Northwestel's satellite dish in the heart of Iqaluit is the telecommunications artery for the territorial capital. BCE plans to pay down some of its $33.8-billion in long-term debt with the proceeds from the sale of the business.Casey Lessard/The Globe and Mail
A year after BCE Inc. BCE-T announced plans to sell its Northern Canada telecom business to a coalition of Indigenous companies for $1-billion, a final deal remains in limbo.
Last June, BCE-owned Bell Canada said it was selling Northwestel Inc. to Sixty North Unity, a group composed of Indigenous organizations from the Yukon, Northwest Territories and Nunavut. The companies billed the deal as “a landmark partnership to advance Indigenous self-determination through the Indigenous ownership of critical telecommunications infrastructure in the north.”
A year later, however, Sixty North says it is still exploring a range of private and government funding sources to complete the deal.
In a statement to The Globe, Sixty North director Tiffany Eckert-Maret said “discussions with potential partners and funders remain active. We continue to be optimistic about the opportunity and are confident in its long-term value.”
“Several groups are currently engaged at various stages of review, and while we’re not sharing exact numbers at this point, the level of interest and engagement has been encouraging,” she said.
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Ms. Eckert-Maret said the group is encouraged by the Government of Canada’s Indigenous Loan Guarantee Program, which she called a “promising pathway” to support Indigenous equity participation in major projects.
Bell Canada spokesperson Luc Levasseur said in a statement that transactions of this nature require time to close, involve support from government and are subject to customary closing conditions.
“The parties continue to work in partnership to complete the transaction,” he said.
BCE has said it plans to use the proceeds from the sale to pay down some of its $33.8-billion in long-term debt.
Once the transaction closes, Sixty North said it will become the largest fully Indigenous-owned telecom company in the world.
As of 2019, Northwestel served 120,000 customers, according to company documents. In a memo for investors published last summer, the National Bank of Canada said Northwestel earned approximately $250-million in revenue each year, and had EBITDA of about $135-million.
But industry observers say there are unanswered questions about the deal.
Last year, then-head of the Public Interest Advocacy Centre, John Lawford, asked the Canadian Radio-television and Telecommunications Commission to require the companies to disclose details of the arrangement, but the regulator denied the request, deeming the information competitively sensitive.
Heather Hudson, an associate professor at the University of Alaska Anchorage and Canadian expert on remote and rural broadband, said it’s not clear how the price of the asset was determined and what consultation was done.
The price should consider that much of the telecom’s network is made of old copper wire, which has “depreciated many times over,” she said.
And while Bell said it plans to maintain a strategic partnership with continuing operational support for Northwestel, Ms. Hudson said it’s unclear whether the groups behind North Sixty Unity have enough required technical telecommunications experience to run the company. Among the Indigenous and Northern groups she has spoken to, “there’s not a unanimous idea, but there are a lot of questions,” she said.
Another challenge Sixty North could face is increased competition from satellite companies such as Starlink, which provides wireless services to remote areas. In financial filings earlier this year, Bell said this intensifying competition could adversely affect network deployment strategies and dampen demand.
When the deal was first announced, North Sixty Unity said it was planning significant capital investment to drive digital growth in the North and improve connectivity, including doubling internet speeds and offering low earth orbit (LEO) satellite connectivity in the Northwest Territories and Nunavut, a project Northwestel had already been pursuing under Bell.
Northwestel had $4.1-million in funding from the CRTC’s Broadband Fund to launch LEO satellites, but asked for a postponement for that project in 2023, citing unanticipated delays related to a third party. At the time, it said it expects the project to be complete by the end of 2027.
Bell added that its efforts to respond to this competition were being further hampered by regulatory hurdles. In January, following a review of telecommunications services in Canada’s North, the CRTC imposed obligations for Northwestel to automatically credit customers for lengthy outages.
It also said it would introduce a new retail Internet subsidy for the Far North, to be funded by telecom carriers through the National Contribution Fund. Consultations on that fund are continuing.
In its latest annual report, BCE said the transaction is expected to close in 2025 subject to certain closing conditions, including securing financing by Sixty North Unity.
The Competition Bureau approved the deal late last year. TD Securities is acting as adviser to Sixty North Unity on the transaction and RBC Capital Markets is acting as adviser to BCE.