> TeraGo to Acquire Mobilexchange – Acquisition deepens millimetre wave spectrum coverage in Canada’s six largest cities

TeraGo to Acquire Mobilexchange – Acquisition deepens millimetre wave spectrum coverage in Canada’s six largest cities

Toronto – September  21, 2018 – TeraGo Inc. (“TeraGo” or the “Company”) (TSX: TGO, www.terago.ca), today announced that it has entered into a definitive share purchase agreement under which TeraGo Networks Inc., a wholly-owned subsidiary of TeraGo, will acquire (the “Acquisition”) all of the issued and outstanding shares of Mobilexchange Spectrum Inc. and its parent holding company Mobilexchange Spectrum Holdings Inc. (collectively “MSI”) for aggregate cash consideration of $5,664,716 (the “Purchase Price”). The Acquisition is being funded through the net proceeds of TeraGo’s bought deal equity offering which previously closed on June 18, 2018.

The Acquisition will provide TeraGo with six 24 GHz spectrum licences totalling 960 MHz (the “Spectrum Licences”) in Canada’s six largest cities covering approximately 3.1 billion MHz-Pop[1]. TeraGo has already been using the Spectrum Licences to provide wireless internet services to its business customers through subordinate licences issued to it under an existing lease with MSI. As referenced in TeraGo’s final short-form prospectus dated June 11, 2018 (the “Final Prospectus”) and filed on Sedar (www.sedar.com), the Company has since delivered its notice to exercise its purchase option to acquire the Spectrum Licences under the lease for an aggregate cash consideration equal to the Purchase Price. Following discussions and negotiations with MSI and its shareholders, the proposed Acquisition provides TeraGo with the Spectrum Licences in lieu of completing the purchase option. At closing, MSI is expected to have no cash or debt, and accordingly, there will be no post-closing adjustments to the Purchase Price. The shareholders of MSI have provided TeraGo with an indemnity to support various representations and warranties provided in connection with the Acquisition.

“With the acquisition of MSI and their spectrum assets, TeraGo will be the primary license holder of 24 and 38 GHz fixed wireless spectrum in Canada’s major markets covering approximately 8.1 billion MHz-Pop1,” said Tony Ciciretto, President and CEO of TeraGo. “Since 1999, TeraGo has invested in spectrum equipment and technology to provide a competitive alternative to the larger wireline incumbent carriers. With the introduction of 5G technology and the increased bandwidth and capabilities it provides, the value of our millimetre wave spectrum assets will be further enhanced, greatly improving our overall competitiveness.”

Along with customary closing conditions, the Acquisition and transfer of the Spectrum Licenses to TeraGo is subject to Innovation, Science and Economic Development Canada (“ISED”) approval. The Acquisition is expected to close following ISED approval.

Forward-Looking Statements

 This news release includes certain forward-looking statements that are made as of the date hereof. Such forward-looking statements may include but are not limited to statements regarding the acquisition by the Company of MSI and its Spectrum Licences, technology advancement expectations from 5G, value enhancement of millimetre wave spectrum assets, improvement of competitiveness, and ISED approval of the transfer of the Spectrum Licences. All such statements constitute “forward-looking information” as defined under, applicable Canadian securities laws. Any statements contained herein that are not statements of historical facts constitute forward-looking information. The forward-looking statements reflect the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including risks relating to the proposed acquisition of additional spectrum and those risks set forth in the “Risk Factors” sections in each of the Final Prospectus and the annual MD&A of the Company for the year ended December 31, 2017, which is available on www.sedar.com under the Company’s corporate profile. Factors that could cause actual results or events to differ materially include the inability to satisfy closing conditions contained in the share purchase agreement for the Acquisition, the failure to receive ISED approval with respect to the proposed transfer of the Spectrum Licences, certain counterparty risks in dealing with the current shareholders of MSI and the assumption that there will be no material assets and liabilities of MSI on closing other than the Spectrum Licences. Until all the closing conditions are satisfied or waived, there can be no assurances that the Acquisition will be completed. Accordingly, readers should not place undue reliance on forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed with the forward-looking statements. Except as may be required by applicable Canadian securities laws, TeraGo does not intend, and disclaims any obligation, to update or revise any forward-looking statements whether in words, oral or written as a result of new information, future events or otherwise.

 About TeraGo

TeraGo provides businesses across Canada and internationally with cloud, colocation and connectivity services. TeraGo manages over 3,000 cloud workloads, operates five data centres in the Greater Toronto Area, the Greater Vancouver Area, and Kelowna, and owns and manages its own IP network. The Company serves approximately 4,000 business customers in 46 major markets across Canada including Toronto, Montreal, Calgary, Edmonton, Vancouver and Winnipeg. TeraGo Networks is a Competitive Local Exchange Carrier (CLEC) and was recognized by IDC as a Major Player in MarketScape Cloud Vendor Assessment. TeraGo Networks was also selected as one of Canada’s Top Small and Medium Employers for 2017.

For further information, please contact:

TeraGo Investor Relations
Dennis Fong, LodeRock Advisors Inc.
Telephone: 1-416-282-9930
Email: ir@terago.ca

[1]Based on ISED’s population figures for 2011.