Industry Minister James Moore said Wednesday the proposed transaction has been denied. Last June, Ottawa killed a similar bid from Telus, worth $380 million.
"It's not been approved," Moore said after a caucus meeting in Ottawa.
Telus (TSX:T) declined to comment on its latest attempt to buy Toronto-based Mobilicity, which was recently given creditor protection until Dec. 20. Mobilicity also wouldn't comment, adding that it's still talking to the government about a potential sale.
"Discussions with Industry Canada are ongoing," said Mobilicity spokeswoman Sheryl Steinberg. "We have nothing else to add at this point."
A spokeswoman for Moore said the government will continue to enforce the moratorium on the transfer of spectrum — radio waves needed to operate cellphone networks — which was set aside specifically for new startup wireless companies in 2008. The move was part of an effort to bring more competition to a market dominated by Rogers (TSX:RCI. B), Bell (TSX:BCE) and Telus.
Ottawa has indicated it does not want this spectrum to be bought up by the big three carriers, which leaves Mobilicity still looking for a buyer.
"We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers," said the minister's spokeswoman Jessica Fletcher.
Telecom analyst Eamon Hoey said Industry Canada stuck to its policy and gave Telus a clear answer.
"What don't you understand about the word 'No?'" said Hoey, of Hoey Associates Management Consultants Inc. in Toronto.
Hoey said the market will now decide what happens to Mobilicity.
Mobilicity launched in 2010 and has about 215,000 no-contract cellphone customers in Toronto, Ottawa, Calgary, Edmonton and Vancouver.
Along with Mobilicity, Wind Mobile is the other small carrier currently up for sale.
Wind launched four years ago and has more than 600,000 cellphone customers. Wind's chairman and CEO Anthony Lacavera has said he would like to buy back the 65 per cent of the company that he doesn't own from Russian telecom VimpelCom, which is shopping around its stake.
Last week, Telus was given federal approval to buy small talk-and-text provider Public Mobile, which was not under any sale restrictions because it bought a different kind of spectrum.
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