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BCE closes $3.1-billion MTS deal, launches new services in Manitoba

The MTS building in downtown Winnipeg is seen in this file photo.

Joe Bryksa/CP

BCE Inc. has closed its $3.1-billion deal to acquire Manitoba Telecom Services Inc. and says it will begin investing in networks and offering its Fibe-branded television and Internet services in the province.

The companies announced the friendly takeover last May but only received the final necessary federal approvals last month. BCE announced Friday it has completed the transaction as planned and will pick up a total of 710,000 wireless, TV and Internet customers.

Manitoba was one of the last provinces with a regional telephone company that offered competition in the wireless market to the Big Three national carriers: BCE, Rogers Communications Inc. and Telus Corp.

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Wireless prices in the province are lower than in many other parts of the country, and to win the blessing of the Competition Bureau and the federal Department of Innovation, Science and Economic Development, BCE agreed to transfer 24,700 of its wireless subscribers (plus cellular airwaves and retail stores) to rural Internet provider Xplornet Communications Inc., which plans to launch a new mobile business in the province.

BCE had already agreed to transfer subscribers and stores to Telus, which will pick up 110,000 new wireless customers as part of a $300-million side deal.

BCE now has a total of 470,000 wireless customers in Manitoba and chief executive officer George Cope has pledged not to raise MTS's current wireless prices for 12 months after the deal closes.

BCE has also said it will invest $1-billion over five years in Manitoba networks. In a charm offensive after the deal was announced, BCE executives visited the province on several occasions to announce plans to upgrade services in remote communities and along long stretches of highway with poor cell coverage. The company said Friday that it has launched LTE (fourth-generation) cell service in Churchill, Man.

Winnipeg will serve as BCE's headquarters for the provinces of Manitoba, Saskatchewan, Alberta and British Columbia and on Friday BCE appointed Dan McKeen as vice-chairman of Bell MTS (a new business unit of BCE) as well as its Western Canada operations. Mr. McKeen has spent most of his career at Halifax-based telecom provider Eastlink and joined Bell Aliant in 2010. Starting in 2014, when BCE completed its privatization of Bell Aliant, he led the Atlantic Canada telecom's integration with BCE's national operations.

BCE is expected to announce new financial guidance factoring MTS's operations into its own when it reports its first-quarter earnings. The company says the deal, which it values at a total of $3.9-billion including the assumption of MTS's debt, will bring with it about $100-million in annual cost synergies.

Macquarie Capital Markets analyst Greg MacDonald published new estimates on BCE on Thursday ahead of the expected closing, calling the acquisition "slightly positive" for BCE, saying it should allow the company to maintain 5-per-cent growth in its dividend payouts for 2017 and possibly 2018 despite the fact that earnings are now growing at a rate of less than 5 per cent.

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BCE has made several acquisitions in recent years – including the Bell Aliant privatization, acquiring the remaining interest in data centre business Q9 Networks last year, and buying Astral Media Inc. in 2013 – to help fuel its growth as the telecom industry matures.

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About the Author
Telecom Reporter

Christine Dobby covers the Canadian telecom industry for The Globe and Mail. Before joining the Globe in May 2014 she reported for the Financial Post for three years, most recently writing about telecom and media. She has also reported for the Toronto Star and New Brunswick Telegraph-Journal. More

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