Bell CEO pushes for Internet deals
Globe&Mail-31Mar99- >old news but not posted, need to watch BCE<
for future reference
EXCLUSIVE
Jean Monty sees two scenarios: a joint venture
with U.S. phone firms or increasing its presence
in the sector with a stake in a portal site.
Wednesday, March 31, 1999
LAWRENCE SURTEES
Telecommunications Reporter; With files from reporter Mark Evans.
Bell Canada is looking to bulk up in cyberspace and is exploring potential deals that include buying a minority stake in a U.S. portal company such as America Online Inc., Bell CEO Jean Monty says.
Such an approach dovetails with the strategy of Bell's chief executive officer to find new sources of growth for Canada's largest telephone company to make up for diminished growth and plummeting profit margins in its traditional markets.
Bell's parent, BCE Inc., is flush with cash from a $5.1-billion deal announced last week to sell a 20-per-cent stake in Bell to Ameritech Corp. of Chicago. So Mr. Monty, also president and CEO of BCE, is now poised to finance an expansion of Bell's Internet business.
"We're very interested in being the access provider to an AOL or an Excite or to all the other portals," Mr. Monty told The Globe and Mail's editorial board yesterday. "That business is going to be very much part and parcel of our core in the future."
BCE, the Montreal-based conglomerate, will own 80 per cent of Bell after the Ameritech deal closes this spring. Ameritech, in turn, plans to merge with a larger U.S. phone company, SBC Communications Inc. of San Antonio.
Bell already controls a major Canadian portal, named Sympatico.ca, which has half a million customers -- including 200,000 in Bell's territory in Ontario and Quebec. "That's nice, we're the biggest one in Canada, but it's not good enough," Mr. Monty said.
Industry analysts agree.
To be successful, an Internet portal operator "must have both the breadth of reaching millions of users and offer a great depth of content," says Michele Pelino, senior analyst in the Internet market strategy group at Yankee Group of Boston.
Mr. Monty outlined two approaches to increase the heft of Bell's Internet business. One is to either set up a joint venture with a group of U.S. phone companies or to buy a stake in a leading portal company.
Driving BCE's quest is the rise of portals as a digital agora -- a launch pad for electronic commerce transactions made over the global Internet.
Portals attempt to draw Internet users -- businesses and consumers -- to a central site on the Internet where they not only get information, but can find products and services to buy over the Web.
"By amassing a mass audience, portals have become key bases of power in the Internet market, and are now attracting the attention and money of global leaders in communications, commerce and media," said a recent Yankee Group study.
Mr. Monty revealed that Bell Canada came very close to striking a deal with three U.S. local phone companies and an unnamed technology company a few weeks ago to launch a continent-wide portal and high-speed access service to connect customers to the Internet.
That deal would equip Bell and its U.S. partners to compete against big Internet service providers -- including the At Home Corp. consortium offering high-speed Internet access to 330,000 cable television customers across North America. At Home's shareholders include two of Canada's leading cable television companies -- Rogers Communications Inc. of Toronto and Shaw Communications Inc. of Calgary.
The cable TV companies solidified their lead over the phone companies in the enhanced Internet service marketplace earlier this year when At Home acquired Excite Inc. for more than $7.5-billion (U.S.). Both companies are based in Redwood City, Calif.
However, Bell's bid to strike a deal with the unnamed phone companies fell apart because the unnamed technology company wanted too much control over the operation, Mr. Monty said. He added that the phone companies will continue to explore that idea, noting that Bell, Ameritech and SBC are already hooked up to 70 million homes in North America.
Mr. Monty also said Bell is exploring buying either a minority stake in a large U.S. portal, like AOL, or a majority stake in a Canadian portal operation.
Yankee Group analysts believe that acquisitions of portal companies within the commerce services market will be rampant this year.
However, Mr. Monty quipped that BCE can't afford to "go buy AOL, they could buy us."
But Mr. Monty affirmed that he doesn't want to dump Bell's Sympatico, adding his preference is to strengthen Sympatico and link it to a bigger U.S.-based portal company -- like AOL -- combined with a venture with the U.S. phone companies.
That approach was echoed by Andrew Scoular, president and CEO of MediaLinx Interactive LP, the Toronto-based arm of Bell that owns Sympatico.ca.
Mr. Scoular's vision, outlined in a recent interview, is to forge a partnership with a portal company within the next six months to boost Sympatico's content, then rebrand the service and take it public within two years. |
