Canadian telecom carriers consider merger

The two largest telecom carriers in Canada are in discussions over a possible tie-up, although no official deal has been announced. Telus Corp. and BCE Inc. said they are pursuing “non-exclusive discussions” about a possible “business combination” that Telus’ chief executive said would create an “all Canadian solution for both immediate and long-term value creation.”
“Telus has a unique opportunity to create a truly national Canadian enterprise with the requisite balance sheet strength as well as scale and scope to continue Telus’ development as a global leader in the deployment of state of the art technology and innovative new services for customers,” said Darren Entwistle, the carrier’s president and CEO.
If the transaction goes through, it would further consolidate the North American telecom market, which has been rocked by a number of major mergers and acquisitions over the past several years.
BCE said it is reviewing a variety of “strategic alternatives,” which according to media reports include acquisition offers by Canada Pension Plan Investment Board, Ontario Teachers Pension Plan Board, and U.S. private equity firm Cerberus Capital Management LP. BCE said it is reviewing proposals through the end of the third quarter.
Telus counts 10.8 million “customer connections,” including 5.1 million wireless subscribers to its Telus Mobility service. BCE sells a variety of wired and wireless services and at the end of the first quarter counted more than 5.8 million wireless customers. Both carriers run CDMA networks and currently offer reciprocal roaming on each others networks, with Telus predominate in western Canada and Bell in eastern Canada. Telus also operates an iDEN network.
GSM-based operator Rogers Communications Inc. acquired smaller GSM rival Microcell Telecommunications Inc. in 2004 for $1.1 billion after trumping a $800 million offer from Telus.