One more, this time on BCE:
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THURSDAY AUGUST 13 1998ÿÿTelecomsÿ
BCE to consider partnerships
By Scott Morrison
Recent mergers and alliances in the telecommunications sector have heightened speculation over whether BCE, the Canadian telecoms group, will successfully consummate a partnership with a US carrier to better serve its top corporate customers.
The company, which owns Bell Canada, the Ontario and Quebec service provider, has been under pressure to respond to rapid technological change, convergence and consolidation.
Jean Monty, BCE chief executive, has said he intends to exploit the growing market for high speed internet service and corporate data communications. That means he can not afford to ignore a partnership with a US carrier that would provide BCE with access to a high-speed global network.
Mr Monty has said his company, which had 1997 revenues of C$33bn (US$21.7bn), is involved in discussions with various potential US partners and could make an announcement by September.
While Qwest and Level 3 are seen as possibilities, BCE's favoured partner would be the merged WorldCom/MCI group, particularly due to WorldCom's internet focus.
The case is more compelling given that MCI and BCE were partners in the now defunct Concert alliance and continue to share tech-nology.
WorldCom declined to comment on a possible partnership with BCE, saying it was focused on completing its merger with MCI.
It is not clear how such an arrangement would be structured, as BCE has a number of options. The most likely is that BCE would offer WorldCom/MCI an equity stake in its C$750m national broadband network that would provide high speed data and internet services to corporate customers.
BCE would secure cross-border originated traffic for its network, as well as benefit from MCI's technology and billing platforms.
WorldCom/MCI, in turn, would be able to provide clients with end-to-end service between Canada and other nations.
Another possibility would be for BCE to form an alliance with the US carrier and engage in a limited share swap agreement.
However, analysts say that a share swap between BCE and its US partner could result in a messy divorce should the alliance eventually fall apart.
A more unlikely scenario would be a merger. That, however, would amount to a takeover by the larger WorldCom/MCI group, with BCE shareholders controlling a minority interest in the combined entity.
Analysts doubt Mr Monty would be willing to consider such a transaction. There are also restrictions on foreign ownership of Canadian telcoms groups.
A final option available to BCE would entail forming a joint venture with a US carrier, similar to that recently announced by AT&T and British Telecommunications. The two groups are to create a new entity to meet the growing demand for high speed internet and corporate data communications.
But the significant capital investment required to create a new international joint venture would likely dissuade BCE from adopting such a strategy.>>>> |
