Bell MTS launches $1B investment as deal closes
Tourists in Churchill, Man., can now officially access an upgraded wireless network to post polar bear photos on Instagram.
BCE Inc. closed its $ 3.9 billion acquisition of Manitoba Telecom Services, the company said Friday, one month after federal regulators approved the deal. The telecom giant kicked off its promised $1 billion, five-year investment in the province by turning on a 4G LTE wireless network in the “polar bear capital of the world.”
The new brand, Bell MTS, immediately catapulted to the No. 1 mobile provider spot in the province with 470,000 subscribers, even though Bell had to divest approximately one- quarter of MTS subscribers to Telus Corp. and a fraction to Xplornet Communications Inc. — a New Brunswickbased broadband provider that specializes in rural areas but has never before offered wireless services — to satisfy the Competition Bureau.
Before the transaction, MTS served half of the wirel ess market, followed by Rogers at 30 per cent and Bell and Telus with 10 per cent each. The acquisition put Bell MTS ahead with more than 40 per cent of market share, but levelled the playing field among the Big Three and maintained a fourth player with the introduction of Xplornet.
The Competition Bureau found that “coordinated behaviour” among the Big Three led to higher wireless prices where there isn’t a strong regional competitor such as MTS. The bureau determined that “Manitobans would pay significantly more for mobile wireless services” if Bell bought MTS, but said the divestments to Xplornet and Telus addressed its concerns. Bell promised to maintain MTS wireless prices for 12 months as of Friday.
Overall, the deal adds about 710,000 wireless, Internet and television customers to Bell’s books, a 5 per cent increase in subscribers.
The acquisition sparked leadership changes that came into effect Friday. MTS CEO Jay Forbes departed his role. BCE CEO George Cope thanked Forbes for his exceptional leadership and support for the deal that created “tremendous value.”
Executive Dan McKeen was appointed leader of Bell MTS as part of his new role as vice chair of Bell MTS and Western Canada. McKeen previously led the integration of Bell Aliant in the Maritimes into Bell’s national operations, so said he knows firsthand the benefit of Bell’s scale and expertise in building networks.
The first infrastructure project in the town of Churchill is a “very good example of a place where our investment could make a difference,” McKeen said in an interview, pointing to the growth in ecotourism in the remote community.
Bell MTS also plans to invest in continuous wireless coverage along critical highways and improved mobile and broadband networks in mining centres, rural and remote communities including five under- served indigen- ous communities.
“We would be working on these in parallel,” McKeen said. “So far everybody seems very excited, and particularly excited about the increased level of investment that’s going to provide benefits for both residential and business consumers in the overall province.”
Bell MTS has not made any decisions about wireless prices after the 12- month price freeze, but McKeen said it wants to be competitive and meet its goal of having the largest market share.
The former MTS office has been converted to Bell’s headquarters for Western Canada and the Bell MTS office. The employee head count is expected to change, McKeen said.
“When you bring two public companies together, there is going to be some synergies, so there will be some job changes,” he said. “Some of them will happen inside Bell and some will happen inside MTS over time. We haven’t made any of those announcements at this time.”