Feds approve Telus purchase of Public Mobile

Public Mobile has been bought by Telus, eliminating the small company from Canada’s wireless landscape and leaving Wind Mobile and Mobilicity as the only two surviving startups providing competition to the country’s big telecoms.

Telus received federal approval late Wednesday to buy Public Mobile, primarily a talk-and-text service with 280,000 customers in Ontario and Quebec.

Federal Industry Minister James Moore approved the transfer of Public Mobile’s spectrum licence to Vancouver-based Telus, saying the transaction doesn’t affect competition in the wireless industry.

Canaccord Genuity analyst Dvai Ghose called the deal a “surprise move,” saying it eliminates a small competitor for Telus, Rogers, Bell as well as for Wind Mobile, Mobilicity and Quebecor’s Videotron.

“It also highlights that the new entrants have, by and large, failed,” Ghose said in a research note.

Industry Canada said Public Mobile’s spectrum — radio waves needed to operate cellphone networks — isn’t used for the latest smartphones and data plans.

Public Mobile bought its spectrum in 2008 and it was never under any restrictions that would have prevented it from being sold.

Wind Mobile and Mobilicity bought a different kind of spectrum that the government does not appear to want sold to Rogers (TSX:RCI.B), Bell (TSX:BCE) or Telus (TSX:T) when their spectrum licences expire next year.

“We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers,” Moore said in a statement.

“This means Canadians will continue to benefit from quality spectrum being deployed across the country, resulting in dependable high-speed wireless services with the latest technologies at the best prices.

Telus tried to buy struggling Mobilicity last spring, but the $380-million deal was rejected by Industry Canada.

Financial terms of the Public Mobile deal were not disclosed.

Public Mobile’s customers will be migrated to Telus’s fast network that uses Long-Term Evolution (LTE) technology.

Telus said Public Mobile’s G-block spectrum can be used for LTE networks and for some smartphones, such as the new iPhone 5s and 5c.

“We look forward to the successful completion of this transaction, and migrating Public Mobile’s customers onto TELUS’ world-class 4G LTE network while putting their spectrum to good use for millions of customers across Canada,” Eros Spadotto, Telus executive vice-president of technology strategy and operations, said in a statement.

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