Rogers to Pay Bell $392 Million in Cash for Glentel Partnership
Last November, Bell announced it was acquiring Burnaby-based cellular dealer Glentel for $594 million. Less than a month later, Rogers filed an application in court to block the sale, and three days later Bell announced it had sold a 50% stake to the latter, announced on Christmas Eve.
“After BCE funds the $297-million cash portion of consideration on the Glentel transaction, BCE’s net cash position will in fact improve by $95-million, so our liquidity and financial position will be strengthened as a result,”
The Rogers investment will bring down the net effective cost of Bell acquiring 50% of Glentel to $202 million, with Vanaselja saying “We think that’s really good value for securing this distribution channel, particularly as we head into a period of increased volumes of wireless subscriber contract expirations.”
With the closing of Target Canada stores, it brings Glentel locations across Canada down to 368 (a loss of 126 locations).
Later this year the wireless industry will be facing what is described as a “double cohort”, as numerous three year contracts are up for renewal in June (signed before the new Wireless Code), along with many two-year contracts as well, which, according to the Globe emphasizes the importance of point-of-sale transactions to re-sign customers.
The Glentel sale still needs to be approved by the Competition Bureau, and Bell says it expects the deal to finalize later this year in the spring.