Telus to buy struggling startup Public Mobile

Telus to buy struggling startup Public Mobile

Telus Corp. (TSE:T), Canada’s third-largest wireless operator, received federal approval late yesterday to buy struggling startup Public Mobile, primarily a talk-and-text service with 280,000 customers in Ontario and Quebec, for an undisclosed price.

Federal Industry Minister James Moore approved the transfer of Public Mobile’s spectrum licence to Vancouver, British Colombia-based Telus, saying the transaction doesn’t affect competition in the wireless industry.

The Public Mobile transaction is still subject to approval from Canada's Competition Bureau.

The move has left Wind Mobile and Mobilicity as the only two surviving startups providing competition to Canada's big telecoms -- Bell, Rogers and Telus.

Moore said Public Mobile's spectrum – radio waves needed to operate cellphone networks – isn't used for the latest smartphones and data plans. Public Mobile’s spectrum is considered lower quality and is of “significantly lesser value than other types of spectrum,” Mr. Moore said, making it eligible for transfer.

Public Mobile bought its spectrum in 2008 and it was never under any restrictions that would have prevented it from being sold. Wind Mobile and Mobilicity bought a different kind of spectrum.

“We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers,” Moore said in a statement.

Telus said in a separate statement that it has agreed to buy 100 percent of Public Mobile, launched in 2009, from private equity firm Cartesian Capital and Thomvest Seed Capital, a Toronto-based investment vehicle backed by Peter Thomson.

Public Mobile’s customers will be migrated to Telus’s fast network that uses Long-Term Evolution (LTE) technology.

Telus said Public Mobile’s G-block spectrum can be used for LTE networks and for some smartphones, such as the new iPhone 5s and 5c.

Telus tried to buy struggling Mobilicity earlier this year, but the C$380-million deal was rejected by Industry Canada.

Telus shares closed up 2 percent to C$36.47 in Toronto yesterday, extending gains for a fifth day. The stock is up 12 percent this year, compared with a 6.5 percent rally for the benchmark S&P/TSX Composite index (TSE:OSPTX).

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