DEALTALK-Canada's Telus risks costly snub with Mobilicity bid

Fri Apr 25, 2014 6:47pm EDT
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(Adds notice of mediation in 7th paragraph)

By Alastair Sharp

TORONTO, April 25 (Reuters) - If Telus Corp hopes to press its advantage in an upcoming auction of wireless airwaves, the Canadian telecom may need to abandon its plan to snatch a floundering rival out of creditor protection and back away from a nasty fight with the government.

Canada's Conservative government has aggressively opposed the carrier's expansion plans, which Ottawa sees as a challenge to its policy of encouraging more competition in an industry dominated for years by Telus and its two main rivals, BCE Inc and Rogers Communications Inc.

In effect, Ottawa has warned the entire industry that it will not tolerate any move that could interfere with its initiative.

The government has already blocked two previous bids by Telus to swallow Mobilicity, a low-cost carrier that owns valuable spectrum assets. The third attempt, a C$350 million ($317 million) bid, was announced late last week by Mobilicity and its court-appointed monitor.

Ottawa is now waving a big stick at Telus, warning of dire consequences if the carrier fails to abandon the pursuit, according to a report in the Globe and Mail newspaper on Friday. If Telus will not stand down, the government threatened to shut it out of an upcoming auction of airwaves, the lifeblood of the wireless industry, by changing the rules of the sale, the paper said, citing unnamed government sources.

Telus declined to comment on the Globe and Mail report.

But the company and the government, along with Mobilicity and its debtholders, will have a chance to hash out their differences next week after the court dealing with the issue ordered mediation, to be overseen by a veteran retired judge.   Continued...