Telco previously hinted at a minority sale in its cell tower portfolio
By Ahmad Hathout
Telus announced Friday that it has agreed to sell to a pension fund a minority stake in a separate entity that will carry its wireless infrastructure.
La Caisse, one of the largest pension funds in the country, will spend $1.26 billion on the 49.9 per cent interest in Terrion, a newly created cell tower operator headquartered in Montreal and headed by long-time Telus executive Eros Spadotto.
Terrion will manage about 3,000 tower sites across British Columbia, Alberta, Ontario and Quebec and will generate money through wholesale rental. Telus will retain full ownership and control of the network component and security systems, it said in a press release. The companies expect the deal to close before the end of the third quarter.
“The establishment of Terrion allows TELUS to focus on our innovative service offerings and next-generation connectivity for the benefit of our customers, while enabling Terrion to specialize in infrastructure development, site management and third-party co-location,” said Telus president and CEO Darren Entwistle.
Terrion will focus on tower expansion and developing industry-wide partnerships, including with Telus: the telco said it will enter into an agreement with Terrion to lease capacity on the towers for an initial period of eight years.
“La Caisse brings a combination of telecom sector expertise, long-term capital and an active asset management approach to help establish Terrion as a full-fledged player and position it for long-term growth,” Emmanuel Jaclot, La Caisse’s executive vice president and head of infrastructure, said in the release. “This landmark transaction complements our existing portfolio of tower companies across the United States, Europe and New Zealand.”
Telus had previously announced that it was looking to leverage its assets to raise money and pay down debt, following a similar announcement by Rogers.
But it’s also spinning this deal as some sort of olive branch to competitors and a signal to federal regulators that wholesale competition is good. “Importantly, just as we enable our telecom peers with wholesale access to our mobility network to serve their customers, Terrion will provide an avenue for other wireless carriers to leverage TELUS’ infrastructure on a wholesale basis for the betterment of their mobility businesses,” Entwistle said.
“Additionally, this transaction is in line with the federal government’s objectives of enhancing national connectivity and digital infrastructure, exemplifying the type of large-scale development Canada needs to maintain its competitive advantage in the global digital economy,” he added.
Telus is actively combatting opposition to the CRTC’s twice-affirmed policy of allowing the three largest telecommunications companies to use the wholesale internet regime, which the telco said will allow it to quickly expand eastward and boost competition.
Most recently, it outed itself to media and then made a public spectacle of being one of the wireless partners from which Cogeco is leasing capacity to launch its wireless business, which the regional telecom never revealed.
The announcement comes alongside its second quarter earnings report, which shows mobile network revenue was down one per cent to $1.7 billion against the comparable period that ended June 30 last year. Mobile equipment and other service revenues were also down one per cent to roughly $500 million in the quarter.
Those losses were offset by fixed data services, which were up three per cent to $1.2 billion in the quarter. Landline revenue was down four per cent to $170 million.
The telco added only 55,000 new mobile wireless subscribers in the quarter, down 46 per cent against the comparable period. Average revenue per user (ARPU) was down 3.3 per cent, or $1.91, to $56.58, while churn improved by one basis point to 1.06 per cent.
Gross mobile phone subscribers were down nine per cent over the year to 376,000 for a total base of 10.2 million – up two per cent. (Telus doesn’t break out postpaid and prepaid subscribers.)
Telus added 27,000 new internet subscribers, down 18 per cent, for a total base that was up two per cent to 2.7 million; it added 12,000 new television customers, down 52 per cent, for a total base that was up six per cent to 1.4 million; it lost 17,000 landline customers, more than the 8,000 it lost in the comparable period, for a total base of one million (down five per cent); and it added 9,000 new security and automation customers, down 55 per cent over the year, for a total base that increased four per cent to 1.14 million.
It added 112,000 new connected devices, which was also down 30 per cent from last year. The total base was up 18 per cent over the year to roughly four million.
The telco saw roughly $5 billion in revenue in the three months that ended June 30, three per cent higher against the comparable period last year. The net loss, however, was $245 million, which was attributed to a $500-million impairment of goodwill with Telus Digital, which it seeks to purchase.
