Cogeco to buy Toronto Hydro's telecom unit

[cablewithaview]

TORONTO (Reuters) - Cogeco Cable Inc plans to acquire all the shares of city-owned Toronto Hydro Telecom Inc for C$200 million ($194 million), the cable company said on Friday. The sale will allow the telecom company's parent, electric utility Toronto Hydro, to focus on its core power-distribution business, while the mayor of Toronto said C$75 million of the proceeds could be spent rejuvenating social housing units.

The deal is expected to close on July 31.

Toronto Hydro Telecom leases fiber optic cable capacity and offers a variety of services to business customers and organizations, including data, ethernet, voice over Internet protocol, high-speed Internet access, dark fiber, data storage and data security.

Cogeco, which operates cable-TV and telecoms services in Ontario, Quebec and Portugal, said the acquisition in the populous greater Toronto area "brings interesting growth opportunities."

Toronto Hydro Telecom's network, 70-person workforce and business market potential "should complement our existing business telecommunications activities in Ontario and allow future growth for Cogeco Cable in this line of business," Louis Audet, the company's president and chief executive, said in a statement.

Toronto Hydro is Canada's largest municipal electricity distributor.

"This sale enhances our ability to invest in the renewal of our distribution system," said David O'Brien, president and chief executive of Toronto Hydro, which is planning a C$1.3 billion system rebuild over the next 10 years.

The utility's owner, the city of Toronto, expects to receive a C$75 million "dividend" from the sale, and Mayor David Miller said he wants to use the funds to help repair and retrofit the city's aging public housing buildings.

Cogeco said the purchase price represents a multiple of 9.6 times Toronto Hydro Telecom's projected 2008 earnings before interest, taxes, depreciation and amortization. It also will assume C$4 million in working capital deficiency and liabilities.

($1=$1.03 Canadian)


Cogeco to buy Toronto Hydro's telecom unit - Yahoo! Canada News