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1.3 Key corporate developments

1.3 Key corporate developments

MTS acquisition expected to close on March 17

On February 15, 2017, Innovation, Science and Economic Development Canada (ISED) and the Competition Bureau approved BCE’s $3.9 billion acquisition of MTS originally announced on May 2, 2016. The combined companies’ Manitoba operations will be known as Bell MTS. These approvals, together with the Canadian Radio-television and Telecommunications Commission’s (CRTC) approval on December 20, 2016, under the Broadcasting Act, of the transfer of the broadcasting distribution undertaking (BDU) licence held by MTS to BCE, completed all regulatory approvals required to close the transaction. MTS shareholders approved BCE’s acquisition of MTS at a special shareholders meeting held on June 23, 2016 and the Manitoba Court of Queen’s Bench issued a final order approving the acquisition on June 29, 2016. Subject to certain closing conditions and termination rights, this transaction is expected to close on March 17, 2017.

The transaction will be completed through a plan of arrangement under which BCE will acquire all of the issued and outstanding common shares of MTS for $40 per share, which will be paid 55% through the issuance of BCE common shares and 45% in cash. The cash component will be funded through debt financing (Refer to section 6.7, Liquidity, for more details) and BCE will issue approximately 28 million common shares for the equity portion of the transaction. If the transaction does not close under certain circumstances BCE may be liable to pay a break fee of $200 million to MTS.

The acquisition of MTS, which is expected to be accretive to BCE’s revenue, adjusted EBITDA and free cash flow, will allow us to reach more Canadians through the expansion of our wireless and wireline broadband networks while supporting our goal of being recognized by customers as Canada’s leading communications company.

As part of a consent agreement with the Competition Bureau, BCE has agreed to divest approximately one-quarter of MTS’ postpaid wireless subscribers and 13 retail locations to the TELUS Group for total proceeds of approximately $300 million, subject to final adjustments. Subject to certain closing conditions and termination rights, this transaction is expected to close on April 1, 2017. The $75 million break fee that was payable by BCE to the TELUS Group if the transaction with the TELUS Group did not close under certain circumstances is no longer applicable given the receipt of all regulatory approvals.

As part of the previously mentioned consent agreement, BCE has also agreed to transfer to Xplornet a total of 40 MHz of 700 MHz, Advanced Wireless Services-1 (AWS-1) and 2500 MHz wireless spectrum currently held by MTS, which has also been approved by ISED; 24,700 wireless customers once Xplornet launches its mobile wireless service; and five retail outlets in Winnipeg and one in Brandon. Xplornet will receive transitional remedy network access from Bell MTS in urban areas of Manitoba for three years and other operational benefits as Xplornet builds out its own wireless network in Manitoba. Subject to certain closing conditions and termination rights, this transaction is expected to close on March 17, 2017.

 

Acquisition of Q9 Networks Inc. (Q9)

On October 3, 2016, BCE acquired all equity it did not already own in Q9, a Toronto-based data centre operator providing outsourced hosting and other data solutions to Canadian business and government customers. Q9 had previously been acquired in October 2012 by an investor group comprised of BCE, Ontario Teachers’ Pension Plan Board, Providence Equity Partners LLC and funds managed by Madison Dearborn Partners LLC. BCE held a 35.4% stake in Q9 and has acquired the remaining 64.6% equity interest from its fellow investors. The transaction was valued at approximately $680 million, including Q9 net debt but excluding BCE’s prior ownership interest. The acquisition supports BCE’s ability to compete against domestic and international providers in the growing outsourced data services sector.

 

Recognition of Bell’s environmental leadership

United States magazine Newsweek once again recognized Bell’s environmental leadership by naming it on its annual list of the top green companies in the world. Bell placed 110th on the newsmagazine’s 2016 list of 500 publicly traded international companies and is the only Canadian communications provider on the list. Bell ranked sixth out of the 16 Canadian companies recognized for 2016. The first telecommunications company in Canada to achieve the highest level certification for its environmental management system (ISO 14001), Bell continuously seeks to reduce the environmental impact of its operations across its networks, Information Technology (IT) infrastructure, buildings and service fleet. In 2016, we made progress in a number of areas, reducing electricity by about 26 gigawatt hours and generating about 450,000 kilowatt hours (kWh) of renewable energy from solar and wind power sources. We also reduced fuel consumption by about 3 million litres due in part to our investment in more than 1,000 new fuel-efficient replacement vehicles and the continuous efforts of team members to reduce idling.

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