Bulletin: BCE Inc. Ratings Unaffected By Acquisition Of Manitoba Telecom Services Inc.

TORONTO (S&P Global Ratings) May 2, 2016--S&P Global Ratings today said that BCE Inc.'s announcement that it would acquire Manitoba Telecom Services Inc. (MTS) does not affect its rating or outlook on BCE (BBB+/Stable/--). We expect that the C$3.9 billion acquisition, which is about 55% equity funded, would preserve BCE's debt leverage below our key 3.0x adjusted debt to EBITDA threshold for rating pressure. Moreover, we believe the acquisition would bolster the company's competitive advantage modestly and add some geographic diversity, but would generate fairly small synergies. We estimate that the proposed transaction would be modestly leveraging under our base-case forecasts for BCE and MTS, holding BCE's pro forma adjusted debt to EBITDA at about 2.8x in 2016 before improving

...TORONTO (S&P Global Ratings) May 2, 2016--S&P Global Ratings today said that BCE Inc.'s announcement that it would acquire Manitoba Telecom Services Inc. (MTS) does not affect its rating or outlook on BCE (###+/Stable/--). We expect that the C$3.9 billion acquisition, which is about 55% equity funded, would preserve BCE's debt leverage below our key 3.0x adjusted debt to EBITDA threshold for rating pressure. Moreover, we believe the acquisition would bolster the company's competitive advantage modestly and add some geographic diversity, but would generate fairly small synergies. We estimate that the proposed transaction would be modestly leveraging under our base-case forecasts for BCE and MTS, holding BCE's pro forma adjusted debt to EBITDA at about 2.8x in 2016 before improving slowly to about 2.7x in 2017. Moreover, we estimate that funds from operations to debt would remain below 30% until 2018, which is weak for the rating. That said, our adjusted leverage estimate is only 0.1x higher...

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