Bell Aliant: BCE to privatize Atlantic Canada telecom affiliate
Tech analyst predicts job cuts as BCE privatizes regional affiliate
A telecommunications analyst suspects there will be job losses at Bell Aliant after it was announced today that Canadian telecom giant BCE Inc. will privatize the Atlantic Canada telecom affiliate by buying the stake it doesn't already own in the regional company.
BCE, which already controls Halifax-based Bell Aliant, says it`s acquiring the interest of public minority shareholders in Bell Aliant for roughly $3.95 billion.
The telecom giant already owns 44 per cent of its publicly traded subsidiary and is acquiring the remaining approximately 127.5 million common shares owned by Bell Aliant's public minority shareholders.
Troy Crandall, an analyst with MacDougall, MacDougall & MacTier Inc. in Montreal, says there could be cuts in well-paying accounting and middle-management jobs as BCE looks for $100 million in "synergies."
"As for the management, you will still need some middle management, obviously, but maybe not quite to the degree that they previously had," Crandall said.
"You could probably expect some job cuts to come as a result of this, or job transfers, as well. But nonetheless it would impact the Maritimes."
Crandall says he doesn't expect the deal to mean a change in service or prices for customers.
BCE and Bell Aliant did not confirm in a news release Wednesday morning whether jobs will be cut.
Mobile network set to grow in Atlantic Canada
BCE says Bell Aliant will continue to serve customers in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island from its Halifax headquarters. Bell Aliant also has regional telecom operations in rural Ontario and Quebec.
BCE said it plans a capital investment of $2.1 billion across Atlantic Canada over the next five years to continue the roll out broadband wireline and wireless for consumers and business users.
"What they have committed to in Atlantic Canada is maintaining the Bell Aliant brand in Atlantic Canada," said Bell Aliant CEO Karen Sheriff. "We will still have our headquarters, regional headquarters, in Halifax. They have made a significant commitment to a $2.1-billion capital spend that will be spent over the next five years."
Bell Aliant provides television, Internet and phone services to its customers. Sheriff says BCE has promised to expand in the region.
"They've also committed that they're going to roll out their 4G LTE network, which is a significant mobile network expansion in Atlantic Canada. That will go to a hundred additional communities in Atlantic Canada by the end of 2015, with a focus on small towns and rural," she said.
Deal doesn't require regulatory approvals
BCE says bringing Bell Aliant fully into BCE simplifies the company's structure, eliminating costs and increases operational efficiency.
"Bell Aliant is a core part of BCE's national communications operations alongside Bell Canada," BCE president and CEO George Cope said in a statement on Wednesday.
"Privatizing Bell Aliant enhances our broadband investment strategy and capital markets objectives, while delivering great value to the public minority shareholders who have supported Bell Aliant's success," Cope said.
Bell Aliant's broadband fibre-to-the-home network is expected to reach one million premises across the Bell Aliant territory by the end of the year, delivering high-speed Internet, digital TV experience and a range of business services.
BCE also said it will also continue to invest in broadband services for consumers and business customers in rural areas of Ontario and Quebec currently managed by Bell Aliant.
Canaccord Genuity analyst Dvai Ghose wasn't surprised by BCE's announcement.
"The deal has been speculated for a long time, does not require regulatory approvals, as BCE already controls Bell Aliant, and is at the high end of the fairness approval range, we assume a quick close," Ghose wrote in a research note.
Ghose also said the deal should be financially advantageous for BCE and also should help it raise its dividend in 2015.
"But deal will also have a negative impact on BCE's asset mix and growth and highlights BCE's weakness," he said.
"Consequently as with the CTV and Astral acquisitions, we envisage near-to-medium term accretion but longer term declines. The deal therefore suggests to us that BCE has to continue to acquire to grow dividends, unlike its nearest peer TELUS which has targeted at least 10 per cent annual DPS (dividend) growth to 2016."
With files from The Canadian Press