Regulators in Canada have been making a push to enhance competition in the mobile space, with Industry Minister Christian Paradis going so far as to lay out a set of rules for the nation's upcoming 700MHz spectrum auction that he promises will give citizens "more choices and more access at better prices." Granted, that ideal world only works if the carriers can stay afloat long enough to bid. According to William Aziz, Mobilicity's own chief restructuring officer, the operator has been "losing a significant amount of money every month." To that end, he reckons that an "acquisition by Telus is the best alternative," and he seems to think that the $380 million deal will receive a hasty approval considering the circumstances.
The purchase price is thought to be high enough to cover the debts looming over Mobilicity, and it'll give its 150 employees a secure job at Telus. If it sails through, a quarter-million Mobilicity customers should see no interruption in service as the integration takes place. Of course, a secondary benefit for Telus is gaining access to the spectrum Mobilicity currently uses. The end result for customers in the world's nicest country? We'd love to say that one fewer player will result in better service, lower prices and greater fulfillment for all... but something tells us that's probably wishing for a bit much.
[Image credit: Andrew Currie, Flickr]
TELUS agrees to acquire Mobilicity
Mobilicity approaches TELUS to enter into agreement ensuring service continues for 250,000 customers
VANCOUVER, May 16, 2013 /CNW/ - TELUS has entered into an agreement with Mobilicity to acquire the company for $380 million. If the deal receives the required approvals, it would ensure continued service to Mobilicity's 250,000 customers without the risk of disruption.
The agreement between TELUS and the company is subject to conditions including approval by the Competition Bureau, Industry Canada, and Mobilicity's debtholders. TELUS and Mobilicity have informed the government and regulators and both companies are fully committed to working cooperatively to secure timely approvals for the transaction.
"A concern for our customers and employees led us to approach TELUS, which has a reputation for a strong customer focus, as evidenced by their industry leading client loyalty," said Stewart Lyons, Mobilicity President. "I am confident TELUS will look after our employees and our customers, mitigating any disruption to their service, while offering the best outcome for all stakeholders."
William Aziz, Mobilicity Chief Restructuring Officer, continued, "Mobilicity has been losing a significant amount of money every month. The financial strength of TELUS will allow the business to be continued in a way that will benefit customers and employees. An acquisition by TELUS is the best alternative for Mobilicity."
The entire purchase price will be used to satisfy Mobilicity's secured and unsecured debt.
"We look forward to serving Mobilicity's customers and welcoming their employees to the TELUS team," said David Fuller, TELUS Chief Marketing Officer.
If this transaction is approved, TELUS will retain all 150 Mobilicity employees as it integrates the Mobilicity operation into TELUS over the coming months. The employees would have the opportunity to review and secure permanent, long term roles with TELUS.
TELUS has created 1,700 new jobs in Canada over the last two years alone while bringing 4G wireless coverage to 99 per cent of Canadians coast-to-coast.
Acquisition agreement details:
Mobilicity has begun proceedings in the Ontario Superior Court of Justice with a view to obtaining approval for a plan of arrangement under the Canadian Business Corporations Act. The plan of arrangement with TELUS requires an affirmative vote by debtholders, after which TELUS and Mobilicity will seek court approval of a transaction that will see Mobilicity emerge as a wholly-owned subsidiary of TELUS. TELUS has entered into support agreements with a significant number of Mobilicity's debtholders who have committed to vote for the plan of arrangement pursuant to the terms and conditions of the support agreements.
TELUS and Mobilicity anticipate an expeditious legal and regulatory review in view of the current circumstances Mobilicity is facing.
Caution Regarding Forward Looking Statements
This news release contains statements about expected future events of TELUS that are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and predictions and are subject to inherent risks and uncertainties. There can be no assurance that the associated benefits for TELUS shareholders of the acquisition will be realized, or that the expected regulatory and other approvals will be obtained. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future events to differ materially from that expressed in the forward-looking statements. Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements.
TELUS (TSX: T, NYSE: TU) is a leading national telecommunications company in Canada, with $11 billion of annual revenue and 13.2 million customer connections, including 7.7 million wireless subscribers, 3.4 million wireline network access lines, 1.4 million Internet subscribers and 712,000 TELUS TV customers. Led since 2000 by President and CEO, Darren Entwistle, TELUS provides a wide range of communications products and services, including wireless, data, Internet protocol (IP), voice, television, entertainment and video.
In support of our philosophy to give where we live, TELUS, our team members and retirees have contributed more than $300 million to charitable and not-for-profit organizations and volunteered 4.8 million hours of service to local communities since 2000. Fourteen TELUS Community Boards lead TELUS' local philanthropic initiatives. TELUS was honoured to be named the most outstanding philanthropic corporation globally for 2010 by the Association of Fundraising Professionals, becoming the first Canadian company to receive this prestigious international recognition.
For more information about TELUS, please visit telus.com.