The encyclopedia · Strategy & Leadership · Strategic decision · 2009–2016
Mobilicity spent $243M on spectrum and was crushed by Canada's Big Three — sold for parts
A wireless startup the government created spent $243M on spectrum, couldn't grow beyond 5 cities, and was acquired by Rogers for $440M in a fire sale.
Mobilicity
What happened
Mobilicity was founded in 2009 as DAVE Wireless by John Bitove, a Canadian entrepreneur who had previously brought the Toronto Raptors to the NBA. The company was part of the Canadian government's deliberate effort to create a fourth wireless competitor. In 2008, it spent $243 million on AWS spectrum in the government auction that set aside reserved spectrum for new entrants.
Mobilicity launched in Toronto in May 2010 with unlimited-data plans at aggressively low prices — a direct challenge to Rogers, Bell, and Telus (known collectively as Canada's Big Three). It expanded to Edmonton, Vancouver, Ottawa and Calgary by April 2011. At its peak it had approximately 250,000 subscribers. But it never added a new city after Calgary.
The incumbents responded with flanker brands — Chatr (Rogers), Solo (Bell), and Koodo (Telus) — that matched Mobilicity's prices but offered better network coverage, which Mobilicity could not match with its limited spectrum holdings and no roaming deal. By April 2013 it was in financial distress, and on April 26 the Ontario Superior Court granted it creditor protection under the Companies' Creditors Arrangement Act (CCAA).
Telus tried to acquire Mobilicity twice — for $380 million in May 2013 and $350 million in April 2014 — but both deals were blocked by the government and the Competition Bureau, which argued that selling a new entrant to an incumbent defeated the purpose of the policy that created it. Rogers eventually acquired Mobilicity in June 2015 for $440 million, a deal that was approved on the condition that Rogers divest spectrum. By 2016 the Mobilicity brand was retired and its subscribers were migrated to Chatr.
Why it happened
- Mobilicity spent $243M on spectrum before launching — a fixed cost that meant the company started with debt before selling a single plan.
- The Big Three launched flanker brands matching Mobilicity's prices with better coverage — Mobilicity could not differentiate on anything but price.
- 250,000 subscribers across 5 cities was too small to cover spectrum, network and overhead costs.
- The government created Mobilicity through spectrum policy and then blocked its sale to Telus, trapping it in regulatory limbo.
The lesson
A government creates a competitor, burdens it with $243M in spectrum debt before it sells a plan, then blocks its sale to an incumbent. The competitor exists in regulatory limbo, not in the market.
Aftermath
Mobilicity was acquired by Rogers Communications in June 2015 for $440 million in a court-approved CCAA restructuring. The Mobilicity brand was discontinued in 2016; subscribers were migrated to Rogers' Chatr brand. Retail outlets were converted to Chatr branding. The company's subscriber base had fallen from 250,000 in 2013 to 157,000 by April 2015.
Sources
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