The deal to acquire the upstart wireless carrier founded in 2008 was announced Thursday, two days after Ottawa blocked the sale of Mobilicity to Telus Corp., and could be a sign that the buyers are preparing to be players in Canada's wireless market.
Thomvest would hold the controlling interest in Public Mobile and Cartesian would have a smaller financial stake, pending regulatory approval of the deal.
"In the coming months, the Canadian wireless industry will see consolidation, and an important spectrum auction," Cartesian partner Paul Pizzani said. "Public Mobile is well-positioned to grow in scale by pursuing these consolidation opportunities and by bidding for national spectrum in the 700 MHz auction."
- Can anyone take on the Big 3 of Canadian telecom?
In September, Ottawa will start accepting bids for new wireless spectrum, which is the radio waves over which wireless signals travel. The 700 Mhz band will be sold off at auction in January, and it will let carriers transmit more information over their networks, faster and more reliably.
While killing the Telus takeover, Industry Minister Christian Paradis said at the time that the federal government wanted to foster competition in Canada's wireless telecommunication industry.
That decision fuelled speculation the government would be open to consolidation between Mobilicity and other smaller competitors as long as the the controlling interest was Canadian and not one of the three incumbents — Bell, Rogers or Telus.
"While financial terms were not released, Thomvest and Cartesian have said that they will fully finance Public Mobile, including consolidation of new entrants and 700 MHz spectrum auction payments," telecom analyst Dvai Ghose of Canaccord said in a note to clients. "We understand that Thomvest was already an investor in Public Mobile."
Thursday's move suggests Public Mobile is expecting to be a player in the next spectrum auction.
"Circumstances in the Canadian wireless industry have created a window for Canada's fourth wireless player to emerge. We are pleased to partner with Cartesian and the Public Mobile team to pursue this opportunity," said Thomvest's managing director, Stefan Clulow.
That's a departure from the company's origins, as Public Mobile focused on pay-as-you-go voice services in Ontario and Quebec while Wind and Mobilicity focused on all-inclusive monthly packages across a wider swath of the country. Indeed, the company only recently started offering customers comprehensive data plans.
Ghose notes that much of Public Mobile's original spectrum was not included in the range that the government "set aside" for new players and banned incumbents from acquiring for at least five years.
"The G-block spectrum that it owns could have been purchased by the incumbents at the 2008 AWS auction, but was not because the incumbents deemed it to be too much of a niche spectrum," Ghose said.
The Thomsons, through their holding company Woodbridge, own controlling stakes in Reuters news agency, the Globe and Mail and numerous other media assets.
Public Mobile founder and CEO Alek Krstajic said their support will enable Public Mobile to expand its subscriber base from a well-funded position.Suggest a correction