Court Approves Moblicity-Telus Deal

This week the Ontario Superior Court of Justice approved Telus’ acquisition of Mobilicity. A couple weeks earlier, on May 16, Telus agreed to buy the wireless telecommunication provider for $380 million, pending approval from the debtholders, the court, the Competition Bureau and Industry Canada.

Now the anticipation is winding down as the debtholders have voted in favour for the transaction and the court has allowed the proposal to proceed.

“Today’s court decision takes us another important step closer to completing this acquisition,” said David Fuller, Telus Chief Marketing Officer, “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.”

Founded in Vaughan, Ontario in 2009, Mobilicity or often known as Data & Audio Visual Enterprises Wireless, has been financially struggling. With over $450 million in debt and losing $30 million a month, it became clear for the Mobilicity executives that the only credible way to maintain undisrupted service and job security is to make a deal. In December it began talk with Telus and by February it secured much needed capital to continue operations, while conversations about purchase continued.

SEE ALSO: The End of Wireless Competition in Canada

On April 25, Mobilicity and Telus negotiated a final deal and applied to the court for an order allowing it to rather sale or restructure the organization. Industry Canada is still in need of some time to carefully consider the proposal. And the spectrum transfer consultation will try to reach a decision before the November auction. But the companies are hoping a deal can be closed by August 9.

By May 16, Telus reported that Mobilicity had over 250,000 subscribers, while Wind Mobile had over 600,000.

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.  

Vancouver-based believes the acquisition, if allowed to go through, “will stifle choice and fair treatment of customers in Canada’s already-broken wireless market.” OpenMedia points out that Mobilicity is one of only three carriers in Canada independent of the “Big Three” cell phone companies, who already control roughly 94% of the market.

“The sale of Mobilicity to Telus will stifle choice in an already monopolistic wireless market,” the organization affirms. “The deal also gives big telecom conglomerates more room to raise prices, as the check on the market provided by new entrants diminishes.”

Photo: The Globe and Mail