Canada blocks Telus deal for more wireless spectrum
By Randall Palmer and Euan Rocha
OTTAWA/TORONTO (Reuters) - Canada rejected the transfer of Mobilicity's wireless spectrum licenses to Telus Corp (T.TO: Quote) on Tuesday, effectively blocking its takeover of the struggling startup as the government seeks to hold back industry leaders from swallowing smaller rivals.
However, Industry Minister Christian Paradis indicated that the government may still approve the big three wireless phone companies buying up airwave spectrum from smaller players after a ban on such deals expires in early 2014, as long as it did not result in "undue spectrum concentration."
During an auction that began in 2008, the government put a five-year ban on the transfer of spectrum - bandwidth used for phone calls and data transmission - set aside for new entrants.
Even though the ban expires only in early 2014, Telus last month struck a C$380 million ($367 million) deal to buy debt-laden Mobilicity because the start-up company faced possible bankruptcy unless it was acquired. Telus asked the government to waive the ban and allow it to take over Mobilicity's spectrum licenses.
Paradis said he believes Mobilicity had lots of options, and bankruptcy was not foregone conclusion. And his ruling to reject Telus' application effectively quashes the takeover deal.
"Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents," Paradis said. "We will not waive this condition of license and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit."
After the expiry of the license transfer ban in early 2014, Paradis said, he would still frown on any license transfer that results in too much concentration of spectrum in the hands of a few players, in a particular region or market. Continued...