Telus Corp. (T), Canada’s third-largest wireless carrier, is in talks to buy Mobilicity, one of four companies that sought to challenge the country’s incumbents under government moves to boost competition, according to a person with direct knowledge of the deal.
The two firms are working on a letter-of-intent that is unsigned, said the person, who asked not to be identified as the talks are confidential. A deal would value Mobilicity at C$350 million ($345 million) to C$400 million, the person said.
Telus is looking to bulk up against BCE Inc. (BCE) and Rogers Communications Inc. (RCI/B), which have opted to increase business by acquiring sports and other media companies to offer fresh content to subscribers. Vancouver-based Telus has avoided acquisitions and instead tapped the faster-growing economy of western Canada to add subscribers faster than its competitors.
Telus spokesman Shawn Hall declined to comment, as did Sheryl Steinberg, a spokeswoman for Toronto-based Mobilicity. As a private company, Mobilicity doesn’t disclose subscriber numbers, she said. Earlier today, the Globe and Mail reported on the Telus-Mobilicity talks.
Mobilicity, Public Mobile and Wind Mobile, Quebecor Inc. (QBR/B)’s Videotron unit, all bought wireless spectrum in a 2008 auction for new networks in a government-backed plan to spur greater competition in Canada. Bell, Telus and Rogers combined still control 90 percent of the Canadian wireless market. Mobilicity has been competing with Telus and the others for almost three years.
“Any transaction that requires regulatory approval will be considered accordingly,” said Alexandra Fortier, a spokeswoman for Industry Minister Christian Paradis. “We cannot comment on speculation.”
Public Mobile has hired a bank to explore a sale, according to the Globe and Mail. Lisa Papas, a spokeswoman for Public Mobile, declined to comment.
Wind Mobile has been put up for sale by its prospective new owners Vimpelcom Ltd. (VIP:US), a different person familiar with that process has said. The sale has been complicated because the transfer of shares owned by Wind Mobile founder Anthony Lacavera to Amsterdam-based Vimpelcom has yet to be approved by the Canadian government.
While Wind and Mobilicity could be expected to attract the interest of Canadian incumbents because of the valuable airwaves waves they own, current rules prohibit a transfer of ownership of spectrum before 2014.
“Industry Canada is consulting Canadians on the conditions of spectrum license transfer requests, with comments due by May 3, 2013,” Fortier said. “Our government intends to finalize the approach shortly thereafter.”
Rogers agreed in January to pay about C$300 million for spectrum that Shaw Communications Inc. (SJR/B) purchased in 2008 and never used after it shelved plans to start a mobile-phone service. That deal has yet to be approved by Canadian regulators.
Telus rose 0.8 percent to C$70.20 at the close in Toronto.
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