Canadian number-three operator Telus has agreed to acquire Public Mobile in a deal that avoids the regulatory restrictions that led to the failure of a previous bid for Mobilicity.
The transaction will see Telus obtain 100 per cent ownership of its smaller rival which has 280,000 subscribers. The company operates in Ontario and Quebec.
A previous bid by Telus to acquire new market entrant Mobilicity failed in June as the spectrum licences held by the minor player could not be transferred to Telus by virtue of being reserved for new players for a five-year period.
However, the spectrum held by Public Mobile is not subject to the transfer restriction because it is in an open part of the same spectrum allocation that took place in 2008, meaning it is not set aside for new entrants.
The PCS G block spectrum held by Public Mobile is aligned with spectrum Telus holds in western Canada and “is part of a developing ecosystem that is being driven by the insatiable demand consumers have for access to wireless data applications,” according to Eros Spadotto, EVP of technology strategy and operations for Telus.
The deal should “ensure continuity of service and enhanced functionality” for Public Mobile’s customers, who will be able to access the LTE network run by Telus.
The deal is pending approval from the Canadian Competition Bureau but has been passed by Industry Canada, a government agency.
Financial terms of the transaction were not disclosed although proceeds will be used to pay down Public Mobile’s debt and satisfy equity investors.
The Canadian government’s attempts to attract a fourth major player to the Canadian market to compete with the ‘big three’ of Telus, Rogers Communications and BCE took a blow last month when a spectrum auction due to take place in January 2014 failed to attract interest from any major foreign operators.