Lame-duck wireless carrier Mobilicity suddenly looks way more valuable

Three possible outcomes for the smallest wireless player

A Mobilicity storefront just before the company opened for business in 2010.

A Mobilicity storefront just before the company opened for business in 2010. (Rene Johnson/Toronto Star/Getty)

One question wireless industry watchers are likely asking themselves today is whether Mobilicity is worth more or less than it was at the start of the week.

With the news that Wind Mobile founder Anthony Lacavera, along with a group of Canadian and U.S. investors, has secured a buyout of his company from Russia’s Vimpelcom, the attention turns squarely to fellow new entrant Mobilicity.

If Wind and its 740,000 customers is valued at about $300 million, then surely Mobilicity and its comparatively piddly 150,000 customers is worth considerably less, right?

Not necessarily. The struggling carrier now has one major intangible asset going for it—it’s the last remaining key to a kingdom of potential spectrum riches.

The next auction of spectrum—the airwaves that wireless carriers need to expand and improve their networks—features a unique clause tailored specifically to Wind and Mobilicity. Up to 60% of the airwaves being sold early next year are reserved for smaller companies with operating presences in the areas of license. In Ontario, Alberta and B.C., only Wind and Mobilicity qualify.

MORE: The latest spectrum auction looks tailor-made for Videotron and Wind Mobile »

With Wind’s recapitalization, three possible scenarios present themselves:

First, if the current status quo were to continue until then, struggling Mobilicity won’t be able to bid and Wind will have a cake walk to cheap spectrum, assuming that its new investors would pony up the minimum fees required. They’d be crazy not to, given that they’d be getting an incredibly valuable resource at rock-bottom prices.

Second, Quebecor buys Mobilicity so that it can qualify for the special terms. The Quebec-based company bought 700 MHz spectrum in Ontario, Alberta and B.C. earlier this year and has signaled that it wants to expand. It theoretically could still do so with just the spectrum it already has in hand, but again, passing up an opportunity to acquire even more airwaves for a relatively low price wouldn’t be smart.

Third, Wind buys Mobilicity. Again, there’s no indication the newly stable company’s investors are willing to make that kind of an outlay, but it may actually be the cheaper option than doing nothing and hoping for the best. If Quebecor buys Mobilicity, Wind will have competition in the upcoming auction—and that could get expensive quickly. It was Quebecor, after all, that shut Wind out of Quebec back in the 2008 auction by effectively outbidding its desire to be a truly national carrier.

MORE: Videotron won its 700 MHz spectrum. Now what? »

There’s always the fourth possibility that Quebecor and Wind could work together to build the government’s hoped-for fourth carrier, but history suggests that’s unlikely. Quebecor, through its Videotron unit, bought its spectrum in 2008 entirely so that it could control its own wireless destiny and not have to depend on Rogers, its wholesale partner at the time.

Similarly, Wind has finally become the master of its own fate. Lacavera has always talked like a man who wants to sit at the head of his own table, a position he might have to give up or share once again if another larger stranger were invited in.

MORE: Meet Anthony Lacavera, Wind Mobile’s wireless wonder boy »

That’s why the race for Mobilicity is on. Not too long ago, the floundering company looked like a lame duck that nobody wanted—or, thanks to government intervention, that nobody could have. Now, it’s the figurative belle of the ball, at least for two possible suitors.