Bell posted an 88 percent decline in free cash flow since the first quarter of 2022.
Canadian telecommunications company Bell has entered a deal to acquire Montréal-based cloud services firm FX Innovation as part of its broader growth strategy for its enterprise solutions.
Founded in 2002, FX Innovation provides cloud consulting services and workflow automation solutions to businesses. It provides support for IT management platform ServiceNow, integrating the application within business environments in Canada and internationally.
FX Innovation is backed by La Caisse de dépôt et placement du Québec (CDPQ). In 2018, CDPQ invested $10 million into FX Innovation to support its expansion across Canada, the United States, and Europe.
Bell expects to close its acquisition of FX Innovation in the second or third quarter of 2023.
According to John Watson, group president of business markets, customer experience, and AI at Bell, FX Innovation’s cloud services will “complement” Bell’s product and services team for corporate clients.
Watson added that FX Innovation, combined with Bell’s national scale, resources, as well as fibre and 5G networks, would help enable customers to accelerate their digital transformation.
Integrating FX Innovation would build on Bell’s recent additions to its product line for businesses.
In March, Bell partnered with Palo Alto Networks to launch two new cybersecurity solutions to help identify threats to enterprise data in the cloud and provide managed services to protect data across disparate cloud environments.
This acquisition also follows Bell’s recent sale of its 63-percent majority stake in film-and-TV complex Pinewood Toronto Studios. Bell said the cash proceeds from that transaction will support its acquisition of FX Innovation in part, as the telecommunications company focuses on its core services for residential and business customers.
Bell said it expects the acquisition of FX Innovation to close in the “second or third quarter of 2023.” The financial terms of the transaction were not disclosed. FX Innovation will continue to operate independently under the leadership of its co-founder and current CEO Guillaume Bazinet.
As Bell pursues growth through this acquisition, its parent company, BCE Inc., has not been insulated from the macroeconomic downturn affecting businesses in Canada and beyond.
Though its operating revenue edged higher, a 3.5-percent increase from the first quarter in 2022, it experienced greater losses.
In its Q1 2023 earnings report released on Thursday, BCE Inc. posted an 88 percent year-over-year decline in its free cash flow, from $716 million in Q1 2022 to $85 million. The corporation attributes this drop from “operating activities excluding acquisition and other costs paid, and higher capital expenditures.”
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BCE also saw its net earnings decrease by 15.6 percent, which the company said is due to several factors, including increased interest expense, higher depreciation and amortization expense, higher severance, and other costs related to office spaces it closed as part of its hybrid work policy.
BCE has made multiple rounds of layoffs in recent years, affecting employees in its Bell Media business unit. In 2022, Bell made cuts to its CTV Vancouver newsroom along with other radio stations.
For the remainder of 2023, BCE said it expects to reduce contributions to post-employment benefit plans and payments under other post-employment benefit plans, and lower capital expenditures to drive higher free cash flow.
Featured image courtesy Bell.
