Leading operators Rogers and Telus are both interested in acquiring smaller rival Mobilicity, according to The Globe and Mail.
Both recently submitted takeover proposals to the Canadian government for preliminary review, and received a positive response.
Government body Industry Canada indicated approval for either transaction, subject to a final review of a definitive deal.
However, it’s still possible a deal might not occur. If no agreement is concluded within the next week or so, the matter could be postponed until after elections in October.
Mobilicity has been looking for a buyer for some time, but previous efforts were stymied by the government. Telus’ repeated attempts have been blocked because the authorities did not want a sale to one of the country’s leading operators.
Three operators – Bell, Rogers and Telus – dominate the country’s market with respectively 8.1 million, 9.5 million and 8.3 million connections (GSMA Intelligence, Q1 2015 figures) out of a 29.6 million total.
Any takeover of Mobilicty would also need the approval of the judge handling Mobilicity’s creditor protection proceedings.
The company filed for creditor protection in October 2013.
However, the government’s attitude appears to have shifted. A number of factors have changed the competitive landscape. One is that Telus is prepared to transfer some of Mobilicity’s spectrum to Wind Mobile, which has emerged as a more viable competitor in recent months.
In general, spectrum is now more fairly shared around, according to the government. Industry Minister James Moore said spectrum holdings have shifted in recent years. In 2006, the big three operators controlled 98 per cent of radio frequencies. By this summer, newcomers will have 25 per cent of spectrum, said Moore.
The new environment is in contrast to last year when two of Mobilicity backers sued the Canadian government, claiming it failed to fulfil pledges to help the mobile operator compete against the country’s big three players.
The filing claimed negligence, misrepresentation, breach of contract and abuse of public office. It also claimed that Industry Canada assured Mobilicity founder John Bitove that the company could transfer any spectrum licences it acquired to an established player five years after they were issued.
A potential acquisition of Mobilicity by Telus was rejected in 2013 on the grounds that the spectrum was reserved for newcomers for a set period of five years.
Industry Canada subsequently indicated that even after the expiry of the restrictions on the licences issued in 2008, deals involving incumbents may not be straightforward.