Canadian telco Manitoba Telecom Services (MTS) has agreed to sell Allstream, its business communications unit, to telecoms investment firm Accelero Capital for C$520m (US$502.8m) including debt.
The transaction has already been approved by…
Canadian telco Manitoba Telecom Services (MTS) has agreed to sell Allstream, its business communications unit, to telecoms investment firm Accelero Capital for C$520m (US$502.8m) including debt.
The transaction has already been approved by MTS’ board of directors, and is expected to close in the second half of 2013, subject to regulatory clearance.
Of the C$405m net proceeds, C$130m will go towards MTS’ pension plan, while C$70m will be used to repay short-term debt incurred in February.
Commenting on the transaction, MTS CEO Pierre Blouin said: “MTS goes forward as a pure-play telecom with a strong consumer franchise and significant free cash flow to support our dividend.
He added: “We 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.”
In September last year, the telco launched a wide-ranging strategic review of Allstream, saying at the time that the decision had been made in light of the relaxation of foreign investment laws in Canada.
At the time, it confirmed that CIBC World Markets and Morgan Stanley would be providing financial advice. Stikeman Elliott acted as legal adviser.
Accelero Capital, the buying company, was founded about two years ago by Egyptian entrepreneur Naguib Sawiris and former executives at Egypt’s Orascom Telecom, Italy-based Wind Telecom and Russia-focused VimpelCom.
Accelero is also working on a bid for Wind Canada, which was recently put up for sale by VimpelCom. The investment vehicle has teamed up with founder and current Wind Canada CEO Anthony Lacavera.
According to MTS, Sawiris has overseen more than C$1bn of investment in the Canadian telecoms industry, contributing to the emergence of independent wireless competition in the country.
