Videotron has plans......................
MONTREAL, Nov 23 (Reuters) - Quebec cable company Videotron Groupe Ltee <VDO.TO> said on Tuesday it had teamed up with U.S. investment firm Carlyle Group to build a telecommunications network across Canada.
So there TERN!!
Videotron said it wanted to extend its present Quebec-based fiber optic network to the rest of Canada and eventually spin it off to maximize its value on the public market.
It said broadening the scope of its presence was also vital for Videotron because the company wanted to offer a bigger range of telecoms services such as Internet access and electronic commerce, a market valued at C$11 billion.
"We need to have a national presence. Just having this system in Quebec has not allowed us to have those sophisticated business products," Alain Michel, Videotron Group chief financial officer, said in a conference call.
Expanding on the national telecom scene will mean Videotron will fight heavyweights such as Bell Canada, unit of BCE Inc <BCE.TO> and AT&T Canada Inc., which are in the process of establishing themselves as coast-to-coast telecoms services providers.
Montreal-based Videotron said Carlyle Group will invest C$200 million to acquire convertible preferred equity of Videotron Telecom (VTL), a wholly-owned subsidiary of Videotron Groupe Ltee. When those shares are converted into common stock of VTL, Carlyle will own about 29 percent of VTL's common equity, valued at C$700 million in total.
"Our priority now is to tackle our expansion plan," VTL Chairman Claude Chagnon told Reuters.
"We are aiming to be present in major Canadian cities as soon as possible," he said, adding 12 to 18 months was a reasonable amount of time to achieve his goal.
The VTL network will be built from a blend of internal development and acquisitions, Videotron said.
All options were possible concerning the future of VTL, with the spinoff of the subsidiary as a publicly traded company an immediate goal, Chagnon said.
The eventual sale of the coast-to-coast network is not ruled out, he said.
"The credibility of the Carlyle Group will help us finance VTL on the public market," Chagnon said.
Before being halted on the Toronto Stock Exchange, Videotron shares were unchanged at C$23. Their 52-week low is C$19.85 and the high C$32.50.
Videotron, the third-largest cable provider in Canada, started its move into telecoms services by building in recent years a 4,300-mile (7,000-kilometer) fiber optic network in Quebec, home of a quarter of the Canadian population of 30 million.
The Carlyle group is a Washington-based investment firm with stakes in industry leaders like fiber-optic cable company Global Crossing Ltd <GBLX.O> and digital telephony expert North Point Communications Group.
"Videotron will benefit on a technology point of view from its association with Carlyle," said Iain Grant, managing director with telecom consultant Yankee Group, in Brockville, Ontario.
North Point's expertise in digital technology to enhance phone lines transmission capacity could help Videotron bridge its network from the main fiber optic trunks to individual houses or businesses, mostly connected with a simple old-fashioned phone line, he said.
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