UPDATE 2-Public Mobile calls for consolidation of telecom startups

Thu Jun 6, 2013 6:13pm EDT
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By Euan Rocha and Alastair Sharp

TORONTO, June 6 (Reuters) - Canadian telecom startup Public Mobile, which has been bought by venture capital firm Thomvest and private equity firm Cartesian Capital, said on Thursday it sees a need for consolidation among new entrants in a sector dominated by industry behemoths.

The need to combine Wind, Public Mobile and Mobilicity - the three main struggling industry startups - is pressing, said Alek Krstajic, the chief executive of Public Mobile, but he stressed that he does not necessarily see his company as an acquirer, or the one taking a lead role in the consolidation process.

"We see ourselves having a place in consolidation, it's not clear who the consolidator is yet," said Krstajic in an interview shortly after his company announced its new ownership. "The consolidator will be one who brings the money."

Wind Mobile, Public Mobile and Mobilicity acquired wireless spectrum - bandwidth used for phone calls and data transmission - during an auction in 2008. While these companies have helped lower wireless phone bills for many Canadian consumers, they have struggled to turn a profit, forcing them to seek new financing and explore alternatives.

The Canadian government, which wants to boost competition in the sector, hopes investors - other than industry giants Rogers Communications Inc, Telus Corp and BCE Inc's Bell - will back the new entrants.

Public Mobile's acquisition by Thomvest and Cartesian is a big fillip for the Canadian government's efforts.

The deal comes just two days after Canada refused to allow the transfer of wireless spectrum licenses to Telus from Mobilicity. The ruling effectively blocks Telus's takeover of the struggling company.   Continued...