Bell’s MTS acquisition approved by federal regulators

BCE Inc. will be able to acquire Manitoba Telecom Services Inc. under the $3.9 billion deal the telecommunication carriers made last year, after federal regulators gave the transaction the green light, according to announcements made by the carriers on Wednesday morning.

With the Innovation, Science and Economic Development Canada (ISED) and Competition Bureau approving the acquisition, a new Bell MTS brand will be launched March 17.

To earn the clearance required to acquire the largest telecom services provider in Manitoba, Bell MTS has agreed to transfer 40 MHz of spectrum from the 700 MHz, AWS-1 and 2500 MHZ wireless bands to Woodstock, N.B.-based Xplornet Communications Inc. It will also transfer 24,700 wireless customers and six total retail outlets to Xplornet once it launches its mobile wireless service in the province. Currently, Xplornet offers satellite Internet services in Manitoba.

“We’re quite pleased,” BCE chief legal and regulatory officer Mirko Bibic said. “Today is a very good day.”

Bell expected to part with some spectrum because both it and MTS were at the spectrum limit to hold in Manitoba, he added, noting that Bell tried to seek an exemption, but it wasn’t granted.

Since making a deal with MTS on May 2, 2016, Bell said it would invest $1 billion over five years to enhance broadband networks and services across Manitoba. Those upgrades include introducing Bell’s Gigabit Fibe Internet, Fibe TV, and Bell’s LTE wireless network.

Xplornet is also to receive transitional remedy network access from Bell MTS in urban areas for three years and other operational support as it builds out its own network.

In further concessions, and previously announced in the May 2 deal, Bell will divest to Telus Corp. about one-quarter of the current MTS postpaid subscriber base for proceeds of about $300 million, and 13 MTS retail locations.

In its statement, Bell said that it now expects to find “cost synergies” of about $100 million from the integration with MTS, which is double the previous $50 million it forecast. Those savings will come from reduced wireless roaming and network sharing, network backhaul and wholesale costs, increased wholesale revenue, and volume-based purchasing advantages.

“We’ll be able to secure better terms from manufacturers compared to MTS,” Bibic said. “There’s no payments to other carriers for roaming out of the province, same thing with backhaul.”

When asked if layoffs were in the works, Bibic said that Bell is investing $1 billion to improve networks in the province and intends to grow its buisness there. While there will be some obvious redundancies to eliminate among executive positions, no other plans for layoffs exist currently.

“You can’t grow without people locally,” he says. “The planning hasn’t been done. We don’t even own the company yet.”

Look out for financial guidance targets to reflect those benefits in the Q1 results released April 26, Bell said, which provides a list of new business opportunities as a result of the merger:

  • Bell is adding 710,000 customers in Manitoba, a five per cent increase to its broadband service subscribers
  • It’s now the top wireless provider in Manitoba with 470,000 projected subscribers
  • It will operate 69 retail locations and MTS products will also be available at Bell, The Source, Tbooth wireless, and WirelessWave locations.
  • Bell Media’s CraveTV streaming service will be available to MTS TV customers and Internet subscribers.

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Brian Jackson
Brian Jackson
Editorial director of IT World Canada. Covering technology as it applies to business users. Multiple COPA award winner and now judge. Paddles a canoe as much as possible.

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