TORONTO (Reuters) - Canadian telecommunications startup Public Mobile said on Thursday that it was acquired by venture capital firm Thomvest Seed Capital and private equity firm Cartesian Capital, a deal that points to active interest in new entrants to the sector.
Privately held Public Mobile, is based in Toronto and provides wireless coverage in Ontario and Quebec. Terms of the deal were not disclosed.
The announcement comes just two days after Canada refused to allow the transfer of wireless spectrum licenses to Telus Corp (T.TO) from Mobilicity, another startup. The ruling effectively blocks Telus’ takeover of the struggling company.
The Canadian government, which wants to boost competition in the sector and reduce wireless phone bills, hopes investors other than industry leaders Telus, Rogers Communications (RCIb.TO) and BCE Inc’s (BCE.TO) Bell will invest in the new entrants.
Public Mobile, Mobilicity and other new companies bought wireless spectrum during an auction in 2008 and have helped to lower wireless phone bills. But these companies have also struggled to turn profits, forcing them to explore alternatives.
“Circumstances in the Canadian wireless industry have created a window for Canada’s fourth wireless player to emerge,” Thomvest managing director Stefan Clulow said in a statement.
Thomvest is a Toronto-based investment vehicle backed by Peter Thomson. He is chairman of Woodbridge, the Thomson family investment company that owns a majority stake in Thomson Reuters Corp (TRI.TO). Cartesian is based in New York.
Privately held Public Mobile, which provides mobile coverage in Ontario and Quebec, also said it planned to take part in the government’s upcoming auction of 700 megahertz spectrum, which is bandwidth that can be used for calls and data transmission.
Telus had warned that Mobilicity might go bankrupt if the government blocked its proposed takeover.
Ruling against that proposal earlier this week, Industry Minister Christian Paradis said he believed that Mobilicity and other new industry entrants had many financing options, and bankruptcy was not foregone conclusion.
Reporting by Euan Rocha; Editing by Lisa Von Ahn and Janet Guttsman