BCE acquires Manitoba Telecom for $2.5B, plans to expand 1 Gbps, IPTV

BCE, the parent company of Bell Canada, is acquiring Manitoba Telecom Services (MTS) for approximately $2.5 billion (CAD $3.1 billion), enhancing its presence in the Western Canadian province with a larger wireline broadband and TV footprint.

By acquiring MTS, BCE will expand its internet subscriber base by 6.6 percent or 224,000 subscribers and IPTV subscribers by 8.6 percent of 106,000, enabling it to more effectively compete with Manitoba cable operators.

MTS currently delivers broadband internet and IPTV to over 70 percent of homes in Manitoba. Over 90 percent of these homes can get speeds up to 50 Mbps.

The deal also improves Bell's business markets positioning by expanding its local fiber footprint to cover Manitoba and moves national off-net traffic to its on-net fiber facilities.

But BCE has no plans to rest on its broadband and TV laurels. After the acquisition closes, BCE has committed to invest about $800 million (CAD $1 billion) in Manitoba over five years to expand and enhance broadband infrastructure. Specifically, BCE will roll out its Gigabit Fibe Internet service within 12 months.

Expanding broadband, particularly FTTH-based broadband, has been an ongoing focus for BCE within its existing territories.

During the first quarter earnings call, the service provider said its FTTH network delivers service to over 2.5 million locations. BCE's $1 billion investment in broadband will extend its Gigabit Fibe service to 3 million homes and businesses by end of 2016.

Under the terms of the agreement, Bell's MTS team will serve customers across Manitoba. The Winnipeg head office will become Bell's Western Canada headquarters.

The service provider said it will pay $31.91 (CAD $40) per share, representing a premium of 22 percent to Manitoba Telecom's Friday closing. BCE will also assume MTN's approximately $638 million (CAD $800 million) outstanding debt, Reuters reports.

BCE's acquisition comes at what has been interesting year for MTS. In November, MTS sold off its Allstream business division to Zayo for $348 million following a number of unsuccessful efforts to divest the unit.  

To allay regulatory concerns, BCE will sell about one-third of MTS's postpaid wireless subscribers to Telus after completing the acquisition.

BCE said it expects to complete of MTS acquisition and Telus transaction by either the end of 2016 or early next year.

For more:
- see the release
- Reuters has this article

Related articles:
Zayo acquires Allstream for $348M, gains instant Canadian fiber presence
MTS Allstream names Forbes as new CEO
Allstream's President Dean Prevost to step down, COO Strople to take over role
MTS establishes managed provider position with planned Manitoba data center