Mobilicity president Stewart Lyons says he’s confident a proposal by telecommunications giant Telus Corp. to buy the struggling wireless upstart will clear regulatory hurdles “given the shape we’re in.”

Lyons, in an interview, said federal authorities understand the company lacks operating cash, and are well aware of the possibility that jobs could be lost and customers stranded if the deal is rebuffed and Mobilicity fails.

Telus, based in Burnaby, B.C., on Thursday unveiled a plan to acquire Vaughan’s Mobilicity for $380 million, with all of purchase price to be used to pay off the privately held wireless service provider’s debt.

Telus chief marketing officer Dave Fuller said Mobilicity approached it along with other possible buyers, adding that Ottawa has been apprised of the process throughout.

Mobility is incurring losses and has built up significant debt establishing a presence in several cities across Canada. It was one of handful of new wireless entrants that entered the market after Ottawa’s most recent auction of wireless spectrum, the electromagnetic band that allows mobile devices such as smartphones to transmit voice, and increasingly data and video signals.

The entrants have acquired subscribers but face financial challenges amid competition from major players, with three of the entrants potentially for sale and going to the incumbents.

Telecom consultant Iain Grant said Mobilicity’s business model involves substantial investment in infrastructure, adding that discount brands launched by established carriers have kept its growth below expectations.

He said the company could find another white knight if the Telus bid is rejected, suggesting that leading wireless provider Rogers Communications, for example, could step in with a better price or Mobilicity could pursue a merge with another new entrant.

Grant said Telus has intimated that it will walk away from the Mobility deal if it is not granted an exemption to a restriction on transfer of wireless spectrum licenses set aside for new entrants.

He added that consumers would suffer without the “hot breath” of aggressive and nimble competitors on the more established providers.

But Telecom consultant Mark Goldberg said Canada’s wireless market is comparatively competitive, with Fuller citing 11 facilities based providers, though Grant said Canadians in areas outside of major markets have not seen the full benefits.

Fuller said Telus has requested an expedited review of the planned transaction and has not decided whether it would absorb Mobilicity or continue to offer it as a distinct brand along with other assets such as its discount wireless unit Koodo.

Telus, whose shares rose on the announcement on anticipation that it could acquire a new base of customers at a reasonable cost, is interested in Mobilicity assets including its wireless spectrum.

The proposed deal requires approvals from authorities including the Competition Bureau, the CRTC and Industry Canada, with Industry minister Christian Paradis, saying he will take time “to review the proposal carefully.”

Telus said it will retain all 150 Mobilicity employees and maintain service to customers without interruption if the deal is allowed to proceed.

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Paradis has said that Ottawa wants to encourage competition in the wireless sector and maintain at least four competitors in every region of the country.

In a conference call in April he said the government’s policies allowing greater foreign ownership of smaller players is keeping the goal on track “even if there is some consolidation.”

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