June 23, 2008 -- (WEB HOST INDUSTRY REVIEW) -- Montreal, Canada-based telecom Cogeco Cable (cogeco.com) announced last week it plants to purchase Toronto Hydro Telecom (thtelecom.ca) for C$200 million, according to a report by Reuters. The deal is expected to close on July 31.
Toronto Hydro Telecom is partly owned by the city's electric utility Toronto Hydro (torontohydro.com), which is Canada's largest municipal electricity distributor.
The acquisition will enable Toronto Hydro to focus on its core power-distribution business. Meanwhile, C$75 million of the proceeds, a "dividend" from the sale, could be used towards restoring social housing units, said Toronto mayor David Miller.
Toronto Hydro Telecom leases fiber optic cable capacity and offers a range 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.
On the other side of the spectrum, the deal will bring additional growth opportunities for Cogeco into the greater Toronto area. The teleco provider currently runs cable-TV and telecoms services in Ontario, Quebec and Portugal.
Toronto Hydro Telecom has a massive network with a 70-person workforce and business market potential. "[Toronto Hydro Telecom] should complement our existing business telecommunications activities in Ontario and allow future growth for Cogeco Cable in this line of business," said Louis Audet, Cogeco president and CEO, in a statement.
Cogeco said the C$200 million acquisition price is 9.6 times Toronto Hydro Telecom's projected 2008 earnings before interest, taxes, depreciation and amortization.
The teleco said it will also assume C$4 million in working capital deficiency and liabilities.
