Wind selling LTE spectrum in Prairies to MTS, Sasktel; MTS moves to divest Allstream

3 Aug 2015

Canada’s fourth largest cellular operator by subscribers Wind Mobile has won approval from the telecoms ministry Industry Canada to transfer its unused AWS (1700MHz/2100MHz) spectrum licences in the Prairie provinces of Manitoba and Saskatchewan to the two regions’ respective incumbent telcos Manitoba Telecom Services (MTS Allstream) and SaskTel, which will each add the frequencies to their existing 4G LTE bandwidth. SaskTel CEO Ron Styles said in a press release: ‘Our 4G LTE network in the nine major urban centres in Saskatchewan operates on the AWS-1 spectrum band and with these additional blocks we can deliver significantly more bandwidth and faster speeds.’ SaskTel’s communications director Michelle Englot added, however, that final terms including price had not yet been agreed, as the Regina-based telco remained in negotiations with Wind. MTS, on the other hand, released a statement confirming that it has agreed to purchase 15MHz of paired AWS-1 spectrum in Manitoba from Wind for CAD45 million (USD34.3 million), saying that the acquisition will ‘significantly increase the speed and customer experience on the MTS wireless network to the benefit of many Manitobans.’

Wind’s CEO Alek Krstajic stated that the company will channel the proceeds from the spectrum sales into network expansion and quality improvements including LTE services in Ontario, British Columbia and Alberta.

MTS added in its release that it will finance the CAD45 million spectrum payment to Wind using existing credit facilities which it plans to repay following its planned sale of its national long-distance and enterprise telecoms division Allstream. The Winnipeg Free Press notes that in MTS’ latest results for Q2 2015, the dramatic downsizing of the Toronto-based Allstream division drove free cash flow up 41% to CAD45.4 million, while the company said that management has shifted focus to manage the exit of Allstream ‘that will maximise value while promoting deal certainty.’ MTS has retained advisors and plans to formally approach prospective purchasers for Allstream in the second half of this year. MTS’ revenue for the second quarter was down 1.2% year-on-year to CAD398.3 million, EBITDA fell 14.5% to CAD121.9 million and net income dropped 47.5% to CAD10.4 million.