Mobilicity to be purchased by Rogers, pending government approval [Update: it’s official]

Update, June 24th: It’s official, folks. Mobilicity has filed court documents accepting an offer from Rogers for $465 million. The companies plan to go to court to get the deal approved, but the government could still block the deal. Mobilicity service will continue unabated for the foreseeable future.

More to come.

Mobilicity is set to be purchased by Rogers for between $400 million and $450 million, according to sources at The Globe and MailThe downtrodden new entrant, which Obelysk Inc., a holding company with around 30% ownership of the company, publicly admitted was striving to become an MVNO, is to be purchased by Canada’s largest telecom if the government agrees to the deal.

While negotiations between Telus and Mobilicity continued into this week, Rogers reportedly offered the smaller provider, which has around $525 million in outstanding debt and is under court-ordered creditor protection, a more attractive offer.

The $400-$450 million purchase amount hasn’t been publicly confirmed from either party, but last week both Telus and Rogers were reported to have offered around $350 million for the new entrant. According to The Globe, Telus offered more than Rogers, but Mobilicity’s creditors felt that Rogers was a better candidate for government approval.

As part of the deal, which Industry Canada has yet to allow, Rogers will have to transfer a portion of Mobilicity’s Ontario-based AWS spectrum, for which it paid over $260 million in 2008, to Wind Mobile.

In 2013, Telus attempted to purchase Mobilicity, but a dearth of available spectrum and a different business climate led the government to put stricter rules on incumbents buying new entrants. With an influx of new spectrum from three auctions in the past two years, Wind Mobile is in a much better position to play the role of the government’s “fourth viable competitor” in markets like Ontario, Alberta and British Columbia.

Wind, which purchased 30Mhz of AWS-3 spectrum in a recent auction, is primed to launch an LTE network in the next year. By accepting 10Mhz of AWS spectrum from this Rogers-Mobilicity deal, Wind could fill in many of its coverage holes in Southern and Eastern Ontario.

Mobilicity is reportedly set to take the proceedings to court should the government block the acquisition.

[source]The Globe and Mail, Financial Post[/source]