Telus selling 49.9% stake in cell towers to La Caisse for $1.26B, Q2 profit down

Article content

Telus Corp. says it’s selling a 49.9 per cent stake in a newly spun-out wireless tower operator to La Caisse for $1.26 billion as it also reported its second quarter income fell from last year.

Article content

The telecommunications company said the new operator called Terrion will be based in Montreal, and that the partial sale of the assets will go toward deleveraging.

Article content

Article content

Telus had first announced in March it was considering selling a minority stake in its portfolio of wireless towers as part of its efforts to strengthen its balance sheet. It said it hoped that monetizing the tower network would help enhance its network operations and that the proceeds would be used to pay down debt.

Article content

Article content

“This transformative partnership unlocks significant value for Telus shareholders and enhanced connectivity for our customers,” said president and CEO Darren Entwistle in a press release.

Article content

Article content

“The establishment of Terrion allows Telus to focus on our innovative service offerings and next-generation connectivity for the benefit of our customers, while enabling Terrion to specialize in infrastructure development, site management and third-party co-location.”

Article content

With its tower infrastructure sale, Telus is the latest telecom company to shed non-core assets as the sector copes with challenges such as slower growth and fierce competition.

Article content

Bell Canada announced last year it was selling Northwestel Inc. to a consortium of northern Indigenous communities and recently completed the sale of its 37.5 per cent stake in Maple Leaf Sports and Entertainment to rival Rogers Communications Inc.

Article content

In June, Rogers closed the $7 billion sale of a minority stake in a portion of its wireless network infrastructure to a group led by U.S. investment management firm Blackstone Inc.

Article content

Article content

Those transactions “are clear indications that Canadian telcos are looking for ways to improve their (return on invested capital),” said Scotiabank analyst Maher Yaghi in a note.

Article content

“Now that Telus has opened the gate, we would not be surprised if, in due time, other (mobile network operators) in Canada would pursue similar transactions.”

Article content

The sale comes as Telus reported a net loss of $245 million for the three months ending June 30, compared to earnings of $221 million in the same quarter last year, as it took a $500 million impairment of goodwill related to Telus Digital.

Article content

Adjusted net income worked out to $342 million, or 22 cents per diluted share for the period, down from $366 million, or 25 cents per share last year.

Article content

The mean analyst estimate had been for earnings of 23 cents per share, according to LSEG Data & Analytics.

Article content

Consolidated operating revenue totalled $5.08 billion in the quarter, up from $4.97 billion in the quarter last year.

Article content

Telus said it added 198,000 net new customers, down around 134,000 compared with the same period a year earlier. The figure includes 55,000 mobile phone subscribers — down 46,000 year-over-year — and 27,000 internet customers, a decrease of 6,000 from a year earlier.