MTS deal will expand wireless footprint, intensify competition: BCE president

MTS posts losses after selling its business unit, Allstream, to Accelero Capital in May. (stock image)

BCE president and CEO George Cope said the company’s friendly deal to buy MTS will expand the company’s existing wireless footprint and intensify competition in the marketplace.

"We’re incredibly excited about the transaction, and to have the board of directors of MTS recommend that Bell become the future owners of that asset, just incredible,” Cope said.

BCE Inc. announced Monday it has signed a friendly deal valued at $3.9 billion to buy Manitoba Telecom Services Inc.

The agreement will add Manitoba's largest phone, Internet and wireless company to a Montreal-based telecommunication business that stretches across Canada.

The acquisition will add 2,700 employees from Manitoba Telecom to BCE's Bell phone business. Bell's western operation will nearly double to 6,900 people as a result, and operate as Bell MTS, headquartered in Winnipeg.

Cope said BCE’s announced $1 billion investment will require putting more people to work, but couldn’t rule out cuts to MTS’ workforce.

“There is definitely, in the corporate area, there will be some changes, I think for sure,” he said. “But we are investing more than what MTS was, and part of that is just scale and where we think the market is going.”

In a side deal, BCE has agreed in principle to sell about one-third of Manitoba Telecom's post-paid wireless customers, as well as one-third of the MTS stores in Manitoba to Vancouver-based Telus Corp. -- a competitor with both companies. The BCE-Telus agreement requires approval from the Competition Bureau. Neither BCE nor Telus put a value on their agreement.

Some have speculated the deal could mean a lack of competition in the market, driving prices up. Cope said the Telus transaction will keep competitive pricing alive in Manitoba.

“I think we may actually see the competition intensify here in the marketplace,” he said. “Clearly we have to earn the respect that MTS does, and the stewardship of this asset will be critical to the success for us here.”

Cope also said plans are in the works to expand MTS’ wireless footprint to areas of Manitoba that are underserved.

“The specifics of exactly where, I won’t share today because we’re still nine months away from closing,” Cope said. “The footprint will expand. On wireless, the footprint will be larger, and on broadband wireless and wire-line, it will be faster.”

BCE will have the opportunity to match any superior offer that may come forward. Each side has agreed to pay a $120-million break fee under certain circumstances if the deal isn't completed.

The agreement will require various approvals, including from the Canadian Radio-television and Telecommunications Commission, but is expected to close late this year or early 2017.

MTS History

MTS has more than 100 years of history in the Manitoba telecommunications industry.

It was initially known as the Manitoba Telephone System, beginning as a Crown corporation in the early 1900s. A Bell annual report dating back to 1908 shows an early description of the sale of the Manitoba phone business to the provincial government.

MTS was privatized in 1997 during a Gary Filmon-lead PC government.

-With files from The Canadian Press