Here's an example randomly picked from the WSJ. I should specify
that the format is scrambled, not text...
Qwest Communications International Inc.
Dow Jones Newswires -- December 23, 1998
BCE Inc. Says MCI WorldCom, Qwest Possible NatCo
Partners
By Ben Dummett
TORONTO (Dow Jones)--BCE Inc.'s (BCE) national broadband company is close to securing
partnerships to ensure its new high-speed data network, to be launched next month, reaches across
Canada, through the U.S. and beyond.
To expand the high-speed network into the lucrative U.S. market and internationally, the broadband
company is eyeing possible partnerships with MCI WorldCom Inc. (WCOM) and Qwest
Communications International Inc. (QWST), two big network operators in the U.S., Terry Jarman,
president and chief executive of BCE's broadband company, told Dow Jones.
BCE's broadband company is referred to as NatCo.
Qwest "would certainly be a good choice for us; I think equally so, or perhaps more so to some
extent, would MCI WorldCom," Jarman said.
MCI WorldCom might make a better choice because of BCE's existing alliance with that company.
As well, MCI WorldCom is more established at servicing corporate customers - NatCo's target
audience - the executive explained.
At the same time, Jarman hinted he is considering other potential partners, saying NatCo is mulling
"three choices." Jarman said the ultimate alliance will either involve one or two partners, and NatCo
expects to reveal details of the alliance in the third or fourth week of January. BCE also will announce
NatCo's permanent name at that time.
NatCo's planned alliance will serve two purposes. It will allow NatCo to provide its customers
seamless Internet Protocol and high-speed, data-network services into the U.S., which is "clearly a
significant market for our customers," Jarman said.
At the same time, it won't prevent NatCo. or other any other BCE company, from competing with
the alliance partner, for instance, in the U.S. long-distance market or another business, Jarman said.
"What we don't want to be is a franchisee of a U.S. global partner," Jarman stressed.
The possiblity of BCE Inc.'s (BCE) NatCo unit forming an alliance with Qwest Communications
International Inc. of Denver, Colo. (QWST) is based on their similarities.
Indeed, John Henderson, telecom analyst at Scotia Capital Markets, notes in a recent report that
Jean Monty, president and chief executive of Montreal-based BCE, considers NatCo as the Qwest
of Canada.
Terry Jarman, NatCo's president and chief executive, also sees similarities between the two
companies. First, each is building an extensive high-speed network. Second, and more importantly
for tactical reasons, NatCo and Qwest will complete their networks in same timeframe. And even
more important, Qwest's strategy supports BCE's view that the world is moving towards broadband,
Internet-based telecommunications services, Jarman said.
Indeed, BCE expects NatCo to generate annual revenue growth of 10% to 15%. By contrast, BCE's
traditional phone services sold to business customers is only growing at about 4% annually, Jarman
said.
In addition to closing in on a U.S./global partner, NatCo is close to finalizing partnerships to extend
its high-speed network across Canada. Jarman said he is "confidently optimistic" of soon forming
alliances with Manitoba Telecom Services Inc. (T.MBT) and government-owned Saskatchewan
Telecommunications for BCE's new high-speed network.
BCE, though, continues to rule out giving either provincial telephone company getting an equity stake
as part of any alliance, Jarman said.
A spokesman at Manitoba Telecom declined to comment, while no representative at SaskTel was
immediately available for comment.
Manitoba Telecom has said that its first priority would be to acquired an equity stake either in Natco
or a similar company that BC Telecom (T.BCT) and Telus Corp. (T) intend to set up after their
planned merger is complete.
Earlier this month, BCE's Bell Canada unit announced pacts with four telecommunications companies
in eastern Canada to use their network facitities as part of NatCo's network. In return, the four
carriers get access to NatCo's network to offer their local high-speed data services. Those involved
are NBTel, a unit of Bruncor Inc. (T.BRR), Maritime Telegraph Communications, a unit of NewTel
Communications Enterprises Inc. (T.NEL), Island Telecom Inc. (T.IT), and Maritime Telegraph &
Telephone & Co. (T.MTT).
BCE Inc.'s (BCE) bet on NatCo is part of an overall strategy to transform itself into a growth engine
and shed its image as a holding company - a strategy that shows signs of working.
BCE continues to target an annual revenue growth rate of between 6% to 8%. However, a company
spokesman confirmed Jean Monty, BCE's president and chief executive, indicated in a presentation
to the C.D. Howe Institute Nov. 30 that revenue could potentially grow by as much as 10%. This
higher growth rate is based on the possibility of certain initiatives generating higher revenues than first
expected, the BCE spokesman said.
He declined to identify the initiatives. However, NatCo is certainly one of them, analysts said. The
other initiatives would include wireless operator Bell Canada International Inc. (BCI), CGI Group
Inc. (GIB.A), an information-technology company, MPACT Immedia Corp. (T.IFM), a provider of
electronic commerce, and ExpressVu, a satellite television operator.
For BCE to reach an annual growth rate target of 9%, John Henderson, an analyst at Scotia Capital
Markets, estimates 1.5% of the total would come from NatCo - a rate Terry Jarman, NatCo's chief
executive, calls reasonable, - 1.5% from CGI, 3% from Bell Canada International Inc. (BCICF), 1%
from Bell Canada and 1% from MPACT and other operations.
The BCE spokesman said BCE doesn't reveal growth targets for earnings. However, the spokesman
confirmed that earlier this year, Monty told analysts he hoped earnings would grow by double the
targeted revenue growth rate of 6% to 8%. The spokesman stressed the earnings growth projection
wasn't the company's official target.
Scotia's Henderson, who attented Monty's presentation at the CD Howe Institute, said Monty
expressed a personal objective of 10% revenue growth and at least double that rate in annual
earnings. The BCE spokesman declined to comment because he didn't attend the presentation.
While, Henderson is optimistic that BCE can achieve annual revenue growth of 8% to 10%, he's not
prepared to assume up to a 20% jump in annual profits as part of his model.
Henderson rates BCE a strong "buy" with a one-year price target of C$66. In Toronto Wednesday,
the stock is up 1.90 to 57.50 on about 825,000 shares.
-By Ben Dummett; 416-943-7807; ben.dummett@dowjones.ca
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