Telus’ Quest for Spectrum Continues

Public Mobile is the latest acquisition.

| More on:
The Motley Fool

By Cameron Conway

The deal

Back in November, Telus (TSX: T) quietly bought Public Mobile for an undisclosed amount. While the terms of the deal were not released, around the same time Telus had a $800 million debt offering.  Telus claimed that the $800 million was going to be “used to repay outstanding commercial paper, if regulatory approval is obtained, to fund the acquisition of 100 per cent of Public Mobile Inc. (a Canadian mobile carrier), and the balance for other general corporate purposes.”

In this deal Telus absorbed Public Mobile’s 280,000 customers (that will continue to receive the same Public Mobile service) and something much more important to Telus, their G-band spectrum

The G Spectrum

In 2008 Public Mobile was one of the participants in the auction for this G-band spectrum and won the rights for Ontario and Quebec at a cost of $52.4 million. Back in 2008, the G spectrum was considered an “orphan” or “garbage” part of the spectrum because, well, none of the phone manufacturers were using it.  So start-ups like Public Mobile and Novus Wireless Inc were able to use this unused frequency to build their networks, with out interference from the “Big 3”

But something happened in 2011 when Sprint announced plans to build a nationwide 4th generation LTE network in the U.S. using the G-band. Not long after Sprint’s announcement, wireless experts and manufacturers agreed to include this “orphan” spectrum in the next generation of phones. Phones that are now in peoples pockets today, such as the new Iphone 5S and 5C, are calibrated to take advantage of this G-band spectrum.

Biding their time

As the ability for consumers to unknowingly take advantage of this frequency has increased, Telus has been biding their time and waiting to make their move.  Public Mobile gives Telus the G-band in Ontario and Quebec.  However, Telus has already been on the hunt as the company acquired Novus Wireless Inc. who possessed the same G-band spectrum in B.C. and Alberta, earlier this year.

The Foolish Dial-Tone

Without dabbling in the upcoming spectrum auction, through these transactions, Telus has enhanced its position in Canada’s wireless space.  These moves have effectively allowed the company to jump ahead of Rogers and Bell which do not support G-Band frequencies. Now that this frequency is no longer a gamble and more and more manufactures continue to include the G-band into their “ecosystems”, Telus hopes to lure more customers to take advantage of this bandwidth investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway does not own shares in any of the companies mentioned.  The Motley Fool does not own shares in any of the companies mentioned.

More on Investing

Payday ringed on a calendar
Dividend Stocks

3 Top TSX Passive-Income Stocks That Pay Out Every Month

Here are some of the best TSX stocks for passive monthly income. Investors should explore to see if they're a…

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Remarkably Cheap TSX Stocks to Buy Right Now

These three cheap TSX stocks are some of the best buys on the TSX, and yet their share price is…

Read more »

think thought consider
Dividend Stocks

This Dividend Stock Could Create $1,353 in Passive Income in 2024

This dividend stock can create massive passive income from two sources, so don't miss out before a recovery in 2024!

Read more »

Increasing yield
Dividend Stocks

TFSA Investors: Buy This Top Bank Stock for High-Yielding Dividends

Generate a superior passive-income stream by investing in this high-yielding dividend stock from Canada’s Big Six banks.

Read more »

grow money, wealth build
Dividend Stocks

2 of the Best TSX Dividend Stocks I Plan on Holding Forever

High-yield TSX dividend stocks, such as Enbridge, offer you tasty yields and trade at significant discounts to consensus price targets.

Read more »

FREIGHT TRAIN
Investing

CNR Stock: Should You Buy Today?

Canadian National Railway has been hit in recent quarters, as economic growth has slowed, with CNR stock declining 10% in…

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »