Mobilicity tries to restructure

As wireless carrier Mobilicity is considering a sale to an incumbent, its founder and employees have presented an offer to the federal government that would restructure the small Ontario-based company in an attempt to avoid a pending shutdown of its operations in the event of an acquisition.

A group led by the carrier’s founder and an investor John Bitove has made an offer to Industry Canada to acquire Mobilicity’s 155,000 current active subscribers, its dealer network, the existing call-centre operators and other vital contractors by proposing to set up a so-called “Mobile Virtual Network Operator (MVNO) relationship” with any potential acquirer.

Incumbents Telus and Rogers Communications Inc. are reportedly locked in an escalating bidding war for financially crippled Mobilicity, which has been operating under court-supervised creditor protection since September 2013. The upstart’s creditors and directors met Saturday by conference call to assess the terms of two transactions, which are said to already exceed the $350-million figure Telus had offered when it failed to acquire Mobilicity in 2014. The negotiations are said to be ongoing.

Converting the small carrier into an MVNO would mean Mobilicity would be required to pay a roaming fee to access the network infrastructure of its acquirer including spectrum but allow itself to “emerge with a viable business going forward” and continue to operate in the five major cities that it currently serves: Toronto, Ottawa, Vancouver, Edmonton and Calgary. The manoeuvre would be funded by holding company Obelysk Inc., the private equity firm of Canadian businessman Bitove, who founded Mobilicity in 2008.

“The Big 3 telecoms want Mobilicity spectrum and this group is not objecting to that sale,” the release says. “We owe it to the customers, dealers, contractors and employees to stay in business going forward and not face uncertain demise like Public Mobile or other past wireless operators in Canada.”