AT&T seeks to penetrate the local phone market in Canada
AT&T Canada wants new partners, local phone service
By Lydia Zajc
TORONTO, Jan 7 (Reuters) - AT&T Canada on Thursday unveiled
a bold C$800 million plan to enter the country's local phone
market and find new partners to take the place of three banks.
AT&T Canada Long Distance Services Co., an affiliate of
AT&T Corp., had been widely expected to launch local phone
service following liberalization of the once tightly regulated
Canadian industry and the unraveling of Stentor, the club of
established Canadian phone companies. Stentor was dominated by
BCE Inc. unit Bell Canada, the nation's biggest
telephone company.
"We're moving from long-distance into an all-distance
company," newly appointed AT&T Canada President and Chief
Executive James Meenan told reporters in a conference call.
"Today is a major step forward for competition in the
telecommunications business in Canada," said Meenan, who
replaces retiring head Bill Catucci.
AT&T Canada Long Distance Services, a 33-percent-owned unit
of America's number one phone company AT&T, will spend C$800
million to buy back the 67-percent stake owned by three
Canadian banks and to expand and amalgamate some business
under the name of AT&T Canada Corp.
The shares held by Bank of Nova Scotia ,
Toronto-Dominion Bank and Royal Bank of Canada
are now in trust and AT&T Canada is seeking new partners to buy
in.
Meenan said it would not be difficult to find another
partner in the industry. He noted that cable companies and
utilities, which are looking at the eventual convergence of
phone, data and video services, were tops in the running.
Ian Angus, analyst at Angus Telemanagement, was taken aback
by the speed of change. "This is a combination of moves, all of
which were expected. I don't think I expected to see them all
in one news release," Angus said.
"The banks were not going to be in for the long haul. There
are legal restrictions on what the banks can own, so they had
to do something about it," Angus noted.
Angus noted that under Canadian foreign ownership
regulations, AT&T may not increase its ownership level.
AT&T Canada said it will have annual sales of C$1.3 billion
and 3,300 employees, once long-distance unit ACC Canada is
merged with the parent firm.
The company said that Catucci, who was brought in three
years ago to clean house, had finished his job.
Meenan said some of the C$800 million will be spent on
fiber optic expansion of its national network, expanding its
Internet offerings and generally enhancing service in major
cities through 1999 and into 2000.
"That's more money than the company has spent on doing
anything in the past three years, as far as outside capital is
concerned," Angus said. "These are all very positive moves for
AT&T (Canada)."
($1=$1.51 Canadian)
((Lydia Zajc, Reuters Toronto Bureau (416) 941-8109, or
e-mail lydia.zajc@reuters.com))
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