BCE to buy Manitoba Telecom in friendly deal worth $3.9B
Deal adds Manitoba's largest phone, internet and wireless company to Montreal-based telecom
BCE Inc. has agreed to buy Manitoba Telecom Services Inc. in a friendly deal valued at $3.9 billion.
The deal will add Manitoba's largest phone, internet and wireless company to a Montreal-based telecommunication business that is already the largest telecom company in Canada.
The purchase price includes $3.1 billion for the company, plus BCE will assume $800 million worth of MTS debt.
- Manitoba Telecom Services sells Allstream business for $465M
- MTS unveils $53-million data centre in Winnipeg
- Manitoba Telecom to cut 400 more jobs from Allstream division
BCE is offering $40 per share in cash or equity for the Winnipeg-based company's stock. MTS shareholders can elect to receive either cash or shares in BCE in exchange for handing over their shares in the company.
On the TSX, shares of MTS shot up more than 15 per cent, adding $5.01 to close at $37.85. Shares of BCE slipped 20 cent to end at $58.64.
BCE says it will also have the opportunity to match any superior offer that may come forward.
To help finance the deal — and secure approval for it from regulators who won't want to see wireless competition lessened any more than it is — BCE will sell about a third of MTS's postpaid subscriber base and retail locations to Telus, in a separate transaction.
MTS is currently the largest wireless provider in the province, with 491,017 customers at the end of its last fiscal year. If the deals go through as they are, Bell Canada will increased its share of the wireless market in Manitoba to more than 400,000, with Telus getting a bump-up of about 140,000 paying customers.
The agreement will require various approvals, including from the Canadian Radio-television and Telecommunications Commission, the Competition Bureau and Industry Canada, but is expected to close late this year or early 2017.
Bad news for consumers
At first blush, the deal may not be good news for consumers.
Manitoba and neighbouring Saskatchewan have some of the cheapest cellular plans available in Canada, thanks in large part to major players in the markets there — MTS in Manitoba, and Sasktel in Saskatchewan.
Now that Bell and Telus have effectively chopped up MTS between themselves, competition could be reduced further still, one expert said Monday.
"With MTS out of the way — and Bell and Telus sharing the same wireless network — prices are bound to increase to levels more commonly found in the rest of the country," lawyer Michael Geist wrote in his blog.
With files from The Canadian Press