TORONTO – Manitoba Telecom Services Inc. announced today it has agreed to sell its Allstream business services unit to Accelero Capital Holdings, the investment company owned by former Wind Mobile backer Naguib Sawiris, for $520 million.
The deal follows a lengthy strategic review by MTS Inc. to explore different options for Allstream’s future. Headquartered in Toronto, Allstream has approximately 30,000 km of fibre network across Canada and a client base of more than 50,000 businesses.
The deal may provide Sawiris with the foothold he needs to re-enter the Canadian wireless market and participate in the upcoming 700 MHz spectrum auction in November. As former head of Orascom Telecom, Sawiris was one of the original backers of Wind Mobile, which is also rumoured to be for sale.
“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,” said Sawiris in a statement.
After closing costs, MTS expects to realize net proceeds of approximately $405 million, $130 million of which will be invested in the company’s pension plan, with $70 million to be put towards the short-term indebtedness MTS incurred in February 2013 to pre-fund its pension obligations.These payments would also restore MTS’s pensions plan solvency rate to 85%.
The transaction is expected to be completed in the second half of 2013 subject to approval under the Investment Canada Act and by the Competition Bureau.
www.mtsallstream.com, www.accelerocapital.com
