Telus Corp (T.TO TU.N), one of Canada’s three big telecom providers, said it would sell a 35 percent stake in outsourcing service provider Telus International, and plans to use the proceeds to expand its wireless and wireline networks.
Competition among Canadian telecom companies has been heating up, sparked by deals including Shaw Communications Inc‘s (SJRb.TO SJR.N) acquisition of Wind Mobile, the country’s fourth-largest wireless provider, and Rogers Communications Inc‘s (RCIb.TO) $465-million purchase of smaller rival Mobilicity.
Telus on Monday entered an agreement with rival BCE Inc (BCE.TO) to buy one-third of Manitoba Telecom Services‘ (MTS) (MBT.TO) post-paid wireless subscribers, after BCE completes its deal to buy MTS.
Vancouver-based Telus said on Thursday it would sell the stake in Telus International to Baring Private Equity Asia for proceeds of about $600 million (US$467.14 million), in a deal valuing the unit at $1.2 billion (US$1 billion).
The company also posted a lower profit due to higher costs, sagging demand in Alberta, Canada’s oil producing hub, and fierce competition for wireless customers.
Telus’s net income fell to $378 million, or 64 Canadian cents per share, in the first quarter ended March 31, from $415 million, or 68 Canadian cents per share, a year earlier.
However, operating revenue rose to $3.11 billion from $3.03 billion, helped by growth in wireless and wireline operations.
Blended churn rate, or the number of customer cancellations, in the quarter was the company’s lowest first quarter churn rate in 16 years, Telus said.
Update: In a statement, Jean Eric Salata, CEO of Baring Asia, said the firm aimed to leverage its “footprint and cross-border capabilities” to enhance Telus International’s client portfiolo and help expand its market presence.
Based in Hong Kong, Baring Asia manages total committed capital of over US$10 billion.
(Reporting by Anet Josline Pinto in Bengaluru; Editing by Shounak Dasgupta)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Telus Corp