Canadian government stands firm on Mobilicity takeover

Dec 9, 2013

It’s the old mobile monopoly problem again. Mobilicity came into being because the Canadian government wanted to inject more competition into the Canadian market, it having settled down into pretty-much a cosy triopoly. So it made spectrum available to new entrants and Mobilicity launched with a band tied up with a five year sales restriction on the valuable spectrum.

Mobilicity has, however, struggled to win subscribers and turn a profit, with less than 200,000 users currently subscribed. It’s now in administration with a view to a sale as a going concern.

The hold-up is around the five year spectrum sale restriction which is due to expire in February 2014. Dominant player, Telus, has been lobbying to have the restriction on the spectrum sale relaxed so it can swoop in and buy the operator, including its valuable spectrum, before it hits the wall and all the subscribers flee.

But now the government has indicated that, far from helping Telus to cement its position in the Canadian market by allowing a sale to go ahead in advance of February, it won’t allow a sale to Telus, or any of the ‘big three’ in Canada, at all, on the basis that no transaction that “decreases competition in the sector to the detriment of consumers," will be allowed.

Now it will be interesting to see what other player might be interested in a foothold in Canada (or not) now that it's clear that Telus won't be allowed to purchase.

The sort of ‘consolidation’ sought by Telus and others in Canada will (apparently) be actively encouraged in Europe if the European Commission gets its ‘connected continent’ proposals past the European Parliament.

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