One of the largest wireless phone companies in Canada, Telus Corp, announced Thursday that it would purchasing Mobilicity for the cost of Can$380 million or US$370 million. The purchase of the debt ridden company is the latest test on the governmental resolve to open the telecommunications market even to small players.
The deal has been approved by some of the creditors and debt holders of Mobilicity and must now navigate the regulatory process which involves a few governmental agencies and approval remains up in the air. The companies though have agreed that the alternative to the current process would be to close down the loss ridden start up firm.
According to Telus chief of marketing, Dave Fuller, "We believe this deal is significantly better than the alternative, which is highly likely to be bankruptcy."
The sale's proceeds would be utilized to pay for much of the debt of the start up company, whose formal name is Data & Audio Visual Enterprises Holdings Inc.
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