AT&T: Telecoms company seeks Canada partners
By Scott Morrison in Toronto
AT&T said yesterday it was looking for strategic partners in Canada after three of the country's banks sold their stakes in the US telecommunications group's Canadian long-distance operation. The move is part of an C$800m (US$530m) initiative to restructure AT&T Canada into a full-service telecoms group.
The banks' withdrawal from AT&T Canada Long-Distance Services was mandated by banking regulations. The banks' collective equity in LDS - 50 per cent of non-voting equity and two-thirds of voting shares - will be held in trust while AT&T negotiates with potential partners, which would invest in the company's Canadian expansion.
The trust is funded by AT&T, but officials would not reveal its value. Analysts estimated the value of LDS at C$1bn-C$1.3bn. AT&T also declined to provide details of its restructuring, but said a large portion would go toward compensating the banks.
AT&T said it was looking for Canadian partners with technology and access to customers through their networks, such as utilities and cable companies. Cogeco and Videotron, two Quebec-based cable-television operators, are seen as likely partners. The two have recently completed share issues and plan to enter the local telephony market.
Observers questioned why AT&T did not wait to find a partner or investor before announcing a change in the ownership structure. "It seems they could be trying to create a bidding war," said Dvai Ghose, telecoms analyst at HSBC Securities.
AT&T's Canadian long-distance, reselling and some administrative functions will be consolidated under the banner of AT&T Canada, which will also launch a local service in 1999.
Under the previous ownership structure, AT&T Canada Enterprises, representing the US parent, held one-third of the Canadian long-distance services company's voting shares and 50 per cent of non-voting equity, the maximum allowed under foreign ownership rest |
