BCE clears final approvals for acquisition of Manitoba Telecom Services
The deal is set to close on March 17.
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WINNIPEG — BCE Inc. cleared its final regulatory hurdle Wednesday to acquire Manitoba Telecom Services Inc., but it will have to transfer thousands of customers to another company to maintain competition in the province's telecom sector.
The Competition Bureau and Innovation, Science and Economic Development Canada gave the green light to the $3.9-billion deal, which had already been approved by MTS shareholders. The deal, first announced last May, is set to close March 17.
The approval comes with a new requirement. Bell (TSX:BCE) and MTS (TSX:MBT) will have to transfer to Xplornet Communications Inc. — a privately held New Brunswick Internet service provider new to the wireless industry — 40 MHz of wireless spectrum currently held by MTS, 24,700 wireless customers and six retail stores.
The measure is aimed at easing concerns from some Manitoba politicians and consumer groups that prices will rise and jobs will be cut once MTS — one of the country's last regional carriers — is folded into Bell.
A top executive at Bell said Wednesday the deal will maintain competition and also lead to improved service, because Bell has promised to invest $1 billion over five years to improve Internet and wireless speeds and coverage in Manitoba.
"Internet services in Manitoba are 20 times slower than they are in the other parts of the country where Bell operates," said Mirko Bibic, an executive vice-president and Bell's chief legal and regulatory officer.
"Same thing with wireless services. The Bell networks are the fastest in North America."
There is no guarantee prices will not rise. Bell would only commit Wednesday to maintaining current MTS wireless plan prices for 12 months after the deal closes.
A Vancouver-based consumer group said the acquisition will hurt Manitoba.
"While consumers and businesses are crying out for lower costs and more competition, our wireless market is moving in the opposite direction," David Christopher, spokesman for OpenMedia, said in a written statement.
"Although the Competition Bureau mandated that Bell sell a modest number of subscribers, stores and spectrum to Xplornet, it will take years for Xplornet to gain a meaningful hold in Manitoba’s wireless market."
The deal will also see the new company, to be called Bell MTS, establish a western headquarters in Winnipeg — the city where MTS's head office now is. Staffing levels are still to be determined.
"Planning will likely begin, now over the next 30 days, such that at March 17, there will probably be more clarity in terms of how this takes shape ... and what opportunities might ensue in terms of employee opportunities," said MTS president and chief executive officer Jay Forbes.
The deal leaves Saskatchewan's provincially owned telecommunications company, SaskTel, as the last regional carrier in Western Canada.
An assessment released last June said the MTS takeover poses serious regulatory, competitive and financial risks for SaskTel. For one, establishing Winnipeg as a western headquarters for Bell could erode SaskTel's share of the Saskatchewan business market.
SaskTel had said that it has been dealing with competitors for nearly 30 years and has strategies in place.
Dustin Duncan, minister responsible for the Crown company, was not available for comment Wednesday. A communications person for SaskTel pointed to the risk assessment for the company's position on the potential impact of the MTS deal.
Premier Brad Wall has said the government wouldn't sell SaskTel without holding a referendum. The government says there's no offer for SaskTel right now.
— With files from Jennifer Graham in Regina
Note to readers: This is a corrected story. An earlier version incorrectly stated Bell and MTS will have to transfer to Xplornet Communications Inc. more than 40 MHz of wireless spectrum currently held by MTS. The actual total amount is 40 MHz.