The deal for Canadian number-three operator Telus to buy relative newcomer Public Mobile will not be challenged by the country’s competition authority.

The Competition Bureau issued a ‘No Action Letter’ to Telus regarding the transaction, “after determining that the proposed transaction is unlikely to substantially lessen or prevent competition in the sale of mobile wireless telecommunications services in Southern Ontario and Greater Montreal”.

The transaction, agreed in October, will see Telus obtain 100 per cent ownership of its smaller rival which has 280,000 subscribers across Ontario and Quebec.

The Commissioner was concerned that the acquisition of Public Mobile would see its $19 per month unlimited talk plan scrapped sooner than planned. However, Telus said it would continue to offer the plan until the end of 2014.

“Our review concluded that remaining non-incumbents are likely to continue to provide effective competition in areas previously served by Public Mobile,” said John Pecman, commissioner of competition.

Pecman added that with the majority of subscribers covered by the three national incumbent providers, the bureau “will continue to closely monitor the evolution of competition in Canada’s wireless telecommunications industry and take action where appropriate”.

Industry Canada, a government agency, approved the deal in November.

The transaction avoids the regulatory restrictions that led to the failure of a previous bid by Telus for new market entrant Mobilicity in June. The spectrum licences held by Mobilicity could not be transferred by virtue of being reserved for new players for a five-year period.

The spectrum held by Public Mobile is not subject to the transfer restriction because although allocated through the same 2008 spectrum issue, it was not set aside for new entrants.

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.