate repayments of some loans, the company would have $4.5 million in cash to fund operations until the end of August and not require further financing. The latest report also provided insight into Mobilicity’s securing of $62 million for a deposit in the AWS-3 auction and the carrier’s subsequent lack of bidding. A previous monitor's report, dated March 3, explained that another rounding of financing for up to $10 million was sought for more "flexibility" in the auction. The more recent report said that one of its main lenders, Catalyst Capital Group Inc., objected to conditions of the financing just ahead of the auction, thus preventing Mobilicity from bidding. It would have qualified to bid for 60 per cent of the spectrum available that was set aside for "operating new entrants," meaning it would not have had to compete with major mobile service providers like BCE Inc., Roger Communications Inc. and Telus Corp. for most of the spectrum up for grabs. Wind ended up with the set-aside spectrum in southern Ontario, Alberta and British Columbia. The monitor's report said the $62-million deposit for that auction has been returned to lawyers for the lenders, while balance of $1.9 million for accumulated fees and interest on that financing remains outstanding. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Mobilicity monitor says Wind promotion did little harm

News | May 1, 2015

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Mobilicity monitor says Wind promotion did little harm

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