Canada banned transferring the spectrum licenses to Telus Corp. from Mobilicity on Tuesday. This means blocking the takeover deal of Telus for Mobilicity. The Canadian government seeks to hold back leaders in the industry from eating their smaller rivals.
The legislation will serve as a warning to Rogers Communications and its rival, Bell of BCE Inc. that any future deals will face similar situations.
However, the country's Industry Minister, Christian Paradis said the government can possibly approve the deal once the ban on similar deals expires by early 2014. The big three wireless phone companies will be allowed to purchase from smaller firms airwave spectrum provided that undue spectrum concentration will not result from any impending deal.
Although the ban on spectrum-bandwidth transfer for data transmission and phone calls will expire by 2014, Telus has already announced last week that it will buy Mobilicity for US$367 million. This will help the debt-laden company further face bankruptcy as they have stated that their only recourse is by getting acquired by another firm. Telus asked the government to lift the ban and allow the firm to acquire Mobilicity. However, Paradis believed that declaring bankruptcy is a foregone conclusion for Mobilicity as it has a lot of other options. This made him rule to reject the application for a takeover deal offered by Telus.
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