Does anyone know the ratio for shares after merger?
canoe.com
Wednesday, May 19, 1999
Merger Mania
Atlantic phone merger moves ahead
HALIFAX (CP) -- In the latest move to
consolidate Canada's phone industry,
shareholders of four Atlantic phone
companies endorsed a merger
Wednesday forming a new
telecommunications giant.
The shareholders of Maritime Tel and
Tel in Nova Scotia, NewTel in Newfoundland and Bruncor in New
Brunswick voted more than 99 per cent in favour of the merger,
officials announced Wednesday.
Shareholders of Island Telecom in Prince Edward Island
approved the move Tuesday. The new company, to be known as
AtlanticCo, represents a joint value of $3 billion and will employ
9,000.
"We're in probably the most highly competitive business there is
today," Colin Lathum, president of MTT, said at the company's
annual meeting Wednesday.
"Everybody does recognize the changing nature of the industry
and the need for something like this to happen."
AtlanticCo, with total revenues of $1.7 billion in 1998, will be the
third-largest telecommunications company in Canada once it gets
regulatory approvals, and the most recent in the international
trend to consolidate.
Several mergers have shaken up Canada's telecommunications
industry in recent months as deregulation brings intense
competition to local and mobile phone markets after several years
of price-cutting in long-distance services.
Ameritech Corp. recently spent more than $5 billion to buy a
chunk of Bell Canada, giving the big U.S. phone company a
foothold in the Canadian market.
Under the deal, Ameritech planned to buy 20 per cent of Bell
Canada, giving parent company Bell Canada Enterprises cash to
expand into new business areas. BCE, Canada's mostly widely
held company, will keep the remaining 80 per cent of Bell.
BCE controls 42 per cent of AtlanticCo.
BCT.Telus was created in February through the joining of BC
Telecom and Telus of Alberta, producing a West-based company
with hopes of expanding nationally and competing with Bell
Canada and other companies in the BCE group.
And alternative long-distance company AT and T bought
Calgary-based MetroNet, giving the company a key partner in the
battle for local phone services.
The move to merge should mean better prices for consumers and
a wider array of products, said one analyst.
"Theoretically, it should be better for the customer," said Mary
Anne DeMonte-Whelan, a telecommunications analyst with
Kierns Capital in Toronto.
"The pricing continues to come down in many of the teleco
products because there is more competition and technology is
making services cheaper."
The merger will also likely mean job cuts from all or some of the
Atlantic companies, but Lathum wasn't sure if that would happen
or how many people might be cut.
"Our intention is to keep job losses at a minimum," said Lathum.
Lathum said the company's focus will be on creating new
products and providing information technology and network
services to the oil and gas sector in Newfoundland and Alberta.
AtlanticCo president Stephen Wetmore has said he wants to get
45 per cent of revenue by 2003 from outside traditional telephone
services, which face declining profit margins as competition
stiffens.
The merger will also make it harder for BCT.Telus to chip away at
the market share in Atlantic Canada as it tries to lure customers
with new high-speed business and consumer communications
services.
"(The Atlantic merger) gives BCE a bit of the edge right now,"
DeMonte-Whelan said. "It actually strengthens competition." |
