With Wind buyout, Mobilicity becomes the belle of the ball

Struggling wireless carrier holds the keys to the next spectrum auction for both Quebecor and Wind.

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One question wireless industry watchers are likely asking themselves today is whether Mobilicity is worth more or less than it was at the start of the week.

With the news that Wind Mobile founder Anthony Lacavera, along with a group of Canadian and U.S. investors, has secured a buyout of his company from Russia’s Vimpelcom, the attention turns squarely to fellow new entrant Mobilicity.

If Wind and its 740,000 customers is valued at about $300 million, then surely Mobilicity and its comparatively piddly 150,000 customers is worth considerably less, right?

Not necessarily. The struggling carrier now has one major intangible asset going for it – it’s the last remaining key to a kingdom of potential spectrum riches.

The next auction of spectrum – the airwaves that wireless carriers need to expand and improve their networks – features a unique clause tailored specifically to Wind and Mobilicity. Up to 60 per cent of the airwaves being sold early next year are reserved for smaller companies with operating presences in the areas of license. In Ontario, Alberta and B.C., only Wind and Mobilicity qualify.

With Wind’s recapitalization, three possible scenarios present themselves. First, if the current status quo were to continue until then, struggling Mobilicity won’t be able to bid and Wind will have a cake walk to cheap spectrum, assuming that its new investors would pony up the minimum fees required. They’d be crazy not to, given that they’d be getting an incredibly valuable resource at rock-bottom prices.

Second, Quebecor buys Mobilicity so that it can qualify for the special terms. The Quebec-based company bought 700 MHz spectrum in Ontario, Alberta and B.C. earlier this year and has signaled that it wants to expand. It theoretically could still do so with just the spectrum it already has in hand, but again, passing up an opportunity to acquire even more airwaves for a relatively low price wouldn’t be smart.

Third, Wind buys Mobilicity. Again, there’s no indication the newly stable company’s investors are willing to make that kind of an outlay, but it may actually be the cheaper option than doing nothing and hoping for the best. If Quebecor buys Mobilicity, Wind will have competition in the upcoming auction – and that could get expensive quickly. It was Quebecor, after all, that shut Wind out of Quebec back in the 2008 auction by effectively outbidding its desire to be a truly national carrier.

There’s always the fourth possibility that Quebecor and Wind could work together to build the government’s hoped-for fourth carrier, but history suggests that’s unlikely. Quebecor, through its Videotron unit, bought its spectrum in 2008 entirely so that it could control its own wireless destiny and not have to depend on Rogers, its wholesale partner at the time.

Similarly, Wind has finally become the master of its own figurative fate. Lacavera has always talked like a man who wants to sit at the head of his own table, a position he might have to give up or share once again if another larger stranger were invited in.

That’s why the race for Mobilicity is on. Not too long ago, the floundering company looked like a lame duck that nobody wanted – or, thanks to government intervention, that nobody could have. Now, it’s the figurative belle of the ball, at least for two possible suitors.

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2 Comments on With Wind buyout, Mobilicity becomes the belle of the ball

  1. Hmmm, Mobilicity is now worth something not for its small client base but because it has first dibs on the upcoming spectrum auction along with Wind.

    When the dust finally settles, I wonder how long it will be before we see better prices for wireless.

  2. Mike Oxlong // April 11, 2016 at 11:15 pm // Reply

    Wind mobile is full of wind. My phone shows full bars, then 3, then 2:then No Service! At random, then over to “Wind away” and then eventually it gets back to Wind and after a 5 minute delay, the thing finally starts working again. Often OUTDOORS in Edmonton i will notice IM PAYING EXTRA to use it since it has decided to switch to roaming all of a sudden. Ive called their customer service, they said it might be my phone so i used another phone that worked with Wind, its no better. I can be sitting in my car just north of downtown or sitting in the park even, and im using the internet and all of a sudden it cuts out for 5 minutes, only to return at full speed randomly. Just avoid the stress of such a WIND BAG LOAD OF BOLLOCKS and go with ANYTHING ELSE!

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