Government reportedly ready to shun TELUS from 2500Mhz spectrum auction if they continue to pursue Mobilicity

The 2500Mhz spectrum auction is set to begin April 14th, 2015 and a new report in the Globe says that TELUS might be shunned from participating if they continue its path to acquire Mobilicity.

Mobilicity has been in bankruptcy protection for the past number of months and recently auctioned off its assets, which includes 10 spectrum licenses and 165,000 subscribers. Mobilicity’s Chief Restructuring Officer William Aziz said last week that “six organizations submitted participating materials and five bids were received,” but it was TELUS’ $350 million offer deemed “to be an acceptable transaction.”

TELUS’ quest to acquire Mobilicity has been denied twice by the government and many believe deal is “dead on arrival.” The main reason is that the AWS spectrum that Mobilicity purchased in 2008 was set aside to inspire new wireless competition in Canada and should not be sold off to a larger wireless player.

When Industry Canada shut down TELUS’ first proposed $380 million buyout last June, Industry Minister James Moore stated that the “spectrum set aside for new entrants was not intended to be transferred to incumbents. We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit.”

The expiry of the moratorium on the transfer of Mobilicity’s spectrum licences expired in February and Mobilicity believes selling to TELUS “will not affect competition in the Canadian wireless sector, satisfies the criteria considered by Industry Canada.”

The Globe’s senior government sources say that “If TELUS doesn’t drop efforts to acquire spectrum set aside for new entrants, the Harper government is prepared to change the rules of the upcoming wireless auction that could effectively bar TELUS or any incumbent from acquiring that spectrum… If companies like Telus think the government will allow them to stockpile spectrum that was set aside for a fourth player, and access new spectrum in future spectrum auctions, they are kidding themselves.”

If the report is accurate, this is “unprecedented action” and will definitely send a message that the government is serious about “fostering competition among wireless providers.” The 2500Mhz spectrum can assist carriers in reaching rural areas and also enhance its LTE (Long-Term Evolution) network.

The Industry Minister stated yesterday that he’ll share his thoughts on the proposed deal “soon.”

Source: Globe