Mr. George Cope of BCE reports

BCE ANNOUNCES AGREEMENT TO ACQUIRE MANITOBA TELECOM SERVICES (MTS)

BCE Inc. will acquire all of the issued and outstanding common shares of Manitoba Telecom Services Inc. in a transaction valued at approximately $3.9-billion.

Highlights:

• Transaction enterprise value of approximately $3.9-billion: BCE to acquire all issued and outstanding common shares of MTS for approximately $3.1-billion and assume outstanding net debt of approximately $800-million;
• $40-per-common-share value represents a significant premium for MTS shareholders; transaction unanimously recommended by the MTS board of directors;
• Bell MTS team will serve customers across Manitoba; Winnipeg head office will become Bell's Western Canadian headquarters;
• $1-billion, five-year capital investment commitment to expand broadband wireless and wireline networks in urban and rural locations throughout Manitoba;
• Free cash flow accretion supports Bell's broadband leadership strategy, dividend growth objective.

"Welcoming MTS to the Bell group of companies opens new opportunities for unprecedented broadband communications investment, innovation and growth for urban and rural Manitoba locations alike. Bell is excited to be part of the clear growth opportunities in Manitoba, and we plan to contribute new communications infrastructure and technologies that deliver the latest wireless, Internet, TV and media services to residents and businesses throughout the province," said George Cope, president and chief executive officer of BCE and Bell Canada. "Bell and MTS have a shared legacy of service and innovation that spans more than a century. We are honoured to join with the MTS team in this all-Canadian transaction to deliver the benefits of new infrastructure investment, technology development and the best of broadband communications to Manitobans."

Bell plans to invest $1-billion in capital over five years after the transaction closes to expand its broadband networks and services throughout Manitoba, including:

• Gigabit Fibe Internet availability, delivering Internet speeds on average up to 20 times faster than those currently offered to MTS customers, within 12 months after the transaction closes;
• The rollout of Fibe TV, Bell's innovative broadband television service;
• Accelerated expansion of the company's award-winning LTE wireless network throughout the province, with average data speeds twice as fast as those now available to MTS customers;
• Integration of MTS's Winnipeg data centre with Bell's existing national network of 27 data and cloud computing centres, Canada's largest, and the country's most extensive broadband fibre network footprint.

"This transaction recognizes the intrinsic value of MTS and will deliver immediate and meaningful value to MTS shareholders, while offering strong benefits to MTS customers and employees, and to the province of Manitoba," said Jay Forbes, president and chief executive officer of MTS. "We are very proud of what the MTS team has accomplished. Now, enabled by Bell's national scale and commitment to broadband investment, Bell MTS will be very well positioned to accelerate service innovation, customer support and community investment to the benefit of Manitobans like never before."

The combined company's Manitoba operations will be known as Bell MTS in recognition of the powerful brand presence the MTS team has built across in the province. Winnipeg becomes the Western Canadian headquarters for Bell and, with the addition of MTS's 2,700 employees, Bell's Western team grows to 6,900 people.

Bell Media's TV, radio and digital platforms will continue to offer opportunities for local artists and entertainers along with continuing support for the Winnipeg Jets and Winnipeg Blue Bombers on the national TSN sports network and TSN Radio 1290 Winnipeg. Bell Media assets in Manitoba also include CTV Winnipeg, Virgin 103.1 and BOB FM 99.9 in the capital city, and BOB FM 96.1 and The Farm 101.1 in Brandon.

Bell MTS will continue the company's sponsorships and community investments in Manitoba, including a shared commitment to United Way, and programs for students and new grads, and will launch a new Bell Let's Talk initiative supporting aboriginal communities in Manitoba, to be chaired by Clara Hughes, Bell Let's Talk national spokesperson and legendary Canadian Olympian who was born and raised in Winnipeg.

Details of the transaction

"With its immediate free cash flow accretion and significant operational synergies and tax savings, the transaction fully supports Bell's broadband leadership strategy and our dividend growth objective. The balanced transaction financing structure maintains our strong investment-grade balance sheet with substantial financial flexibility," said Glen LeBlanc, executive vice-president and chief financial officer of BCE and Bell Canada. "Bell has proven experience in completing similar transactions and successfully integrating them into our national operations, as with Bell Aliant in Atlantic Canada."

The transaction will be completed through a plan of arrangement under which BCE will acquire all of the issued and outstanding common shares of MTS for $40 per share, which will be paid with a combination of BCE shares and cash.

MTS shareholders will be able to elect to receive $40 in cash or 0.6756 of a BCE common share for each MTS common share, subject to proration such that the aggregate consideration will be paid 45 per cent in cash and 55 per cent in BCE common shares. The share consideration is based on BCE's 20-day volume-weighted average price of $59.21.

Creating significant immediate and long-term value for MTS shareholders, the transaction values MTS at approximately 10.1 times 2016 estimated earnings before interest, taxes, depreciation and amortization, based on the latest analyst consensus estimates, and 8.2 times including tax savings and operational synergies. This represents a 23.2-per-cent premium to the weighted average closing share price on the Toronto Stock Exchange for the 20-day period ending April 29, 2016. The offer price represents a 40-per-cent premium to MTS's closing price of $28.59 on Nov. 20, 2015, the business day prior to the announcement of the sale of its Allstream business communications division.

As part of the agreement, MTS will not declare any further dividends on its common shares after its upcoming second quarter 2016 dividend, expected to be declared in May and paid in July. Taxable Canadian shareholders who receive BCE shares as consideration under the transaction will generally be entitled to a rollover to defer Canadian taxation on capital gains.

BCE will finance the cash component of the transaction from available sources of liquidity and will issue approximately 28 million common shares for the equity portion of the transaction, which offers MTS shareholders access to BCE's dividend growth potential. The BCE dividend has been increased 12 times, representing an aggregate increase of 87 per cent, since fourth quarter 2008 and currently delivers an attractive 4.6-per-cent yield. When the transaction is completed, MTS shareholders will own approximately 3 per cent of pro forma BCE common equity.

The board of directors of MTS has approved the transaction and recommends that MTS shareholders vote in favour of it. TD Securities, Barclays and CIBC World Markets, financial advisers to the board of directors of MTS, provided an opinion that, as of the date of the opinion, and subject to the assumptions and limitations stated therein, the consideration proposed to be received by MTS shareholders is fair from a financial point of view.

The agreement between BCE and MTS provides for a non-solicitation covenant on the part of MTS and a right in favour of BCE to match any superior proposal. If BCE does not exercise its right to match, BCE would receive a termination fee of $120-million in the event the agreement is terminated as a result of a superior proposal.

Expected to close at the end of 2016 or early 2017, the transaction will be effected through a plan of arrangement and is subject to customary closing conditions, including court, shareholder, regulatory approvals and other conditions set forth in the transaction agreement, a copy of which is available under MTS's SEDAR profile. A reverse break fee of $120-million would be payable by BCE to MTS if the transaction does not close in certain circumstances.

A proxy circular will be prepared and mailed to MTS shareholders in the coming weeks providing important information about the transaction. MTS shareholders are expected to vote on the transaction in late June.

Call with financial analysts

A conference call for financial analysts will be held Monday, May 2, at 8:30 a.m. ET. To participate, please dial 416-340-2216 or toll-free 1-866-223-7781 before the start of the call. A replay will be available for one week by dialling 905-694-9451 or 1-800-408-3053, passcode 5493892.

A live audio webcast of the conference call will be available on the BCE and MTS websites. The mp3 file will be available for download later today.

We seek Safe Harbor.