A Telus store in Toronto on June 3, 2012.Michelle Siu/The Globe and Mail
Telus Corp.'s deal for Mobilicity is a free option on a small but valuable chunk of Canada's airwaves.
Key among the deal's terms is the lack of a break fee in the $380-million acquisition transaction. Often in a deal with significant risk of failure, there is a fee payable from one side to the other if the deal is blocked to compensate for the loss of the transaction. However, even though there is a solid chance the government blocks this deal, there is no payment.
If the deal cannot proceed, Telus just moves on. Mobilicity will be left to fend for itself, likely through a last-ditch restructuring.
The one potential cost in the whole situation is that Telus upsets Ottawa, which has tried to coddle wireless competitors and keep them out of the hands of the big incumbents like Telus.
Telus argues that without this deal, Mobilicity is doomed. But beyond that, look for Telus to make its case for federal government approval with honey, not more threats. Telus will sell the deal as the best way to save service for Mobilicity's clients, and the jobs of staff, and point to accolades that Telus wireless service has gotten.
The federal government, in one way or another, regulates many of things that a company like Telus does. Telus will behave gingerly to ensure that the larger relationship does not go sour over what is, in the big picture, a small potential acquisition.
Mobilicity, on the other hand, can be expected to fight hard. Some analysts have suggested the new entrants might sue the government if their spectrum sales are barred. For a small player facing financial crisis, and pushing for a sale, upsetting Ottawa is low on the list of concerns.
(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)
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