Risley, Balsillie group buying CanadArm maker MDA in $1-billion deal - The Globe and Mail | Canada News Media
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Risley, Balsillie group buying CanadArm maker MDA in $1-billion deal – The Globe and Mail

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Two of Canada’s wealthiest entrepreneurs, John Risley and Jim Balsillie, are teaming up as part of an investor group to buy the maker of the CanadArm from its U.S. parent, Maxar Technologies Inc. for $1-billion and repatriate its headquarters to Canada.

Mr. Risley’s Northern Private Capital (NPC) announced early Monday it is leading a consortium of equity investors that includes Mr. Balsillie, the former chairman and co-CEO of BlackBerry Ltd., as well as Montreal-based investment company Senvest Capital to buy MacDonald Dettwiler and Associates Ltd. Canada’s largest space technology develop and manufacturer. MDA has more than 1,900 employees at facilities near Vancouver, Toronto, Montreal and in Halifax. In addition to its space robotics business, it is a long-time supplier of Radarsat Earth observation satellites to the Canadian government.

“Over its 50-year history, MDA has grown from a B.C.-based start-up into a world-class space technology company and an anchor of Canada’s space program,” said Mr. Risley, the Nova Scotia entrepreneur who co-founded seafood giant Clearwater Fine Foods and co-manages NPC with former Blackstone Canada chairman Andrew Lapham. “I am so proud this iconic Canadian company will once again be owned and controlled in Canada.” The consortium, which is partly funding the deal with debt provided by Bank of Nova Scotia, Bank of Montreal, PointNorth Capital and Canso Investment Counsel, did not specify where it would locate the headquarters of MDA, formerly based in the Vancouver area.

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Maxar said MDA had US$370-million in annual revenue and US$85-million in adjusted earnings before interest, taxes, depreciation and amortization. The sale “furthers execution on the company’s near-term priority of reducing debt and leverage,” said CEO Daniel Jablonsky in a release.

News off the deal was greeted warmly by investors, who bid up Maxar stock by about 15 per cent in early morning trading. Analysts had cited the potential deal as a catalyst for its stock price.

NPC was advised in the deal by BMO Capital Markets and Bank of Nova Scotia. Maxar was advised by investment banks PJT Partners, RBC Capital Markets and Bank of America Merrill Lynch, as well as law firms Wachtell, Lipton, Rosen & Katz and Stikeman Elliott LLP.

Colorado-based Maxar had put MDA on the auction block this past summer, seeking to use proceeds cut its sizable debt load, though after a few months any talk of potential buyers went cold. Maxar had US$3.1-billion in long-term debt as of Sept. 30.

Early on, the chief executive officer of Italy’s Leonardo SpA said his firm, in partnership with France’s Thales SA, was considering a bid for MDA. This raised concerns about Canadian national security, given MDA’s focus on space, defence, maritime, satellite imagery and communications technology.

The Canadian government under then-prime minister Stephen Harper in 2008 had rejected the proposed $1.3-billion sale of MDA to a U.S. company, Alliant Techsystems Inc., over concerns the United States would gain control over the Radarsat-2 satellite that allows the Canadian government to monitor its territory in the far north. The saga prompted the Harper government to add the national security test to Investment Canada reviews of foreign takeovers of Canadian assets.

University of British Columbia professor John MacDonald and physics graduate Vern Dettwiler founded MDA in a Vancouver garage in 1969, the year humans first set foot on the moon during the Apollo 11 mission. It went on to become a leader in robotics and high-resolution imagery of the Earth’s surface. Orbital Sciences Corp. of Dulles, Va., bought MDA in 1995 for US$67-million and took the company public five years later, divesting the last of its stake in 2001.

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MDA bought California-based satellite maker Space Systems/Loral Inc. in 2012, and decided to chase U.S. government contracts including those with non-military clients, such as NASA and the weather service, but it also meant going after classified defence and intelligence work. In 2017, the company paid US$2.4-billion to acquire DigitalGlobe, a U.S. satellite operator specializing in producing optical imagery for the government. That led to the operations being merged under the Maxar umbrella and its incorporation in the United States, though Maxar’s Colorado-based management insisted MDA operate as an independent business unit with Canada retaining control of Radarsat. Members of the scientific community criticized the shift of MDA’s parent company headquarters.

But Maxar’s shares lost more than 90 per cent of their value from late 2017 to early this year on fears about the company’s debt burden as well as the failure in January of its WorldView-4 satellite, which had generated revenues of US$85-million annually. That same month it replaced Howard Lance as its CEO, naming U.S. defence and intelligence veteran Daniel Jablonsky to the post.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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