Canada's Telus to acquire rival Public Mobile

Canadian operator Telus has struck a deal to acquire 100 per of Metropolitan mobile operator Public Mobile. Public has 350,000 users in Toronto and the surrounding area, primarily of voice and text services. Telus, which holds third place in the Canadian market, had 7.7 million subscribers, as of September 2013, according to WCIS+. The acquisition will put it on an almost equal footing with second placed Bell Wireless.

“We look forward to the successful completion of this transaction, and migrating Public Mobile’s customers onto Telus’ world-class 4G LTE network while putting their spectrum to good use for millions of customers across Canada,” said Eros Spadotto, EVP of technology strategy and operations at Telus.

“Public Mobile’s PCS G block spectrum is part of a developing ecosystem that is being driven by the insatiable demand consumers have for access to wireless data applications. Major US carriers are ensuring this spectrum is purposed for the deployment of LTE networks and notably, the iPhone 5s and 5c have this spectrum ecosystem incorporated within their chipset, consistent with the trend across smartphone manufacturers to produce products that can be sold globally with a lessened need for customisation on a market-by-market basis.”

Spadotto added that Public Mobile’s G block spectrum aligns well with spectrum Telus holds in western Canada. The spectrum was acquired by Public Mobile from the open part of the 2008 auction, not from that set aside for new entrants, so is not subject to a transfer restriction.

“Following our review of strategic options for our organization, Telus stood out as the company most committed to strong customer service and innovation,” said Alek Krstajic, Public Mobile CEO. “This transaction is the best option to guarantee continued quality service for our customers and to maximise the opportunity for our employees and investors.”

In June 2013. Public Mobile was acquired jointly by Toronto-based investment vehicle Thomvest Seed Capital, and Cartesian Capital, a New York-based private equity firm.

Thomvest is now the company’s controlling shareholder and the two firms’ investment has taken Public Mobile to a cash flow positive position.

“Despite the current uncertainty in the Canadian wireless industry, Public Mobile’s strong performance and rapid growth continue to attract financial backing from blue chip investors. This financing is an enormous vote of confidence in Public Mobile’s business and a significant milestone in our company’s history,” Alek Krstajic, Public Mobile’s founder and CEO said at the time.

Telus’ attempts to acquire its rivals have been thwarted in recent times. In June 2013, Mobilicity announced that its proposed acquisition by Telus was officially abandoned. Telus agreed to acquire Mobilicity in May for $380m, pending regulatory approval. However, Canada’s government blocked Telus’ application to acquire Mobilicity’s spectrum licences, effectively scuppering the deal.

In April this year, Public Mobile was one of the three Canadian operators to announce their withdrawal from industry body the Canadian Wireless Telecommunications Association (CWTA). Wind Mobile, Public Mobile and Mobilicity claimed that  the association consistently shows bias towards the country’s three largest operators.

The three operators leaving the association were dwarfed by the country’s leading players in terms of subscriber numbers. Between them, Wind Mobile, Public Mobile and Mobilicity have a combined total of 1.245 million subscribers, according to Informa’s WCIS, compared with Rogers (9.47 million), Bell Wireless (7.64 million) and Telus (7.61 million) at the time.

The challenger triumvirate voiced their mounting frustration with the CWTA’s “consistent bias” in favour of Rogers, Bell and Telus on a wide variety of issues.

“From this point, the CWTA does not, and cannot claim to, speak on behalf of the Canadian mobile wireless sector,” the three said in a combined statement.