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Birch Hill Equity Partners, Fondaction CSN invest in Maskatel-Xittel merger

Maskatel, a telecommunications company based in Saint-Hyacinthe, Québec, has agreed to combine with Xittel, a telecommunications service provider based in Trois-Rivières, Québec. The transaction, the financial details of which were not disclosed, is expected to be completed in the coming months. Maskatel and Xittel said their merger will create a new telecommunications business that will be a leader in Québec’s regional markets. Maskatel is a portfolio investment of Birch Hill Equity Partners, while Xittel is a portfolio investment of Fondaction CSN. Birch Hill and Fondaction CSN provided undisclosed financial support to make the merger agreement possible.


Merger of two Quebec-based telecommunications firms

Maskatel and Xittel merge operations

St-Hyacinthe/Trois-Rivières – Maskatel, a telecommunications company serving the St-Hyacinthe and Drummondville region, and Xittel, a telecommunications service provider that has earned a reputation for its expertise in setting up and operating both dark and lit fibre based telecommunication networks, are pleased to announce the merger of their companies today. Typically for this type of agreement, the merger is subject to approval by certain organizations, which is expected to be granted in the next few months. Xit telecom, the consulting engineering firm, will remain an independent entity and continue to pursue its mission.

The merger will well position the newly formed entity as a telecommunications leader in Quebec’s regional markets. Financial support from Birch Hill Equity Partners, the current owner of Maskatel, and Fondaction CSN, a Xittel shareholder, has made this agreement possible.

Jacques Taillefer, the president of Maskatel, declared, “This pooling of our two companies’ resources and expertise is excellent news for our residential and business clients. It positions us to offer them a broader range of value-added services.”

According to Xittel president Robert Proulx, “The memorandum of understanding announced today will enable us to reinforce the strength and security of our respective networks through the strategic use of our combined systems, and, above all, to serve more regions in Quebec.”

“The two companies will continue to operate from their respective offices, so they can maintain that ever important local presence to serve our communities, and no job losses are anticipated at this time. In fact, we see our existing work force being utilized to a greater extent across the expanded territory in order to support our development efforts,” said Félix-Étienne Lebel of Birch Hill. “We also hope that other telecommunications companies are interested in joining us.”

“Fondaction CSN has been with Xittel since 2006. We have always believed in its potential. The merger announced today is good news for telecommunications in Quebec and access at a regional level,” added Geneviève Bouthillier, assistant head of investments at Fondaction CSN.

The merger is subject to regulatory approval however both parties are optimistic that those approvals will be granted in the next few months.

About Maskatel
Maskatel, created through a merger of small telecommunications companies, is a major player in St-Hyacinthe and the surrounding area. The company’s position in the Drummondville region, where it has set up an extensive fibre optic network, continues to grow. Maskatel offers telephone, Internet and digital TV services – including access to almost 200 channels, around 30 of which broadcast in high-definition – to both residential and business customers.

About Xittel
XITTEL is comprised of a team of 50 people who are passionate about their work. This was the first company in Canada to demonstrate that non-dominant telecommunications companies can use public rights-of-way as well as the support structures of incumbent phone companies. XITTEL’s expansion is the result of several company acquisitions over the years. Since 2005, the firm has also been building and developing its own network to provide customers with a range of services, including Internet, IP telephony, IPTV, web hosting and colocation services.

About Xit telecom
XIT telecom, which was incorporated in 2002, employs 30 people and offers a range of telecommunications engineering services. ISO 9001 certification has sealed the company’s reputation for excellence.

About Birch Hill Equity Partners
This private equity partnership is Canada’s mid-market leader. Setting their sights beyond the capital horizon, its shareholders are dedicated to creating long-term value by entering into lasting business partnerships based on shared interests. With $2 billion in capital under management, 21 partner companies and 33 fully realized investments since 1994, Birch Hill is the leader in long-term value creation in the Canadian mid-market. The firm has extensive experience in the Quebec market, in particular through its partnerships with Distinction Group Inc., Canada’s largest provider of integrated building services, headquartered in LaSalle; Dormez-Vous (Sleep Country Canada Inc.), Quebec’s largest mattress retailer; and Aquaterra (Labrador Source), which enjoys access to the most extensive bottled water distribution network in Canada.

About Fondaction CSN
Fondaction CSN invests in Quebec SMEs in order to help maintain and create jobs in Quebec, within a context of sustainable development. It manages $1.2 billion in assets from retirement savings collected from more than 126,000 shareholders. Through its investments or commitments, either directly or by way of partner or specialized funds, Fondaction supports the development of more than 850 enterprises, many of which represent different components of the social economy.

For more information, please contact:
Céline Laporte/Marie Thibault-Cossette
450 251-2233/819 370-3232 ext. 2052

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