Mobilicity still talking to Industry Canada about a buyer

Struggling Mobilicity is still talking to Industry Canada about a potential sale of the company, but won’t say if big telecom Telus is making a second attempt to buy the small wireless carrier.

“We’ve never disclosed who the prospective purchaser is,” lawyer Orestes Pasparakis said Thursday in an interview from Toronto.

“The company is in discussion with Industry Canada (about the proposed deal) and those discussions are continuing,” Pasparakis said.

The Globe and Mail quoted sources as saying Mobilicity is in talks with Telus to restart a sale process that was killed by the federal government last June.

Telus (TSX:T) itself declined to say it was trying to buy Mobilicity for a second time.

Telus tried to buy Mobilicity for $380 million but the transaction was rejected by Industry Canada because the small company’s licence for spectrum — radio waves needed to operate cellphones — doesn’t expire until next February, which would complicate a sale.

A condition of Mobilicity’s entry as a new wireless player in Canada almost five years ago was that its spectrum licence could not be sold before it expired.

A spokeswoman for federal Industry Minister James Moore said Thursday that there had been no change in the government’s stance regarding transfer of spectrum, saying Mobilicity had sought Industry Canada’s views on a spectrum licence transfer and it had provided “a response in confidence.”

“(But) as we indicated yesterday, our government will continue to enforce the moratorium on the transfer of AWS spectrum to incumbents,” said Jessica Fletcher, the minister’s director of communications.

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

On Wednesday, Telus was given federal approval to buy small talk-and-text provider Public Mobile, which was not under any sale restrictions.

Mobilicity said it’s business as usual for its customers and added its creditor protection has been extended by the courts until Dec. 20 while it awaits a ruling from Industry Canada about the potential transaction.

Meanwhile, the company’s chief operating officer, Stewart Lyons, announced he is leaving.

“I’m proud of the team at Mobilicity and what we accomplished but it’s time for me to move on to another opportunity,” Lyons said in a statement.

The Toronto company, which launched in 2010, has about 215,000 no-contract cellphone customers and operates in Toronto, Ottawa, Calgary, Edmonton and Vancouver.

Mobilicity and Wind Mobile, which is also looking for a buyer, are the remaining independent cellphone startups from the federal government’s efforts to create more competition five years ago in a market dominated by big telecoms Telus, Bell (TSX:BCE) and Rogers (TSX:RCI.B).

The three independent telecom companies have fewer than one million subscribers, while the big three have a combined total of about 26 million.

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