TELUS to Acquire Mobilicity for $380M

The Canadian wireless market is once again heading toward less choice as one of the country's three largest wireless carriers, TELUS, has entered into an agreement to acquire newcomer Mobilicity for $380 million. Fortunately, if the deal is approved, TELUS said it will continue service for Mobilicity's current subscriber base of 250,000, though it is unclear if they will have access to the TELUS network after the deal goes through.

The agreement between the two companies must be approved by the Competition Bureau, Industry Canada and Mobilicity's debt holders, but both TELUS and Mobilicity say they are fully committed to working together in order to secure timely approvals of the transaction.

Mobilicity launched in 2010, offering services to parts of Ontario, British Columbia and Calgary and promising Canadians simple wireless plans. The carrier is very similar to Wind Mobile, which offers similar coverage and pricing, but unlike Wind, which recently called 2012 its strongest year ever, Mobilicity has been struggling for some time. In fact, the purchase price will be used to satisfy the carrier's secured and unsecured debt.

"Mobilicity has been losing a significant amount of money every month," said William Aziz, Mobilicity's chief restructuring officer."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."

In February, Mobilicity entered into a $75 million second lien financing, but it was apparently not enough to keep the carrier afloat.

While this acquisition may have some consumers concerned about how it will impact competition in Canada's wireless market, it is definitely a positive development for both Mobilicity's subscribers and its employees. Indeed, all 150 of Mobilicity's employees will be retained as the company is integrated into TELUS in the coming months. These employees will be able to review and secure permanent long term roles with TELUS.