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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Bosco who wrote (3135)	7/30/1999 8:54:00 AM
From: elmatador	Respond to of 14638

Nortel subsidize BCE? Canadian carriers feel strain Competition is tougher than ever, writes Scott Morrison Second-quarter results from most Canadian telecommunications carriers showed a slight improvement over the first three months of the year, but the figures continue to highlight the dramatic shifts sweeping the country's fiercely competitive market. Intense competition has accelerated the commoditisation of long-distance voice services, and is forcing carriers to expand into new services that they can provide in bundled packages. Carriers that remain too heavily dependent on revenues from basic telecoms services have struggled. Long-distance price competition has been part of the Canadian market for the past several years, but the beginning of local competition has increased the stakes. Carriers are now being pressured to further reduce long-distance prices, in order to gain or keep their customer base. That enables them to earn revenue from a wide array of new products, such as value-added local phone services, internet access, web portals and satellite TV. Analysts reckon the intense price competition in Canada's telecoms sector foreshadows a similar evolution in the US. Although Canada began to deregulate its telecoms sector several years after the US, Canadian authorities have moved quickly to create a competitive market. Analysts expect price pressure to increase south of the border once US local service providers receive regulatory approval to compete in the long-distance market. The first Baby Bell is expected to move into the long-distance arena later this year. Results from BCE, the dominant Canadian telecoms group which owns 80 per cent of Bell Canada, revealed a 5 per cent decline in second-quarter revenue from long-distance and network services. But sales from local services increased slightly due to value-added services, and wireless revenues grew 7 per cent as the company increased its customer base by 25 per cent. BCE also saw a dramatic rise in revenue in its e-commerce and media units, although both divisions continued to report losses. Before special items, BCE had net earnings of C$460m (US$304m), up from C$373m, primarily due to strong performance at Nortel Networks, the communications networking group of which BCE owns almost 42 per cent. AT&T Canada, 31 per cent owned by the US telecoms giant, beat analysts' revenue expectations earlier this week. It is expected to have revenues of C$1.6bn in 2000, primarily due to its emphasis on providing local, long-distance, data and internet services to corporate clients. It sold its residential franchise earlier this year and investors have rewarded it by doubling its share price in 1999. The two companies stood in stark contrast to Call-Net Enterprises, which mainly serves the residential long-distance market through wholly owned Sprint Canada. Call-Net, which is 25 per cent owned by US carrier Sprint, has been punished by investors after it failed to meet analysts' expectations last week. Price competition also hit BCT.Telus, the western Canadian carrier. It managed to report a small profit increase this week, but was held back by a 6 per cent decline in residential and business long-distance revenues. And Teleglobe, the Canadian overseas carrier, issued a profit warning this week. Most observers believe the market remains too crowded despite a recent flurry of merger activity. Call-Net, as well as a number of wireless service providers and cable companies, are seen as targets for the likes of BCT.Telus, which wants to expand in central Canada, and possibly US operators