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Thread: BCE to buy MTS for $3.1B

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    BCE to buy MTS for $3.1B

    BCE to buy Manitoba Telecom in deal worth $3.1-billion
    Globe and Mail, May 2
    Christine Dobby

    BCE Inc. has struck a $3.1-billion deal to buy Manitoba Telecom Services Inc.
    ...
    Winnipeg-based MTS is the province’s incumbent telephone company and has about 50 per cent of Manitoba’s wireless subscribers.
    ...
    The deal, which is understood to have come together quickly over the past week and a half, will require numerous government approvals – from the Competition Bureau, the Canadian Radio-television and Telecommunications Commission and the ministry of Innovation, Science and Economic Development Canada.

    The federal government is likely to have concerns about competition, particularly in the wireless market and the deal will see BCE assign 140,000, or about one third, of its new MTS postpaid cellular subscribers to Telus Corp., which only has about 10 per cent of the market share in the province. BCE will also assign one third of MTS’s dealer locations in the province to Telus.

    BCE says it will have about 425,000 wireless subscribers in the province after the deal. It plans call the combined new company “Bell MTS.”

    “In our view, while regulatory risk due to wireless concentration concerns remains an issue, this deal with Telus is intended to reduce this risk and serves to ensure that none of the incumbents would have a 50-per-cent market share in the province,” Canaccord Genuity analyst Aravinda Galappatthige said Monday.

    If the deal is approved, Mr. Galappatthige added, “we believe this would set a significant precedent, as it would reduce Manitoba to a three-player wireless market from four.”

    He said this could give Shaw Communications Inc. the potential to sell Wind Mobile to one of the Big Three wireless carriers (BCE, Telus or Rogers Communications Inc.) and also could reduce opposition in Ottawa to Quebecor Inc. selling unused spectrum outside of its home province to one of the incumbents.
    ...
    The companies said they expect the deal to close by the end of the year or in early 2017.

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    BCE to buy Manitoba Telecom in friendly deal worth $3.9B
    CBC

    BCE Inc. has agreed to buy Manitoba Telecom Services Inc. in a friendly deal valued at $3.9 billion.

    The deal will add Manitoba's largest phone, internet and wireless company to a Montreal-based telecommunication business that is already the largest telecom company in Canada.

    The purchase price includes $3.1 billion for the company, plus BCE will assume $800 million worth of MTS debt.
    ...
    At first blush, the deal may not be good news for consumers.

    Manitoba and neighbouring Saskatchewan have some of the cheapest cellular plans available in Canada, thanks in large part to major players in the markets there — MTS in Manitoba, and Sasktel in Saskatchewan.

    Now that Bell and Telus have effectively chopped up MTS between themselves, competition could be reduced further still, one expert said Monday.

    "With MTS out of the way — and Bell and Telus sharing the same wireless network — prices are bound to increase to levels more commonly found in the rest of the country," lawyer Michael Geist wrote in his blog.

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    Why Bell’s Plan to Buy MTS Could Kill the Government’s Fourth Wireless Carrier Strategy
    Michael Geist, May 2

    Bell announced plans this morning to buy MTS, the Manitoba-based wireless carrier that has been critical to creating a more competitive wireless market in the province. The nearly $4 billion deal would include a commitment to divest one-third of MTS wireless customers to Telus. The agreement is still subject to regulatory and shareholder approvals along with figuring out how some customers go to Telus and some stay with Bell. While the government has yet to articulate a clear strategy for wireless competition in Canada, the deal appears to kill the hope of four carriers in each market and will likely mean sharply increased prices for Manitoba consumers.

    With the four competitors in Manitoba – Bell, Telus, Rogers, and MTS – the province features some of the lowest wireless prices in Canada. Compare Bell’s wireless pricing for consumers in Manitoba and Ontario. The cost of an unlimited nationwide calling share plan in Manitoba is $50. The same plan in Ontario is $65. The difference in data costs are even larger: Bell offers 6 GB for $20 in Manitoba. The same $20 will get you just 500 MB in Ontario. In fact, 5 GB costs $50 in Ontario, more than double the cost in Manitoba for less data. The other carriers such as Rogers and Telus also offer lower pricing in Manitoba. The reason is obvious: the presence of a fourth carrier creates more competition and lower pricing. With MTS out of the way – and Bell and Telus sharing the same wireless network – prices are bound to increase to levels more commonly found in the rest of the country.

    The deal therefore represents a huge blow to the government’s hopes for a more competitive wireless marketplace. Instead, one of Canada’s lower cost provinces is likely to see increased prices and the market continues to consolidate around the big three providers. If wireless competition is a priority, the government and regulator should carefully examine the proposed transaction and consider whether it moves Canadian wireless in the wrong direction.

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    BCE Inc $3.9 billion deal for Manitoba Telecom Services will test federal fourth-carrier policy
    Financial Post

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    Competition Bureau Invites Canadians to Share Their Views

    May 10, 2016 — OTTAWA, ON — Competition Bureau

    The Competition Bureau is inviting Canadians to share their views on the proposed acquisition of Manitoba Telecom Services (MTS) by BCE through a form on the Bureau’s website.

    The Bureau is currently reviewing the proposed acquisition by BCE, as well as the sale of a portion of the acquired MTS wireless business by BCE to TELUS, in order to assess any potential impact on competition.

    As part of the Bureau’s usual approach in examining a merger, it consults with a wide range of industry participants to obtain their views regarding the competitive implications of a proposed transaction.

    Suppliers, competitors, industry associations, customers and industry experts help the Bureau with its considerations of many different factors relating to competition, including the definition of relevant markets, market concentration, effective remaining competitors and barriers to future entry or expansion by potential competitors.

    Quick Facts
    • On May 2, 2016, BCE announced that it intends to acquire MTS in a transaction valued at approximately $3.9 billion. In a separate announcement, BCE stated that it intends to subsequently sell some of the wireless business acquired from MTS to TELUS.
    • Under the Competition Act, the Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition.
    • The goal of a merger review is to obtain the necessary evidence for careful analysis and consideration before reaching a conclusion as to whether a merger is likely to substantially lessen or prevent competition.

    Merger Review Process
    Feedback Form

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    Quote Originally Posted by pjw918 View Post
    [
    Manitoba and neighbouring Saskatchewan have some of the cheapest cellular plans available in Canada, thanks in large part to major players in the markets there — MTS in Manitoba, and Sasktel in Saskatchewan..
    While the Liberals are in power the big players have wasted no time in taking over the smaller players throughout the whole nation.
    And I am sure tbytel will be the next one. Wouldn't be long indeed
    I am not sure if SHAW, a media buddy of Rogers, is taking over Wind on the behalf of RBT. But if yes, the take over by the big players is almost complete. And our rate will never never match the same level of competition in the States or the rest of the world


    Daniel

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    Telus buys SaskTel and the deal will be complete!

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    MTS deal would set a harmful precedent for wireless competition
    Dwayne Winseck and Ben Klass
    Globe and Mail, May 18

    Dwayne Winseck is professor in the School of Journalism and Communication, Carleton University, and director of the Canadian Media Concentration Research Project. Ben Klass is a PhD student at the School of Journalism and Communication, Carleton University

    Two weeks ago, Bell announced a bid to buy MTS, Manitoba’s largest provider of telecommunications, Internet and next-generation television services. If the merger goes through, the communication industry in Manitoba will be radically transformed, and there will be important implications for the rest of Canada as well.

    A transaction of this magnitude deserves careful consideration. Some pundits and think tanks have been quick to support the deal*, but a more rational review of the situation is needed. Our research suggests that the takeover would not be in the best interest of Manitobans, and that it could set a harmful precedent for the rest of the country.

    Manitobans currently enjoy some of the most affordable prices for wireless service in Canada because MTS acts as an independent competitor to the national carriers. In provinces such as British Columbia, Alberta and Ontario, there are no strong rivals for Bell, Rogers and Telus, and monthly rates for popular voice and data plans are $30 to $70 higher. Remove MTS from the equation and Manitobans will likely soon be facing the same steep rates and parsimonious monthly data caps – which MTS doesn’t have – that frustrate consumers elsewhere.

    Supporters of the merger argue that “ruinous competition” and Manitoba’s affordable prices have left MTS in dire financial straits, unable to invest on the same scale as a company such as Bell. As they see it, cheap prices in the short run might be costly in the long term. From this angle, BCE says it will help bring Manitoba into the future with its pledge to invest $1-billion over five years to build state-of-the-art fibre-optic networks, expand Bell’s Fibe TV service and increase wireless 4G LTE network coverage.

    However, a closer look at the data and existing trends tells a different story. In fact, MTS is more profitable and invests relatively more capital in its networks than Bell. This has been the case for some time. MTS’s significant and timely investments in 4G LTE wireless networks, high-speed broadband and next-generation IPTV services all show that its operations compare either favourably to or better than anything Bell offers throughout its own territories.

    Allowing Bell to acquire MTS would reduce the number of wireless carriers in Manitoba from four to three, a trend strongly opposed by regulators in many countries. When AT&T sought to take over T-Mobile in 2011, the U.S. Justice Department scuppered the deal. T-Mobile has since flourished by offering innovative services such as unlimited data plans and free international roaming. Just last week, European regulators blocked a four-to-three merger between mobile operators Hutchison and O2 in Britain, citing concerns over the potential for sharp increases in bills and anticompetitive behaviour.

    Here in Canada, the federal government has spent the better part of the past decade bending over backward to increase competition in the wireless space. These efforts have begun to bear fruit in Quebec, where Videotron has rapidly expanded, and the Atlantic provinces, where Eastlink is now offering an affordable alternative to the national carriers. Supporters of the merger play down the benefits of independent competition while ignoring the potential harms that reversing course could have on competition.

    Experience around the world shows that having four or more rivals results in more competitive pricing, and a greater diversity of service offerings – a virtuous circle that helps reduce barriers to adoption and innovation. This is vitally important since Canada ranks poorly (32nd of 40 OECD and EU countries) when it comes to cellphone adoption.

    Promoting independent competition is crucial for another reason: MTS is now the only operator in Manitoba providing unlimited data plans, both for mobile and home broadband. The days without expensive overage charges will be numbered if BCE’s bid goes ahead. As telecom consultancy Rewheel has observed, wireless markets that go from four to three carriers usually see a steep rise in prices, and more restrictive data caps.

    Evidence of the potential for harm from reduced competition in telecommunications and TV markets is not speculative. Both the CRTC and the Competition Bureau have found that the mobile wireless industry is not sufficiently competitive, and the former has taken action to constrain the national carriers’ market dominance. Allowing Bell to take over MTS would thus not only deliver Manitoba into the hands of the three firms the CRTC and Competition Bureau have found to have collective “market power,” but would effectively condone the unfettered exercise of that power before the remedies that regulators have put into place have had a chance to achieve their goals.

    For all these reasons, regulators should just say no to the BCE bid.

    --
    * BCE - MTS deal could be the welcome end of the telecom fourth-player policy
    (by the pundits who wrote the MEI report)
    Globe and Mail, May 11

    --
    Rogers increases monthly rate plans in Manitoba by $5
    Mobile Syrup, May 17
    Last edited by pjw918; 05-18-2016 at 02:50 PM.

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    Yeah, I don't see this being of much benefit to Manitobans...

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    MTS shareholders overwhelmingly approve acquisition by BCE
    CNW June 23
    ...
    The Arrangement Resolution was approved by 99.66% of the 43,098,172 votes cast by Shareholders present in person or represented by proxy at the special meeting of Shareholders held earlier today.

    "MTS shareholders have overwhelmingly supported the BCE transaction," said Jay Forbes, President & CEO of MTS. "This strong support reflects the meaningful value that shareholders will receive as a result of this transaction, which also provides compelling benefits to MTS customers, employees and to the province of Manitoba. With these shareholder approvals in place, we will continue to work with BCE to secure the necessary regulatory approvals with a view to closing the transaction as expected."...

    --
    Bell’s takover of MTS poses risks to SaskTel, report says
    Canadian Press June 20

    A new report says the takeover of Manitoba Telecom Services by Bell poses risks to Saskatchewan’s provincially owned telecommunications company.

    The analysis for SaskTel, conducted by Mark H. Goldberg & Associates Inc., says the fundamental risk is that a fewer number of carriers in Manitoba could prompt federal government policy change.

    One possibility is that it could cost more for SaskTel to bid on the newly repurposed broadcast spectrum 600MHz band than it would for national carriers.

    The report notes that in the 2014 auction of the 700MHz spectrum, most of the space ended up being acquired by one of Rogers, Bell or Telus in virtually every region.

    There are further concerns that Ottawa could back away from a stated objective to have four wireless carriers operating in every market...

    --
    Manitoba consumers fear price hikes, data caps if BCE buys MTS: Poll
    PIAC June 7
    ...
    If the deal goes through, 53% of present MTS customers said prices for Internet access would rise (only 8% said they would drop); 54% thought wireless prices would rise (8% drop). More alarmingly, 75% expect data caps will be introduced by the new BCE-MTS in home internet service and 74% believe unlimited data plans will disappear for BCE-MTS wireless customers.

    A majority of all poll respondents believe their overall communications bill would rise (51% expect a price rise versus 10% who expect a drop). Moreover, 59% disagreed that BCE’s takeover of MTS would lead to accelerated high-speed Internet rollout in rural Manitoba.

    “Manitoba consumers think the BCE offer for MTS will hurt them where it matters most – in the wallet”, said John Lawford, Executive Director and General Counsel to PIAC, “They know the deal is bad news for Manitoba and they’ll lose the competitive market that’s delivered low prices and unlimited Internet.”...

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    Ottawa approves sale of MTS to BCE

    Ottawa approves BCE-MTS tie-up; deal to benefit Xplornet
    Globe and Mail, Feb 15
    Christine Dobby

    Federal authorities have approved BCE Inc.’s $3.1-billion deal to acquire Manitoba Telecom Services Inc., one of the country’s last remaining regional telephone operators.

    As part of the approval process, BCE agreed to divest wireless airwaves and subscribers to Xplornet Communications Inc., enabling the rural Internet provider to start selling mobile services in Manitoba.

    This means the province will continue to have four wireless operators, although Xplornet has not previously sold cellular services and it will assume only a small part of the market.

    The Competition Bureau said Wednesday that it consented to the deal on the condition that BCE sell six retail stores, 24,700 wireless subscribers and a swath of spectrum to Xplornet. BCE will also have to help Xplornet get started by giving it access to cell towers and roaming services and helping the smaller company buy handsets for a period of time. Financial terms of the Xplornet arrangement were not disclosed.

    Bringing in Xplornet as a new competitor is in addition to a side deal BCE struck with Telus Corp. last year to help even out market share in the province. The companies said Wednesday BCE will sell about one quarter of its new MTS contract cellular customers as well as 13 retail locations in Manitoba to Telus in a transaction they said is worth $300-million.

    BCE will have about 470,000 wireless customers in the province after the deals close. That will give it about 44 per cent of the Manitoba wireless market, according to RBC Securities Inc. analyst Drew McReynolds, followed by Rogers Communications Inc. at 36 per cent, Telus at 18 per cent and Xplornet at 2 per cent.

    The Competition Bureau said its review of the deal, which went on longer than some expected, determined that the loss of MTS as a competitor in the province would likely lead to higher prices and fewer options for Manitobans.

    “The consent agreement, including Bell’s commitment to complete its transaction with Telus, addresses the Commissioner’s concerns related to the transaction,” the watchdog said in a statement. Commissioner John Pecman added: “we will continue to keep a close watch on competition in Manitoba and across Canada in the mobile wireless services market.”

    The federal department of Innovation, Science and Economic Development (ISED) also approved the deal Wednesday, saying Xplornet joining the market will “result in more competition, which means more choice and competitive prices for all Manitobans.”

    Maintaining a fourth option in the province was central to the deal’s approval. For the better part of the past decade, Ottawa has pursued a telecom policy aimed at bolstering competitors to the Big Three national wireless carriers, BCE, Telus and Rogers Communications Inc.

    Many financial analysts had suggested Calgary-based cable company Shaw Communications Inc. – which bought wireless startup Wind Mobile (now known as Freedom Mobile) last year – would play the role of fourth player in Manitoba as part of the deal’s approval.

    Xplornet, a private company founded in New Brunswick and now headquartered in Markham, Ont., is a fast growing rural Internet provider that offers service using satellite and fixed wireless technology (which uses spectrum and towers to provide Internet coverage). But it still has only about 300,000 customers across the country.

    “It has an existing customer base in Manitoba. However, it is a considerably smaller player [than Shaw] with far less financial clout to be a threat to the incumbents in the province of Manitoba or influence prices,” said Canaccord Genuity’s Aravinda Galappatthige.

    “Although the government theoretically upheld the four player policy, the impact on the market is modest in our view,” he said, adding that the Big Three should be able to increase their wireless revenue in the province “over the longer term.”

    George Cope, chief executive of BCE, said his company is committing to “maintain current MTS wireless price plans for at least 12 months after the closing of the acquisition.” BCE said the deal is expected to close on March 17.
    ...

    --
    BCE News Release
    Telus News Release
    Xplornet News Release

    --
    Competition Bureau Statement
    Competition Bureau News Release
    ISED Statement

    --
    Financial Post
    CBC
    Last edited by pjw918; 02-15-2017 at 04:14 PM. Reason: CompBureau statement; FP coverage; Globe update; ISED; CBC

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    PIAC response.

    BCE-MTS merger approval by Competition Bureau experiments with Manitoba consumers: price increases, more consolidation expected

    OTTAWA, February 15, 2017 – The Public Interest Advocacy Centre (PIAC) and the Consumers’ Association of Canada (CAC) reacted to a consent order filed with the Competition Tribunal today by The Commissioner of Competition, BCE Inc (Bell), and Xplornet Communications Inc. (Xplornet) permitting the acquisition of Manitoba Telecom Services Inc. (MTS) by BCE, subject to certain divestitures and conditions.

    “Manitoba consumers are the guinea pigs in this cellphone market experiment,” said John Lawford, Executive Director and General Counsel at PIAC. “There are no guarantees that wireless prices will not rise in Manitoba due to this deal’s approval despite the artificial creation of a tiny new competitor in Xplornet”, he added.

    The Commissioner of Competition explained in a press release and statement regarding the acquisition that the “Proposed Transaction would likely lead to a substantial increase in the price for mobile wireless plans due to the increased ability and incentive for a coordinated exercise of market power between Bell, TELUS and Rogers in Manitoba.”

    However, despite this finding and the rejection of Bell’s contention that the transaction should be approved due to increased “efficiencies”, the Competition Bureau stated that its concerns about competition in Manitoba were satisfied by the deal in the Consent Order. The order requires Bell to divest to Xplornet certain MTS spectrum, certain MTS customers and stores and to provide access to MTS towers among other conditions, in order for Xplornet to offer a new retail wireless retail business in Manitoba.

    “We’re not quite sure what it takes to get a merger stopped in Canada anymore,” said Bruce Cran, President of the Consumers’ Association of Canada, which opposed the deal alongside PIAC. “We are particularly concerned about the possible move to more consolidation in the wireless market across Canada after this deal.”

    PIAC, on behalf of the Consumers’ Association of Canada, and the Public Interest Law Centre (Manitoba), on behalf of the Manitoba branch of the Consumers’ Association of Canada, released a poll in June 2016 of Manitobans showing high levels of concern with the proposed takeover.

    http://www.piac.ca/our-specialities/...ation-expected

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    I wonder if Xplornet is actually going to try to become a viable 4th player carrier in MB or if they are just going to hold on to the spectrum and sell it back to Bell eventually.

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    Quote Originally Posted by dtong22 View Post
    While the Liberals are in power the big players have wasted no time in taking over the smaller players throughout the whole nation.
    Ok I am a strong PC but this makes no sense at all?
    The Public & Mobilicity takeovers happened on the Conservatives watch

    Plus the fact this MTS takeover has been talked about for a long time
    Public $120 Province Wide + 12GB - $6 Autopay - $6 Loyalty - $42 Refer = $22 per Month
    Telus SK North American Wide 7GB = $65
    Chatr (Mobi) $40 North America Wide + 6GB + 30 Mins Roaming

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    Quote Originally Posted by crab9000 View Post
    I wonder if Xplornet is actually going to try to become a viable 4th player carrier in MB or if they are just going to hold on to the spectrum and sell it back to Bell eventually.
    Or hold it and sell it to Shaw.

    I don't think they have a chance. The 25k customers they got will just switch back to Bell, Rogers or Telus when their contract is over. Anyone who has been following Xplornet knows that the only reason they are around is because there is no other option for rural internet. They are known for crapper service, crappy internet and crappy everything else. When I lived in Alberta we used Platinum Communications for our internet, and for $60/month we got 5 down and 1 up, with unlimited bandwidth. This was over 6 years ago, and we considered it pretty decent for rural internet. As soon as Xplornet bought Platinum, they kept the pricing and the speeds, and reduced the bandwidth down to 50GB per month which is absolutely stupid. So I expect them to continue screwing over people in Manitoba the same way.

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    Peter Armstrong interviews Ben Klass on the BCE-MTS approval.

    http://www.cbc.ca/player/play/878272067621
    CBC Feb 15 - 7min

    --
    http://www.cmcrp.org

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