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Telus backs out of bid for Mobilicity

Published: 10:32 11 Jun 2013 EDT

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Seven days after federal industry minister Christian Paradis effectively pulled the plug on Telus's $380 million bid to take over Mobilicity, the deal is now officially off the table. 

Mobilicity, legally known as Data & Audio-Visual Enterprises Holdings, released a statement on Monday declaring that Telus has exercised an option to terminate the agreement. 

Last Tuesday, Paradis repeated the government's position to prevent industry incumbents from acquiring spectrum set aside for emerging carriers. The minister said he will not budge on a five-year moratorium that blocks the transfer of spectrum from a 2008 auction.

A week prior to that, the Ontario Superior Court of Justice had given its approval of the acquisition. Mobilicity's bond holders had also voted in favour of the transaction. 

Mobilicity will now turn its attention to its recapitalization plan which debt holders will vote on in two weeks. 

Even though Telus is out of the picture, Mobilicity still may have the option to consolidate. Wind Mobile chief executive Anthony Lacavera has expressed interest in the company, a move that would better suit government rules. Paradis has said he would like to see a legitimate fourth national carrier to compete against Telus, Bell and Rogers Communications (TSE: RCI.B).

In an attempt to take on that role, two private equity firms, Thomvest Seed Capital and New York-based private equity firm Cartesian Capital, bought telecom junior Public Mobile.

Telus dipped 30 cents lower to $34.41, Rogers fell 38 cents to $45.37 and Bell parent BCE (TSE: BCE) lost 29 cents to $45.12 as of 10:05 am ET. 

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