Blackstone, CPPIB to bid on Canadian wireless spectrum

The Canada Pension Plan Investment Board has teamed up with Blackstone and a Canadian telecom company to bid in an upcoming spectrum auction. The consortium has deposited $340 million toward that end.

A consortium including Canadian company Manitoba Telecom Services, the Canada Pension Plan Investment Board and The Blackstone Group has made a $340 million (€221 million) deposit and submitted an application to join the upcoming Advanced Wireless Services spectrum auction in Canada.

The deposit was made in the form of letters of credit to Industry Canada, a government division responsible for improving Canadian investment conditions that will conduct a spectrum license auction beginning 27 May. The auction is meant to promote increased competition in the wireless sector.

“A strong new entrant has the potential to bring much-needed innovation to Canada’s wireless market,” Pierre Blouin, chief executive of communications solution provider Manitoba Telecom, said in a statement.

If successful, each member of the consortium will take ownership of one-third of the new entity which will use the spectrum. This structure is in compliance with Canadian laws governing telecommunications and broadcasting companies, which prohibit foreign investors from owning more than 46 percent of telecom companies.

Should the consortium win the auction, it intends to appoint André Tremblay to launch and manage a new wireless company. Tremblay was previously the founder and chief executive of Canadian cellular service provider Microcell, which operates the Fido brand wireless service.

The Canada Pension Plan Investment Board was recently part of a consortium that made a failed bid for Montreal-based telecom giant BCE. The consortium also included private equity firm Kohlberg Kravis Roberts and pension plans Caisse de dépôt et placement du Québec. That auction was won by Teachers’ Private Capital, Providence Equity Partners and Madison Dearborn Capital Partners; the deal recently moved closer to closing as a Canadian court dismissed bondholder lawsuits threatening to impede the $52 billion buyout.

Goldman Sachs and CIBS World Markets are advising MTS Allstream, a wholly owned subsidiary of Manitoba Telecom, on the formation of the consortium. Torys and Aikins, MacAulay & Thorvaldson are legal advisors to MTS.