Bell takeover of MTS gets federal approval

BCE Inc.'s acquisition of Manitoba Telecom Services has been given the green light by the federal government, but with conditions aimed at boosting Xplornet as a regional competitor in the mobile wireless market.

Xplornet getting retail outlets and subscribers

Federal approval the $3.1-billion acquisition of MTS by BCE includes conditions meant to promote a new regional player in the Manitoba market. (Mike Segar/Reuters)

BCE Inc.'s acquisition of Manitoba Telecom Services has been given the green light by the federal government, but with conditions aimed at boosting Xplornet Communications Inc. as a regional competitor in the mobile wireless market in Manitoba.

In a release issued Wednesday, the federal Competition Bureau said it has agreed, after a nine-month investigation, to BCE's $3.1-billion deal for MTS, that will see BCE sell some wireless spectrum to Xplornet, along with six retail stores and 24,700 subscribers.

The Competition Bureau has also ordered BCE to give Xplornet "expedited access" to its cell towers in Manitoba for five years, mobile roaming services and help with buying handsets to help it become the fourth player in the market, along with Bell, Telus and Rogers.

"We believe there is an opportunity to provide more value to consumers in Manitoba," said Allison Lenehan, the president and CEO of Xplornet, a company that currently provides rural broadband internet services in parts of Canada, including Manitoba.

Some customers sold to Telus 

As part of the MTS takeover, BCE has also agreed to follow through on a deal reached last year to sell 13 MTS dealer locations and about a quarter of the MTS cellular contract customers to Telus Corp. for about $300 million.

"Bell's deal to acquire MTS and the expansion of Xplornet into the Manitoba market will result in more competition, which means more choice and competitive prices for all Manitobans," Navdeep Bains, Minister of Innovation, Science and Economic Development, said in a release.

In announcing the approval of the BCE-MTS deal with the conditions, the Competition Bureau cautioned that it had found that the loss of MTS would likely cause prices in Manitoba rise toward levels seen in other regions that lacked a strong regional competitor.

The competition watchdog pointed out that earlier this month Bell was offering a 5GB plan in Ontario for $105, while the same plan was going for $60 in Manitoba.

"While today's consent agreement is expected to address my concerns with the merger, we will continue to keep a close watch on competition in Manitoba and across Canada in the mobile wireless services market," John Pecman, the commisioner of competition, said in a statement

"Given the findings of our review, any future potential mergers by Canada's three largest mobile wireless providers, Bell, Rogers and Tellus can expect to receive a close examination by the bureau," Pecman said.

Open Media, a consumer advocacy group, criticized the approval of the takeover deal saying it doesn't help competition.

"Although the Competition Bureau mandated that Bell sell a modest number of subscribers, stores, and spectrum to Xplornet, it will take years for Xplornet to gain a meaningful hold in Manitoba's wireless market," Open Media spokesman David Christopher said in a statement

Analysts had raised the possibility that Shaw Communications might enter the Manitoba cellular market. Shaw bought Wind Mobile last year.

"Overall, we view the deal as marginally positive for BCE and TELUS because current estimates did not include the deal, and slightly negative for [Shaw] as investors might have anticipated it potentially becoming the fourth player in Manitoba rather than Xplornet," Maher Yaghi of Desjardins Capital Market wrote in a commentary.