) has agreed to take over wireless carrier Mobilicity for $380
million, converting the latter into a wholly owned subsidiary of
the former. However, the deal will be finalized following the
regulatory approvals of the Competition Bureau, Industry Canada,
and Mobilicity's debt holders.
Management at TELUS and Mobilicity have already approached the
federal board for the consent and are working diligently toward
securing the sanction for a timely acquisition without much
hassle. Mobilicity initiated the proceedings of the deal in the
Ontario Superior Court of Justice and expects to obtain the
permission under the Canadian Business Corporations Act.
Mobilicity - which has been distraught by weak finances over the
last couple of months - placed the offer of acquisition to TELUS,
considering the welfare of its customers and employees. If the
deal gets approved, TELUS will retain Mobilicity's existing staff
of 150 personnel as well as render services to its 250,000
customers. On the other hand, Mobilicity will utilize the
proceeds from the transaction to pay off all secured and
With this deal, TELUS - which recently unveiled the
Research In Motion Limited
) BlackBerry Q10 smartphone - aims to bring in more subscribers
and broaden its operating horizon. The company performed
impressively in the first quarter of 2013, with adjusted earnings
per ADS of 55 cents (55 Canadian cents per share) surpassing the
Zacks Consensus Estimate of 53 cents.
We believe that the company is on the path of strengthening its
foothold over the Canadian telecom sector through growing
wireless customers circle, deeper penetration of smartphones,
improving churn, increasing average revenue per unit,
accelerating wireless data services, growing wireline fiber optic
networks and profitable acquisitions.
TELUS Corporation - which operates within the Canadian telecom
industry along with
Rogers Communications Inc.
) - currently carries a Zacks Rank #3 (Hold).
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