MTS makes $230 million on Bell West sale
Manitoba Telecom Services Inc. (MTS) said Monday it will make a $230 million pre-tax profit on the sale of its stake in Bell West Inc., the Calgary-based provider of business services.
MTS will sell its 40 per cent of Bell West to Bell Canada, a subsidiary of BCE Inc., which holds 22 per cent of MTS.
"This marks another key building block in our national strategy," said Bell Canada's Stephen Wetmore.
MTS expects to be paid cash in early August, and it will record the gain in the first quarter this year. The sale price is $645 million.
As expected, the MTS board on Monday exercised an option to require BCE to buy its Bell West stake. The companies had previously announced the deal.
Shares of MTS were up 17 cents at $51.85 on the TSX.
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The companies entered the business telecom market together in 1999 when MTS bought into Bell Intrigna (now Bell West). MTS agreed to sell the stake back to BCE in April, 2002.
MTS did not say what it would do with the cash, although MTS president and CEO Bill Fraser hinted there could be a dividend payout.
He said the company first uses cash to invest in its core businesses. "Beyond that, we return excess cash to our shareholders."
MTS Q4 profit edges up
The company said profit for the three months ended Dec. 31 was $12.8 million (20 cents a share), compared with $12.1 million (19 cents a share) a year earlier. Revenue was $210.6 million, compared with $209.6 million.
Fraser said the company did particularly well in its wireless business, high-speed internet and there was "tremendous customer response" to the launch of MTS TV, which had 8,693 customers at the end of 2003, compared with the company target of 6,000.
MTS TV is a broadband service in Winnipeg that uses existing phone lines and a set-top box to deliver three digital video signals, high-speed internet and phone services simultaneously.
Manitoba Telecom stock rose 17 cents to $51.85 on the TSX. BCE rose 15 cents to $29.70.