UPDATE 2-Canada's Telus agrees to buy start-up Public Mobile

Wed Oct 23, 2013 7:56pm EDT
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By Alastair Sharp and Euan Rocha

TORONTO Oct 23 (Reuters) - Canadian telecom company Telus said on Wednesday it has agreed to buy 100 percent of struggling startup Public Mobile from private equity firm Cartesian Capital and Thomvest Seed Capital, a Toronto-based investment vehicle backed by Peter Thomson.

The terms of the deal were not disclosed.

The Canadian government said in a separate statement that it has approved the transfer of Public's spectrum licenses to Telus, paving the way for the deal to proceed.

Ottawa has been eager to encourage more competition in the wireless sector, and has frowned on dominant carriers buying more attractive airwaves used by small companies.

The approval of the spectrum transfer indicates that the Canadian government remains open to allowing such deals in select circumstances.

Unlike spectrum used by other new entrants such as Mobilicity and Wind Mobile, the spectrum licenses owned by Public were not part of the airwaves that were set aside for new entrants during a 2008 auction. Ottawa put a five-year ban on the transfer of that set-aside spectrum, or bandwidth used for phone calls and data transmission.

Telus had previously sought to buy rival startup Mobilicity, but their initial C$380 million ($366 million) attempt was rebuffed by the government. Mobilicity, which has since sought creditor protection, is now attempting to revive a deal.   Continued...