Canada’s Manitoba Telecom sells fibre network to Accelero for C$520 mn
25 May 2013
Canada's fourth-largest telecommunications company Manitoba Telecom Services Inc (MTS) yesterday agreed to sell its fibre optic network business Allstream to private investment group Accelero Capital Holdings for approximately C$520 million ($503 million).
Allstream, with its head office in Toronto, provides enterprise focused communications through its 30,000-km fibre optic network across Canada, serving more than 50,000 businesses. The unit employs around 2,000 personnel.
Accelero, based in Paris and Cairo, is an investment and management company focused on telecommunication, digital media and technology. It is controlled by Egyptian billionaire Naguib Sawiris, who made his fortune from wireless businesses across Europe, Middle East and North Africa.
Under Accelero's ownership, Allstream expects to strengthen its position as a leading independent telecommunications provider in the enterprise market.
The deal will provide Allstream access to the much needed capital to build and expand its business in the Canadian telecommunications market.
Non-executive chairman and co-founder of Accelero Sawiris said, ''This investment reflects Accelero's long term commitment to the Canadian telecommunications market, and our belief in the opportunity that exists to provide capital to enhance the competitive landscape in Canada.''
''Allstream is the leading competitor to the incumbents in the Canadian enterprise market and a fast growing player in the IP space with an advanced coast-to-coast network,'' he added.
Winnipeg-based Manitoba Telecom Services, formerly Manitoba Telephone System, is a primary telecommunications carrier in the Manitoba province. The company with its two operating subsidiaries MTS and Allsream provides local and long-distance phone, TV, internet and wireless services, and business communications.
Last year, MTS revealed its plan for strategic review of Allstream operation which signalled a possible sale of the enterprise division.
MTS' chief executive officer Pierre Blouin said, ''This transaction makes MTS a stronger, more focused and more valuable company. MTS goes forward as a pure-play telecom with a strong consumer franchise and significant free cash flow to support our dividend."
The transaction has been approved by the MTS board and is expected to close in the second half of 2013, subject to approvals from Canadian regulators and customary closing conditions.
MTS expects to realise net proceeds of approximately $405 million through the sale. It intends to contribute an additional $130 million into the company's pension plan and also repay $70 million in debt out of the sale realisation.
The company said that it will also have sufficient capital to invest in wireless spectrum and to continue bringing fibre-to-the-home, 4G LTE wireless technology and other products and services to more communities across Manitoba, further solidifying our position as the undisputed market leader in the province.
CIBC World Markets and Morgan Stanley acted as financial adviser to MTS on the deal, while Accelero was advised by BMO Capital Markets.
