Wind Mobile wants to buy Mobilicity to create 4th national carrier

DAVE Wireless becomes Mobilicity: Chairman John Bitove (left) and President Dave Dobbin unveil Mobilicity, the company's go-to-market consumer brand name, at a press conference in Toronto, Tuesday, Feb. 2, 2010. (THE CANADIAN PRESS)

MONTREAL -- Wind Mobile would like to open talks to buy Mobilicity in a bid to create a fourth national wireless competitor, CEO Anthony Lacavera said Wednesday.

Wind Mobile is already the fourth-largest wireless carrier in Ontario, British Columbia and Alberta, Lacavera said.

"We are certainly interested in re-opening the discussion with Mobilicity," he said in an interview.

Ottawa is blocking a $380-million deal to sell Mobilicity to Telus Corp. (TSX:T) and said it will continue to prohibit spectrum transfers that would limit competition in the cellphone industry.

Spectrum is radio waves over which wireless networks operate, carrying voice and data.

Lacavera said Mobilicity's spectrum if combined with Wind Mobile's would allow the combined company to build out a faster, next-generation network that will handle heavy data use from smartphones and tablets.

"We can't go to the next generation without more spectrum," he said, calling the merging of the two companies a "logical combination."

Wind Mobile has more than 600,000 subscribers while Mobilicity has 250,000, a small drop compared to the roughly 25 million customers who have signed up with Rogers (TSX:RCI.B), Telus and Bell (TSX:BCE).

Mobilicity currently provides no-contract cellphone service in Toronto, Ottawa, Calgary, Edmonton and Vancouver.

Lacavera has repeatedly said Wind Mobile, Mobilicity and Public Mobile need to consolidate to create a fourth national carrier to go up against Rogers, Bell and Telus. His past calls for consolidation, though, have been rebuffed by Mobilicity and Public Mobile.

"I'm looking forward to starting the discussions as soon as it makes sense for Mobilicity," Lavacera said from Toronto.

Telus couldn't be reached for comment on Wednesday about any future plans for Mobilicity.

Industry Minister Christian Paradis has said the government will use all the tools at its disposal to ensure there are at least four wireless competitors in every region of Canada.

Telecom analyst Iain Grant said while Wind would a logical buyer for Mobilicity, Telus could still buy Mobilicity but not its spectrum.

In that case, Telus would ask for a refund on Mobilicity's spectrum licence, said Grant, managing director of the SeaBoard Group.

"I see Telus maintaining its offer to buy Mobilicity probably adjusting the price somewhat," said Grant, managing director of the SeaBoard Group.

Grant also said other buyers could also emerge, including foreign carriers.

Analyst Troy Crandall said Wind and Mobilicity have the same type of spectrum and operate in similar geographic areas.

"Wind will be one of the potential bidders for the company, assuming they can get the capital," Crandall said.

With the addition of Mobilicity, the combined companies would have close to one million subscribers, said Crandall of MacDougall, MacDougall & MacTier.

Wind Mobile launched in late 2009 after the federal government held a spectrum auction to allow new companies to bring more competition to Canada's cellphone industry.

Mobilicity, Public Mobile and Quebecor's Videotron launched in 2010 and Maritime-based Eastlink got its wireless service running earlier this year.

However, Wind Mobile has been put up for sale by its Dutch owner VimpelCom. Lacavera and original financial Wind Mobile backer Naquib Sawiris reportedly want to buy it back.

And it has been reported that Public Mobile has hired an investment banker to find a buyer.