The Canadian Press - ONLINE EDITION

BCE moves to take full control of Bell Aliant with $3.95-billion privatization

  • Print

BCE Inc., Canada's biggest telecom, is moving to consolidate its position in Atlantic Canada by offering to take full ownership of Bell Aliant through a $3.95-billion deal that analysts generally expect will be successful.

The Montreal-based company also announced the purchase of two New Brunswick call centres, plans to roll out its high-speed wireless service to about 100 more communities in the region and $2.1 billion in infrastructure spending over the next five years.

"Bell Aliant is a core part of BCE's national communications operations alongside Bell Canada," BCE president and CEO George Cope said an announcement Wednesday.

"In line with our investment-focused strategic imperatives, BCE looks forward to continuing network and service innovation to benefit consumers and business customers across Bell Aliant's territory.

BCE Inc. (TSX:BCE), which already owns 44 per cent of Bell Aliant, said the company would maintain its separate identity with customers and remain a regional affiliate of the Montreal-based parent company. However, things like billing and product development will be integrated to reduce expenses if the deal is completed as expected.

Desjardins Securities analyst Mayer Yaghi said BCE is always under pressure to grow its cash flow in order to meet investor desire for higher dividends — something that will be more difficult if its internal growth slows.

"To be able to comfortably continue to grow the dividend at five per cent, you try to get as much as you can," Yaghi said.

He added there's the possibility that another national wireless carrier could emerge and erode the earning power of BCE, Rogers (TSX:RCI.B) and Telus (TSX:T), which collectively account for more than 90 per cent of the market.

"BCE's stock could come under pressure and that would make the transaction more difficult if they were to leave it to next year," Yaghi said.

Thirdly, Yaghi said, the deal will help BCE compete against Rogers, which has been pricing its services aggressively in New Brunswick where Aliant has been building out its fibre-optic television service.

"It's more difficult for the competition when you have one entity that they're competing against, rather than two in different places," Yaghi said.

Bell Aliant will continue to serve customers in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island as well as its regional telecom operations in parts of Ontario and Quebec — primarily outside the major cities served by Bell Canada.

Cope told analysts Aliant is nearing completion of its multi-year upgrade of its wireline network — which delivers phone, Internet and television services — but will need further funding.

BCE — which also has a media business that includes CTV, radio stations, cable channels and outdoor advertising — said the acquisition of Aliant would eliminate the cost of running two publicly traded companies.

It is targeting $100 million in annualized savings, but said it would continue Aliant's network improvements. No job cuts were announced Wednesday, although company executives told analysts that they'd look to reduce overlap in areas such as billing systems and product development.

Bell Aliant headquarters will remain in Halifax.

"I think what this really does is take that local expertise and commitment that we've always had and put the full backing behind us of BCE to make us very, very strong as we move forward to help us keep being the 'preferred guy' in each of our local markets," Bell Aliant chief executive Karen Sheriff said Wednesday on a conference call to discuss the move.

In addition to the Aliant deal, BCE announced Wednesday the acquisition of two call centres in New Brunswick, one in Moncton and the other in Saint John, that will serve Bell Canada customers and add an additional 700 jobs to Bell Canada.

BCE also said it plans a capital investment of $2.1 billion across Atlantic Canada in the next five years to continue the rollout of broadband wireline and wireless for consumers and business users.

Bell Canada's high-speed wireless network will be expanded to more than 100 additional communities in Atlantic Canada by the end of 2015.

Under the offer, Bell Aliant shareholders may choose between $31 in cash, 0.6371 of a BCE common share, or a combination of cash and stock. BCE said the total amount paid will be 25 per cent in cash and 75 per cent in shares, or $7.75 cash and 0.4778 of a BCE common share (worth about $23.80 as at the close Wednesday when BCE was $49.82).

A condition of the offer is that BCE acquire at least 50 per cent of the 127.5 million Aliant shares that it doesn't already own, enough to give it an outright majority of shareholder votes. If BCE acquires 90 per cent or more of all Aliant shares, it can force the others to accept its offer and delist the stock from the public market.

Aliant's shares jumped after markets opened and closed at $31.53, up $3.34 or nearly 12 per cent. Based on the closing numbers for both stocks, BCE's offer was worth about $31.55 assuming 75 per cent of the price was paid in shares.

Follow @DavidPaddon on Twitter

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Exclusive architectural tour of CMHR with Antoine Predock

View more like this

Photo Store Gallery

  • Aerial view of Portage and Main, The Esplanade Riel, Provencher Bridge over the Red River, The Canadian Museum for Human Rights and The Forks near the Assiniboine River, October 21st, 2011. (TREVOR HAGAN/WINNIPEG FREE PRESS) CMHR
  • A Canada goose protects her nest full of eggs Monday on campus at the University of Manitoba- Standup photo- Apr 30, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Do you plan on attending any of the CMHR opening weekend events? (select all that apply)

View Results

View Related Story

Ads by Google