Bell Aliant, Bragg, potential suitors among 13 parties interested in Ontera: analysts

BCE Inc.'s Bell Aliant, Bragg Communications Inc., MTS Allstream Inc. and smaller “niche” service providers are potential suitors to purchase Ontera, the government of Ontario’s northern telecom division, industry analysts say. In March, the Ontario government announced a process to sell off the individual business lines of its northern Crown corporation, the Ontario Northland Transportation Commission (ONTC), including Ontera, a northern Ontario telecom subsidiary. Ontera, a telecom operator since 1902, now has about 30,000 home phone and Internet customers in northern Ontario and provides data services to an unspecified number of business customers, Rebecca McGlynn, an Ontera spokeswoman, said in a phone interview. The company has a 1,500-kilometre “ring of fibre” in northern Ontario and offers wireless services in some areas, McGlynn said. This month, the Ontario government said Ontera will be the first of five ONTC business units put up for sale and that it will soon invite interested parties to “submit their qualifications” to purchase the unit. In a research note released Monday, UBS Securities analyst Phillip Huang said Bell Aliant and Eastlink (owned by Bragg) as two potential buyers. “Given Bell Aliant and privately held Eastlink already operate in parts of Ontera’s footprint we believe both companies may be interested,” the note said. Huang estimated Ontera would sell for $60 million to $80 million. Headquartered in Halifax, N.S., Eastlink offers cable TV, Internet and home phone services predominantly in Atlantic Canada, with services also available in every province except Saskatchewan, according to its website. The company has stores in Timmins and Sudbury in northern Ontario, its website says. Bell Aliant, which offers similar services over telephony lines and an expanding fibre-to-the-home network, operates in Atlantic Canada, Quebec and Ontario. Bell Aliant spokeswoman Natasha Compton said in an emailed statement that the company serves regional customers in Ontario from Kenora in the west near the Manitoba border, to Cornwall in the east near the Quebec border, and south to Chatham-Kent, Ont. Roberta Fox, chair and chief innovation officer at consulting firm Fox Group Technology, agreed in a phone interview that Eastlink or Bell Aliant would be good fits for Ontera, as well as MTS, the incumbent telco in nearby Manitoba. Fox said smaller, “niche, next-gen service providers” may also be interested in acquiring Ontera and its infrastructure to offer network services such as cloud and hosting. She said companies like Activo Inc., an IP infrastructural company that offers business solutions, or Frontiers Technologies, a Nova Scotia cable and telecom company, may make a good fit. “I don’t think it’s just the traditional main competitors. I think there might be interest from people who the general business, public, doesn’t even know who they are,” she said. “It’s really who wants to leverage the circuit aspects and then maybe add cloud and hosted services for the area.” Fox said the potential to run new services on Ontera’s network could appeal more to potential buyers than the company’s current assets or subscriber revenues. ONTC said in its most recent annual report that Ontera earned about $31.95 million in sales revenues in the year ending March 31, 2011. It said the division posted a $2.72 million loss during the year, slightly less than a loss of $3.17 million a year earlier. “To me, that would be the appeal … It would be if you want to get that market base and add advanced services on top of the current subscribers,” Fox said. Andrew Morrison, a spokesman for the Ontario Ministry of Northern Development and Mines, said 13 parties have so far expressed an interest in acquiring Ontera. “It’s nothing formal, but there has been some informal expressions of interest,” he said, declining to name the interested organizations, people or companies and whether they are established telecom providers. He said the ministry is nearing the end of its first phase of the sale, in which it is assessing Ontera’s assets and “identifying risks and opportunities of the divestment process.” “Once that achieved, and we expect that to be achieved in the coming weeks, we’re able to invite interested buyers to respond to our request for qualifications,” he said. Morrison said the government decided to sell off Ontera and ONTC as a result of the entire corporation’s “ever-increasing requirement for government subsidies,” which was projected to top $100 million this year. He said the government hopes to complete the sale of Ontera over the winter. Compton declined to comment on whether it would pursue an acquisition of Ontera. “We are aware of the opportunity but have no comment on any potential investments,” she said via email. Eastlink did not provide comment for this story by deadline. nkyonka@thewirereport.ca

Bell Aliant, Bragg, potential suitors among 13 parties interested in Ontera: analysts

News | August 29, 2012

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Bell Aliant, Bragg, potential suitors among 13 parties interested in Ontera: analysts

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