Telus says it would consider Moblicity bid
Telus says it would consider Moblicity bid
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Christine Dobby | 13/05/09 | Last Updated: 13/05/09 6:02 PM ET
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Ryan Remiorz/The Canadian PressTelus CEO Darren Entwistle acknowledges that spectrum is “quite important” for his company’s growth plans as it works to expand its fourth-generation, or LTE, network.
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MONTREAL • Mobilicity is officially on the block and depending on feedback Darren Entwistle gets from the government, Telus Corp.’s chief executive would consider buying what he calls a “nice to have” asset.
Data & Audio-Visual Enterprises Holdings Inc., the Vaughan, Ont.-based wireless startup that does business as Mobilicity, is at least $450-million in debt and in late April it got court approval to hold investor meetings to consider either a restructuring or sale.
Its books might be a mess, but Mobilicity spent $243-million acquiring radio airwaves set aside specifically for new entrants to Canada’s wireless market during a 2008 auction and the country’s three largest players, Telus, BCE Inc. and Rogers Communications Inc. undoubtedly have their eyes on that spectrum.
If the government is supportive then we look at pursuing that opportunity
Mr. Entwistle acknowledges that spectrum is “quite important” for his company’s growth plans as it works to expand its fourth-generation, or LTE, network to satisfy customers’ “insatiable appetite” for mobile data, but says he is not desperate for it.
“Telus does not need to do an acquisition to realize the full benefits of our strategy,” he said in an interview after his company’s annual general meeting in Montreal Thursday.
“We can get there organically. That’s a great position to be in because it allows you to be highly discretionary as it relates to any corporate development opportunities,” Mr. Entwistle said, adding such opportunities are judged as “nice to have rather than need to have.”
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The long-time CEO of the Vancouver-based telecommunications company would not comment directly on Telus’s plans in relation to Mobilicity but said if it were to consider acquiring one of the new entrants, it would consult with the government first to get a sense of whether the transaction would be feasible.
The licences for the airwaves Mobilicity and other new entrants such as Wind Mobile acquired were subject to a set-aside and it is not clear whether Industry Canada will permit their sale or transfer to an incumbent operator when the five-year terms expire starting next year.
“Rather than go out and try to do something that is less than clear from a corporate development perspective in terms of the acceptability with the Canadian government, we would go and ask the government,” Mr. Entwistle said. “If the government is supportive then we look at pursuing that opportunity.”
Shaw Communications Inc. acquired set-aside spectrum during the 2008 auction but later abandoned its plans to build a wireless network. In January Rogers announced that it purchased a $50-million option to buy those unused airwaves in 2014 when the licences expire.
But the government has gone to great lengths to foster conditions for a fourth wireless competitor in every region and Industry Minister Christian Paradis said last month, “The intent of the policy was not to have this set-aside spectrum to end (up) in the hands of incumbents.”
The industry could soon get a sense of what exactly the ministry plans to do about the issue as final submissions on a consultation on the rules around spectrum transfers were due last Friday and a new framework is expected within weeks.
“I would argue that spectrum in the hands of Telus will be a much more powerful benefit for Canadians than in the hands of a new entrant in financial distress or in the hands of a new entrant that wants to leave the country and invest their dollars elsewhere,” Mr. Entwistle said, referencing Mobilicity and Wind Mobile’s foreign owner VimpelCom Ltd., respectively.
Spectrum in the hands of Telus will be a much more powerful benefit for Canadians than in the hands of a new entrant in financial distress
Telus’s wireless division is a crucial part of its business and at $1.5-billion in sales, accounted for more than half of its revenue in the first quarter, according to its report out Thursday morning.
The company’s wireline division had $1.3-billion in sales and reported overall revenue for the quarter of $2.76-billion, up 4.8% from $2.63-billion in the same quarter last year.
It had first-quarter profit of $362-million or $0.56 per share, up 13.5% from $319-million or $0.49 per share in Q1 2012.
Telus picked up 59,000 new postpaid subscribers, in line with the figure larger competitor BCE Inc. reported Thursday morning and well ahead of the 32,000 net new postpaid customers Rogers reported in its first quarter last month.
The company’s results were largely in line with analyst expectations. Its shares gained 1.28% to close at $37.17 on the Toronto Stock Exchange Thursday.