Canadian mobile operator Mobilicity has received protection from creditors under the Companies' Creditors Arrangement Act. The move will give the company time to look at other financing arrangements; the company was not more specific nor did it give the name of any potential buyer. It only said that the court also approved debtor-in-possession financing from some of its existing noteholders, to a maximum of USD 30 million, and that Ernst & Young will assist in the process.
Mobilicity said customers would not be affected and that there would be no changes to its network. It will continue to honour customer prepayment plans. According to The Globe and Mail, Mobilicity will try to stay afloat long enough to sell itself to Telus. Talks between the company and Telus broke down in June when the government introduced new rules on spectrum transfer between wireless carriers. Telus's original USD 380 million agreement to buy Mobilicity sparked controversy because of a federal prohibition preventing big carriers from buying new entrant spectrum assets until 2014. Earlier this year, the companies asked the government to waive that rule and allow for an immediate transfer, given the depth of Mobilicity's financial problems.
One scenario under consideration, according to the paper's sources, is to give Telus a put option to exercise a spectrum transfer at a later date. Mobilicity, formally known as Data & Audio-Visual Enterprises Holdings, launched service in 2010 after paying CAD 243.1 million for advanced wireless spectrum (AWS) licences in 2008. As of earlier this year, it had 250,000 customers, according to court filings.
