Telus buys Public Mobile in government approved deal

The new entrant wireless carrier that once said it would come out of any market consolidation as a buyer – not a seller – has been acquired today by Burnaby, B.C.-based Telus Corp.

Formed in 2008 after spending $52 million at the Industry Canada wireless spectrum auction for unwanted G-band PCS spectrum, Public Mobile found a handset partner in China-based ZTE and launched a low-cost, unlimited talk-and-text service in Montreal and Toronto. Today Telus takes a 100 per cent ownership stake in the company, acquiring both its spectrum and its 280,000 customers.

Terms of the transaction have not been disclosed. Proceeds of the sale will go to Public Mobile’s debt and equity investors.

James Moore, Minister of Industry issued a statement saying the federal government approved the sale. In a provided statement, he says:

“G-block spectrum licences were acquired in the 2008 spectrum auction but were not part of the 2008 Advanced Wireless Services (AWS) set-aside. G-block spectrum is not used for the latest data plans and smart phones in Canada and is of a significantly lesser value than other types of spectrum. This transaction does not materially change the spectrum concentration of incumbents in this country and therefore will not diminish competition in our wireless sector.

“Canadians have been clear that they want more choice, better service and lower prices in our wireless sector. Our government will continue to enforce the moratorium on the transfer of set-aside AWS spectrum to incumbents. We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers.

“This means Canadians will continue to benefit from quality spectrum being deployed across the country, resulting in dependable high-speed wireless services with the latest technologies at the best prices. As we stated in the Speech from the Throne, we will continue to keep consumer interests at the core of our government’s decisions.”

Moore had previously blocked a Telus takeover of Mobilicity, saying it was not in the interests of wireless competition. Other new entrant Wind Mobile is also looking for a buyer.

In a press release issued by Telus, Public Mobile CEO Alek Krstajic says the deal was the best one on the table following a strategic review. He says the “transaction is the best option guarantee continued quality service for our customers and to maximize the opportunity for our employees and investors.”

Krstajic had previously expressed interest in acquiring other new entrants to the wireless market in Canada. At an event held in August 2012 to launch a music download service he said: “If there is a consolidation, we’re at a point now, very clearly, we are buyers not sellers.”

Until recently, Public Mobile had indicated it would participate in the 700 Mhz spectrum that Industry Canada is expected to hold in January. Public Mobile previously disagreed with Telus over how that spectrum auction should be organized. While Public Mobile wanted wireless spectrum reserved for new entrants, Telus preferred a method that would see caps put on spectrum purchased by each bidder.

In June, Public Mobile was acquired by Toronto-based Thomvest Seed Capital and New York-based Cartesian Capital. The terms of that deal were also not disclosed.

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Jim Love, Chief Content Officer, IT World Canada

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Brian Jackson
Brian Jackson
Editorial director of IT World Canada. Covering technology as it applies to business users. Multiple COPA award winner and now judge. Paddles a canoe as much as possible.

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