BUSINESS

Mobilicity Denies It's Shutting Down, Shifting Subscribers To Wind Mobile (UPDATED)

09/04/2013 10:26 EDT | Updated 11/05/2013 05:12 EST

UPDATE: Mobilicity is denying that it has struck a deal that would allow it to shut down by the end of the month, transferring its subscribers to rival Wind Mobile.

Mobilicity's chief restructuring officer Bill Aziz said Wednesday that the published report about a subscriber deal with Wind Mobile isn't true.

The National Post cited unidentified industry sources as saying that Mobilicity expects to shut down its money-losing operations by the end of September.

The Post reported that Toronto-based Wind Mobile would assume Mobilicity's 200,000 customers for little-to-no financial compensation.

Wind Mobile chairman and CEO Anthony Lacavera says he still interested in buying Mobilicity but wouldn't comment on any deal to acquire the carrier's subscribers.

Both Mobilicity and Wind Mobile bought spectrum — the radio waves over which cellphone signals are transmitted — in 2008 in an auction designed to bring new players to a wireless market dominated by Rogers, Telus and Bell.

The Canadian Press

Mobilicity, one of Canada’s three struggling small wireless companies, is planning to shut down by the end of the month, handing over its 180,000 subscribers to Wind Mobile, according to multiple news reports.

The National Post cites “two separate industry sources” as saying Mobilicity will hand over its subscriber base to Wind for “little to no financial compensation.”

But according to sources quoted by Mobilesyrup, Wind Mobile will pay some $40 million for the customer base. The deal is expected to be finalized “within weeks.”

The news comes just a few days after Verizon announced that it had no intention of setting up shop in Canada, throwing into doubt the future shape of Canada’s wireless industry. Mobilicity had been named as one of the companies Verizon had been eyeing for a buyout, along with Wind Mobile.

It also comes less than two weeks ahead of a deposit deadline for a wireless spectrum auction in which Canada’s wireless companies will bid for blocks of the coveted 700 mHz spectrum range.

Even with special rules giving the small wireless companies better access to the wireless spectrum auction, many observers doubted the three small wireless players — Mobilicity, Wind and Public Mobile — would be able to win much spectrum against the three dominant players, Bell, Rogers and Telus.

The Post reports Wind isn’t buying Mobilicity outright — Mobilicity’s investors will continue to own the company’s spectrum licences and other assets, which can be sold in the future.

The Post also notes that Mobilicity and Wind have largely overlapping areas of operation: Toronto, Ottawa, Calgary, Edmonton and Vancouver.

Mobilicity, which is reportedly carrying more than $500 million in debt, tried to sell its spectrum licences to Telus earlier this year, but Industry Canada blocked the deal over concerns it would concentrate too much spectrum in the hands of a dominant wireless company.

Wind Mobile CEO Anthony Lacavera said last month he would look at buying Mobilicity as a step towards setting Wind Mobile up as Canada's fourth major wireless player.

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