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

To: Neil H who wrote (2295)	3/25/1999 5:41:00 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 14638

Article in the National Post re Ameritech acquiring 20% stake in BCE - Does not affect BCE's 41% stake in Nortel nationalpost.com Thursday, March 25, 1999 Americans buy a fifth of Bell Canada for $5.1B Windfall for investors: Chicago company to appoint chief financial officer and nominate 2 directors Michael Lewis Financial Post Chicago-based Ameritech Corp. is buying a 20% stake in Canadian corporate jewel Bell Canada, a company on a mission to expand in the United States and around the globe. Ameritech confirmed yesterday that it will pay $5.1-billion for the minority share in the main operating unit of BCE Inc. Montreal-based BCE will invest the money in fast-growth areas including its electronic commerce and satellite operations. Ameritech's presence is to be invisible to Bell Canada customers, but under the agreement the U.S. carrier can appoint Bell's chief financial officer and nominate two directors to its board. The alliance, first reported in the Financial Post 12 days ago, has been approved by both company's boards and is expected to close by the end of May. It offers an important gateway to the world for BCE, since Ameritech has invested more than $10-billion (US) to take significant minority positions in European and South American phone and wireless companies. And it gives Ameritech its first significant toehold in Canada, while Bell Canada gains economies of scale, access to core U.S. markets -- and clout in a consolidating industry where mergers are routinely value in excess of $50-billion (US). "This partnership assures Bell Canada's place at the forefront of the global telecommunications industry, while keeping Bell Canada firmly under Canadian control," said Jean Monty, BCE's president and chief executive officer. The deal also "significantly augments the scale and resources of Bell Canada," he said, "and it will translate into greater choice and and innovation for our customers." Bell Canada, for example, will be able to offer its residential customers Ameritech's new privacy manager service, which gives users more control over the calls they receive. For investors, according to industry analysts, the deal's valuation amounts to a windfall. "This price makes me want to jump and shout," said Eamon Hoey, a telecommunications industry consultant based in Toronto, suggesting that a one-fifth stake in Bell would be valued far higher under the U.S. standards Ameritech uses than it would under Canadian standards. For Ameritech, which is poised to become part of the biggest local phone company in the U.S. through a takeover by Dallas-based SBC Communications Inc. worth $61-billion (US), the purchase price for a piece of Canada's premier communications company amounts to chump change, equity analysts said. The alliance would also give Ameritech access to Bell's long-distance facilities when Ameri-tech enters that segment of the business. Ameritech's chief executive, Montreal-born Richard Notebaert, said Ameritech's interest in Canada was driven by business customers' demands for full telecom services wherever they have operations. As well, the companies say they expect to benefit from one another's expertise. Ameritech, for example, has achieved higher margins than Bell's largely because of its development and marketing prowess, while Bell has a proven track record in selling voice mail products. Mr. Monty said the transaction is expected to generate $200-million in additional annual revenues for Bell in two to three years after the deal is sealed. BCE has a market value of about $43-billion, while Ameritech's market capitalization is just under $70-billion (US). Bell had revenues of about $10.6-billion in 1998. BCE's total revenue last year was $27.5-billion. Under the agreement, Bell Canada will be reorganized so that Ameritech can hold direct shares in certain other BCE units. Bell Canada will acquire BCE's interest in six of Canada's regional telephone companies, its 21.5% holding in international long-distance service provider Teleglobe Canada Inc. and its 65% stake in wireless phone company Bell Mobility. The agreement does not affect BCE's 41% stake in Nortel Networks. This restructuring enables Bell Canada to break out of its turf in Quebec and Ontario, analysts said.