Canada’s major mobile networks operators, Bell Mobility (NYSE: BCE), Rogers Communications (NYSE: RCI) and TELUS Communications (NYSE: TU), are operating in a slow growth environment. For 2Q24, the Big 3 MNOs reported similar year-over-year results with service revenues growing at flat to low single digit rates, Adjusted EBITDA showing mid-single digit growth and flat ARPU, all the while carrying tens of billions in long term debt. The financial industry consensus on revenue and earnings at the Big 3 is at or below the low end of those companies’ guidance ranges, Yahoo Finance reported.
Given the lower-growth environment, Yahoo Finance reported that financial analysts at CIBC see “an opportunity for the Canadian telecom companies to deleverage and optimize operations by pursuing one or more [infrastructure] divestiture opportunities.” Although there have not been any formal announcements, towers could be put in play for sale and leaseback arrangements with independent infrastructure companies.
There are nearly 56,000 registered communications towers in Canada, according to Inside Towers Database. Unlike the U.S., where independent tower companies own and operate close to 98 percent of the communications towers, Inside Towers Intelligence reported, virtually all of the towers in Canada are owned by the MNOs and other communications service providers.
Bell, TELUS and Rogers together account for 44,458, or 80 percent of the total, owned towers across the country. A second tier of seven regional MNOs led by Québecor (OTCM: QBCRF)-owned Freedom Mobile, and Xplore account for 9,916 towers or 18 percent while a mix of 15 telephone companies, wireless ISPs and industrial operators make up the balance.
Selling a large portion of this inventory could raise billions for the MNOs. A recent comparison is the block of 5,000 to 6,000 towers that Verizon Wireless is considering selling for an estimated $3 billion, Inside Towers reported. Of course, tower valuations vary depending on factors such as location, tenancies, tower cash flow, lease terms and colocation potential.
Nonetheless, the Canadian MNOs seem to be more amenable to divesting non-core assets, with billions of dollars in potential value across both active and passive infrastructure, real estate and other holdings. For instance, Rogers has indicated that it “aims to divest approximately $1 billion of non-core assets, primarily real estate.” In a similar vein, BCE recently sold off its NorthwesTel subsidiary in northern Canada to a consortium of Indigenous communities for $1 billion, Inside Towers reported.
By John Celentano, Inside Towers Business Editor
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