Rogers will sell spectrum to Wind after $440M Mobilicity takeover

Mobilicity has accepted a $440-million takeover offer from larger rival Rogers Communications Inc., which will sell off Mobilicity's wireless airwaves to secure the permission of various regulatory bodies for the deal.

A court monitor overseeingMobilicity'srestructuring plan since 2013 has given its approval tothe deal, under whichVaughan, Ont.-based Mobilicity will be purchasedby Rogers for a total price of $465 million $440 million for the company's assets plus "certain adjustments" to make up the remaining $25 million.

Cash-strapped Mobilicityhasabout157,000 customersclustered inOttawa, Toronto, Calgary, Edmonton and Vancouver, and it owns valuable spectrum purchased in a government auction in 2008, one that gave birth to the company and many others, including Wind.

Mobilicitytwice before attempted a saleto Telus before the federal government quashed those deals, sayingit would have consolidated too much wireless infrastructure in the hands of too few players.

This deal is different, however, in that Rogers has agreed to sell offMobilicity's spectrum to other smaller rivals to keep regulators happy.

Industry Canada gives approval

In a press release Wednesday, Rogers said it will sellMobilicity'sAWS-1spectrum to Wind in exchangefor some of Wind's own spectrum being transferred to Rogers. That appears to be enough to keep concerns about reduced competition at bay.

"The approval of these spectrum licence transfers is a win for Canadian consumers," Industry Minister James Moore said in a release. "A new wireless competitor has secured valuable spectrum it needs, and high-quality spectrum that went unused for almost a decade will now be deployed for the betterment of all Canadians."

While the deal has the OK of both the court and Industry Canada,it still needs approval from the Competition Bureau.

Deal for Shaw spectrum finalized

There's a third angle to the deal, in that Rogers says it will finalizea plan, previously announced in January 2013,to buyadditional spectrum blocksthat Shawacquired in the 2008 spectrum auction but never used.

Rogers will pay $100 million in that move, and package someof Shaw's unusedspectrum together with all ofMobilicity's spectrumto Wind to satisfy regulators.

In addition to the $440-million purchase price for all of Mobilicity's assets, Rogersgets$175-millionworth of tax losses that the company has accrued over the years that Rogers can now use to reduce its corporate tax bill.

Consumer advocates have concerns that the takeoverwill harm Canadian telecom customers. "To let another small competitor fall into the hands of incumbents runs counter to government policy," said Geoff White, a spokesman with the lobby group Public Interest Advocacy Centre.

"There's a question of what's going to happen to customers of these alternative providerswhen they get gobbled up by the big playerswill they try to upsell them?"