Accelero Capital will acquire Canada-based Allstream, the business services unit of Manitoba Telecom Services (MTS), for $504 million, a move that will enable it to sharpen its focus on serving the enterprise services market.
After it meets various debt- and pension-related obligations and clears regulatory approvals, the deal is expected to close in the second half of this year.
Allstream has a number of key assets, including a 30,000 mile fiber network that currently serves over 50,000 Canadian base businesses.
The telco is in good hands with Accelero. Naguib Sawiris, Accelero's non-executive chairman and co-founder, is a well-known telecom entrepreneur who has led over $1 billion of investments in Canada's telecom market.
Similar to other U.S.-based competitive service providers such as Fibertech, which is owned by private equity firm Court Square, Accelero will provide a number of capital resources to the company to expand its fiber network and on-net building presence to better serve its existing and new business customers. Allstream will retain its headquarters in Toronto.
News of Accelero's purchase of Allstream should not be all that surprising. A report in the The Globe and Mail that emerged last June said MTS was searching for a U.S.-based investor for its Allstream business services unit, following failed attempts to secure a Canadian investor.
In Q1 2013, Allstream's on-net IP-based services sales rose 1.3 percent. During the quarter it also added 88 buildings to its IP fiber network, ending the quarter with a total of 2,811 fiber-fed buildings.
- see the release
MTS Allstream's Q1 broadband, converged IP revenues rise to $53.5 million
MTS expands VDSL2, FTTH home network capabilities with Pace gateways
Legacy declines drag down MTS Allstream by 6 percent in Q4, to $410 million
MTS Allstream earnings get boost from IPTV, IP business services
MTS seeks U.S. investor for its Allstream business-services unit