DENVER, United States-Canada’s telecom market saw major changes recently as its four smallest telecom companies agreed to merge into one company and Bell Canada formed a strategic partnership with U.S.-based wireline and wireless Midwest operator Ameritech.
Formation of AtlanticCo
The merging of four Atlantic region-based firms will create the country’s third-largest telecom company and second-largest information technology provider. The new company, tentatively called AtlanticCo, is made up of Bruncor, Island Telecom, Maritime Telegraph and Telephone and NewTel Enterprises.
On a pro forma basis, AtlanticCo had a 1998 net income of US$114.2 million, with some 230 million mobility subscribers and a 78-percent market share in the region.
“It has a solid financial foundation, and it has the size, scope and the growth strategies to become a significant player in North America’s telecommunications and information technology industries,” said Gerry Pond, president and chief executive officer of Bruncor. Pond is set to become executive vice president of the new company and president of its Information Technology and Emerging Business group.
All four firms have scheduled a shareholders’ meeting to approve the measure for 18 and 19 May. The merger is expected to close 31 May.
Bell Canada stake goes to Ameritech
Meanwhile, BCE and Ameritech announced a strategic partnership, under which Ameritech plans to invest about US$3.4 billion for a 20-percent stake in BCE’s telecom subsidiary, Bell Canada.
Bell Canada is being reorganized so it will hold several telecom assets previously held by BCE, which will keep 80-percent ownership of the company. In particular, Bell Canada will acquire 65 percent of BCE Mobile Communications-a wireless company with some 2 million subscribers-as well as 21.5 percent of international long-distance provider Teleglobe Inc. and equity in six other regional Canadian telecom companies, three of which are involved in the AtlanticCo merger.
According to BCE, the partnership will include several strategic cooperation projects between Bell Canada and Ameritech, including sharing personnel, sales and marketing efforts and traffic exchange on their respective networks.
Both companies’ boards of directors have approved the measure, which is also expected to close by the end of May.
“This partnership assures Bell Canada’s place at the forefront of the global communications industry, while keeping Bell Canada firmly under Canadian control,” said Jean Monty, BCE president and chief executive officer.
Ameritech, whose serving area borders with Canada, has several international partnerships with European telecom operators, including a 41.6-percent stake in TeleDanmark, a 17.5-percent stake in Belgacom, a 29.8-percent in Hungary’s Matav and a 19.7-percent stake in Norway’s NetCom. Ameritech’s total international investments grew by 65 percent last year to more than US$10 billion, the company said.
