Canadian consolidation on horizon with Telus bid for Microcell
Canadian telecommunications provider Telus Corp. said it intends to make a $780 million all-cash takeover bid for rival Microcell Telecommunications Inc., which is best known for its Fido-branded Canadian wireless service. The deal would cut the number of wireless providers in Canada to three and move Telus Mobility ahead of BCE Inc. and Rogers Wireless Communications Inc. as the country’s largest wireless carrier.
The proposal values Microcell’s stock at approximately $20.82 per share, which was a more than 30-percent premium from its closing price Thursday, though Microcell’s stock shot up more than 48 percent following the takeover proposal announcement to $22.58 per share in early Friday trading.
Telus, which operates both CDMA-based and iDEN-based networks, said the takeover bid was consistent with its plans to focus on growth segments of the telecommunications industry, including wireless, Internet Protocol and data, and increases its presence in Quebec and Ontario, where most of Microcell’s customers are based.
“Telus’ bid is also consistent with the current North American consolidation in the scale-driven wireless business,” added Telus President and Chief Executive Officer Darren Entwistle.
Microcell, which formed in 1996 after being awarded a nationwide 30-megahertz PCS license from the Canadian government, said it has been informed of the takeover bid and declined to comment on the offer until it received and reviewed the proposal. The carrier, which currently operates a GSM-based network, also completed a recapitalization plan early last year after declaring bankruptcy. It has roaming pacts with T-Mobile USA Inc., providing a broad North American footprint, and announced a deal last year with Sprint Canada to offer bundled services.
Standard & Poor’s Ratings Services placed its “CCC+” long-term corporate credit ratings and “B-” senior secured debt rating for Microcell on CreditWatch with positive implications and Telus’ debt on CreditWatch with negative implications.
