Canada's Mobilicity to bid in upcoming spectrum auction

TORONTO (Reuters) - Canadian wireless startup Mobilicity said on Tuesday it will participate in an upcoming government auction of airwaves.

The struggling wireless carrier, which sought creditor protection in the fall of 2013, has been trying unsuccessfully to find a buyer for months after its attempts to sell to well-established rival Telus (Toronto:T.TO - News) were stymied by the Canadian government, which is seeking to boost competition in the wireless sector.

Mobilicity, which is formally known as Data & Audio Visual Enterprises, said some of its backers have now agreed to put up the roughly C$65 million ($52.4 million) it needs to buy a seat at the table in the auction of high-frequency AWS-3 spectrum, set to be held in March.

Industry insiders have warned that the attractiveness of Mobilicity to potential suitors wane if competitors secure the spectrum they need in the upcoming auctions of AWS-3 and 2500 megahertz airwaves, while Mobilicity itself misses out.

The carrier is seeking an extension of its creditor protection status until May 8, 2015, to complete the auction process and then evaluate its options based on the auction results.

($1=$1.24 Canadian)

(Reporting by Euan Rocha; Editing by Peter Galloway)