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The Canadian Press - ONLINE EDITION

Court grants Mobilicity request for 3 more months of protection from creditors

TORONTO - Mobilicity obtained an extension Wednesday of its court protection from creditors until Sept. 26, enabling it to keep operating its wireless business while it tries to work out an alternative to being acquired by Telus Corp. (TSX:T).

A report by the court-appointed monitor overseeing the company confirmed the controversial Telus deal was no longer on the table, but said no further comment was possible due to a court confidentiality order.

Telus tried to buy Mobility several times, however Industry Canada repeatedly rejected the deals saying that a purchase by one of the existing major industry players would decrease competition in the wireless sector.

The monitor said a court-ordered mediation process under retired justice Warren Winkler has continued, with representatives of Mobilicity, Industry Canada and the creditors meeting as recently as Monday.

The monitor also said Mobilicity has enough support from its suppliers and creditors and enough access to funds to keep operating until Sept. 26 without receiving additional money.

Mobilicity notified 24 employees in May — about one-third of the total workforce — that they will be officially let go as of June 30, leaving the company with about 41 full-time employees and a part-time employee.

As of June 16, Mobilicity had about 157,000 active subscribers and its management expected the number to drop to 155,000 by the end of June. That's down from down from 194,000 when the initial court protection was issued on Sept. 30.

Mobilicity was one of several new wireless companies to emerge after the federal government opened up competition in the industry by ensuring some spectrum licences auctioned in 2008 were reserved for new firms.

The company has operated in five urban markets — Ottawa, Toronto, Calgary, Edmonton and Vancouver — but has made little impact on Rogers (TSX:RCI.B), Telus or BCE's Bell (TSX:BCE), which collectively account for about 90 per cent of the Canadian subscriber base.

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