Mobilicity again asks for more time to find buyer

MobilicityThe ongoing Mobilicity saga looks set to continue a while longer. The struggling wireless carrier has once again asked the courts to extend its creditor protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) as it continues to look for a buyer. This seventh extension would run to December 1, 2014 as the current extension is set to expire on September 26. At the same time, the company has announced further cost reduction measures, including shutting down a number of cell towers.

Mobililcity has been shopping itself around for about a year. Several deals reached with TELUS Mobility were shot down by Industry Canada and TELUS has officially dropped its bid to acquire it. Chief restructuring officer William Aziz indicates in the latest court documents that “a number of developments have taken place since the last Stay Period extension, which are relevant to the Applicants’ restructuring efforts.” He names the upcoming AWS-3 spectrum auction among them. As a result, Mobilicity is looking for more time to “review and consider the alternatives available to them.”

Mobilicity also announced a number of cost cutting measures. A number of cellular sites have been shut down as they were found to be “either redundant or carried very little traffic.” It expects that these shutdowns will have little effect on customers. It also closed its Vancouver sales office and outsourced some marketing functions.

The report also revealed that Mobilicity added a net 1,697 customers in August, its best customer gains since December 2012.

It remains to be seen what happens to Mobilicity. A merger or acquisition by WIND Mobile (which just bought out VimpelCom’s share) or Quebecor (Videotron’s parent company) appear to be likely scenarios but neither is likely to offer the kind of money TELUS offered.

Sources : Ernst & Young (PDF) // The Globe and Mail