Telus and Mobilicity Deal Approved By Ontario Superior Court of Justice

By: Talha Bhatti  |   May 30th, 2013   |   Business, News, O Canada

One of the biggest deals being made in the Canadian telecom sector recently got approval by the Ontario Superior Court of Justice and will allow wireless service provider Telus to go ahead with the purchase of Mobilicity. The courts approval comes after Telus announced its decision on May 16 to acquire its smaller Canadian wireless telecommunication provider for a tidy sum of $380 million. The offer was conditional on approval form Mobilicity “debtholders, the court, the Competition Bureau and Industry Canada.” The first group to approve the purchase were debtholders and with the nod from the court its is likely that Competition Bureau and Industry Canada will also fall in line.

 
David Fuller, Telus Chief Marketing Officer, stated that, “Today’s court decision takes us another important step closer to completing this acquisition which will allow Telus to save the jobs of Mobilicity’s 150 employees and continue service for their 250,000 customers without the disruption that company’s current financial issues could cause.”

 
Mobilicity got its start in 2009 when it setup shop in Ontario and was known as Data & Audio Visual Enterprises Wireless. The company never was able to dig its self out of financial problems and to date the firm had $450 million of debt on its books and was hemorrhaging $30 million a month. The dismal financial situation of the company could not continue and top executives at Mobilicity concluded that in order to provide their current customers service and also keep their jobs was to get bought out by another more stable firm. The two firms started communicating about a deal in 2012 and were able to hammer out a deal while they also received finances to keep operating in February.

 
The current version of the purchase was approved by the Canadian firms on April 25. Mobilicity and Telus got the ball rolling by asking the court to give it permission to sell or restructure the firm. Industry Canada still has final say and will probably look closely at the deal and do a spectrum transfer consultation. Telus and Mobilicity want the purchase to go through by August 9.

 
Telus has claimed that Mobilicity currently has 250,000 subscribers using its services which is less than half of similar competitor Wind Mobile has 600,000.

 
TechVibes says that, “Competition between the big three Canadian telecommunication companies is heating up. With memories of Mobilicity fresh in the minds of all telecommunication start-ups, Canadians may be handcuffed to Telus, Bell and Rogers contracts and without other options for many years to come.”

 
OpenMedia.ca is also negative about the news and says, “will stifle choice and fair treatment of customers in Canada’s already-broken wireless market.” OpenMedia also states that Mobilicity is independent of the three large carriers in Canada who control almost 94% of the market. The organization adds that, “The sale of Mobilicity to Telus will stifle choice in an already monopolistic wireless market. The deal also gives big telecom conglomerates more room to raise prices, as the check on the market provided by new entrants diminishes.”

 

Source: TechVibes