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Canada again blocks Telus-Mobilicity spectrum deal

OTTAWA (Reuters) - Canada's federal government has rejected a second attempt by big telecommunications company Telus Corp to acquire spectrum licenses from struggling wireless startup Mobilicity, Industry Minister James Moore confirmed on Wednesday.

"That transaction has not been approved," Moore told reporters when asked about a proposed Telus deal with Mobilicity.

Moore confirmed he was referring to a second attempt by Telus to acquire spectrum won by Mobilicity in a 2008 auction that was set aside for challengers to dominant operators such as Telus.

Ottawa blocked Telus' initial C$380 million bid for Mobilicity in June, but let it buy another small operator, Public Mobile, last week. [ID:nL1N0ID2FX] Public bought airwaves in the same auction, but its spectrum was never considered off-limits to the big operators.

A spokesman for Mobilicity said the company remains in talks with Industry Canada officials. The company declined to provide further comment.

Mobilicity, which has less than 200,000 customers, won creditor protection last month as it sought approval for a transaction that would allow it to keep operating.

"We believe that either the Government will be forced to change its mind and Mobilicity will be acquired by Telus, or it will cease to operate," Canaccord Genuity analyst Dvai Ghose wrote in a note to clients.

Telus is separately seeking a judicial review of the government's restrictions on the sale of spectrum licenses, which Ottawa says is intended to limit the market dominance of Telus, Rogers Communications Inc and BCE Inc, which together control some 90 percent of the wireless market.

(Reporting by David Ljunggren, Euan Rocha and Alastair Sharp; Writing by Louise Egan and Alastair Sharp; Editing by Chris Reese and Andre Grenon)

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