Bell long sought to buy MTS
Allstream salecleared the path
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Hey there, time traveller!
This article was published 03/05/2016 (2465 days ago), so information in it may no longer be current.
According to George Cope, the CEO of BCE Inc., the rumours were all true.
Bell has wanted to buy MTS for a long time.
Cope was in Winnipeg on Tuesday, the day after the announcement of his company’s $3.9 billion definitive arrangement to acquire 100 per cent of Manitoba Telecom Services (MTS). That total includes BCE assuming about $900 million of MTS’s debt.
Cope was only half joking when he said it’s the first time in 100 years that Bell has had a crack at MTS, referencing the 1908 transaction when Bell sold the precursor to MTS to the Manitoba government.
In an interview with the affable Cope in MTS’s corporate boardroom (with MTS CEO Jay Forbes sitting across the table), he made clear his belief that the deal will be good for Manitoba consumers and good for the province.
“People ask me about the high price — 10.2 times EBITDA — but I have been saying that these things really only come around every 100 years,” he said. “It’s true. It’s a once in-many-generation opportunity.”
Companies are familiar
MTS and Bell have had a long history of collaboration. Fifteen years ago, Bell owned 22 per cent of MTS, until MTS acquired Allstream in 2004.
“As long as Allstream was owned by MTS it was something that prevented Bell from ever being a buyer,” said Cope, because Bell already operated a national business telecommunications network. “Then Jay (Forbes, MTS CEO) arrived, undertook a transformation of the company, and got a transaction done on Allstream that no one seemed able to do for years.”
Cope said the deal “checks all the boxes” of BCE’s six strategic imperatives that drives the $20-billion-per-year company.
“There’s no debate from anyone today that this is not absolutely in Bell and MTS’s best interest,” he said. “It brings together two companies that have been in the same space for more than 100 years.”
He said that while the $40-per-share price that’s being offered was important, there were other issues the MTS board needed to be satisfied on.
“It was of big importance to the board of MTS that we make a commitment to the province,” said Cope. “It’s very important what’s in for the shareholder. But there was more to it… what’s in it for the province?”
Big spending coming
In Cope’s telling of it, BCE’s commitment to spend $1 billion on the broadband infrastructure in Manitoba over the next five years will be transformative in itself.
It is part of Bell’s plan to spend $20 billion across its entire national infrastructure to upgrade to a much faster and robust high speed Internet network that will allow for download speeds 20 times faster than what is available anywhere in the country.
He said some Manitoba markets will experience that within 12 months of the close of the deal that is expected to happen with nine to 12 months.
Although Cope would not promise there would be no job losses — “we aren’t going to pretend, we have to be honest, there will be some obvious duplications” — he said, “In our world, when we spend $1 billion in capital, that is putting people to work.”
As for making Winnipeg Bell’s Western Canadian headquarters, he said it will be a real thing.
“When BCE says it is head office for a marketplace, by definition some goodness will come out this that none of us can see today,” he said.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
Updated on Tuesday, May 3, 2016 8:44 PM CDT: Updates with writethru