Globalive Said to Be in Talks to Buy Canada Rival Mobilicity

Globalive Communications Corp., a two-year-old Canadian wireless carrier, is in talks to buy Mobilicity, adding a competitor to take on larger rivals BCE Inc. (BCE) and Rogers Communications Inc., according to a person familiar with the discussions.

Globalive, backed by Amsterdam-based VimpelCom Ltd. (VIP), is targeting Mobilicity because it uses compatible wireless frequencies, the person said. The purchase, which would increase Globalive’s customer base by more than 50 percent, may come as early as the first quarter of 2012, said the person, who declined to be identified because the talks aren’t public.

Globalive, which operates under the Wind Mobile brand, is trying to break the dominance of BCE, Rogers and Telus (T) Corp., which control more than 90 percent of the country’s mobile phone market. Globalive and Mobilicity were among new entrants that bought spectrum in 2008 in a government auction designed to increase Canadian wireless competition and cut mobile phone prices.

“We have never commented on speculation like this before and aren’t about to start now,” Mobilicity President Stewart Lyons said today in an e-mailed statement.

Lyons took over from founder Dave Dobbin, who resigned last month to pursue other interests, the Vaughan, Ontario-based company said at the time. Mobilicity, which began operations in May 2010 backed by New York-based Quadrangle Capital Partners, has attracted about 250,000 customers, the company said, without giving subscriber numbers.

Shelley Thomas, a spokeswoman for Toronto-based Globalive, declined to comment on any talks.

Legal Challenges

Globalive has struggled to meet customer targets after challenges from rivals over whether investment from its original backer Orascom Telecom Holding SAE (ORTE) violated Canada’s foreign ownership laws. Wind has about 400,000 customers in Ontario, British Columbia and Alberta, lagging the pace needed to reach its goal of 1.5 million customers in three years.

Acquiring Mobilicity would give Globalive more subscribers to get back on track to that goal, the person said.

Cairo-based Orascom completed a $6.5 billion merger with VimpelCom in April to create the world’s sixth-biggest mobile phone operator. Orascom began talks with Public Mobile, another new Canadian entrant, in late 2010 about merging with Globalive, a second person said. Those talks ended in early 2011 when Orascom began focusing on its VimpelCom deal, the person said.

Public Mobile was of interest to Globalive because it owns wireless spectrum in Quebec that would give Globalive a national footprint, the person said.

Android Phones

Alek Krstajic, CEO of Toronto-based Public Mobile, said the carrier is ramping up its plans as an independent operator as it moves beyond talk-and-text devices into selling smartphones based on Google Inc.’s Android platform.

“We’re a little company that I think is going to surprise a lot of people over the next year - and we just launched Android,” Krstajic said in an interview today. Public had about 153,000 customers at the end of September, he said.

Rogers, Canada’s largest wireless carrier, had 9.29 million mobile device subscribers at the end of the third quarter, compared with 7.37 million for Montreal-based BCE.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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