Rogers Cantel Mobile Communications Inc. and AT&T Corp.’s AT&T Canada Inc. subsidiary announced a long-term alliance that licenses Cantel to use the AT&T brand name and includes a marketing and technology agreement between Cantel and AT&T Wireless Services Inc.
The partnership involves no equity, said the companies. For use of the AT&T name, in the brand “Cantel AT&T,” the Toronto company will pay royalties to AT&T. In exchange, AT&T will receive warrants exchangeable on a one-for-one basis over several years for Cantel Class B shares valued at $32.5 million ($26.4 million U.S.). This represents less than 1 percent of Cantel’s stock.
Beside branding, the companies will share technology, marketing and research efforts. Cantel and AT&T each recently launched Digital PCS cellular service, which uses Interim Standard 136 Time Division Multiple Access technology.
The alliance “combines the best known Canadian cellular name with the world’s most recognized telecommunications brand,” stated Rogers Communications Inc. Chairman Ted Rogers to an audience of RCI’s investors and the media. “Only Cantel and AT&T customers will benefit from being able to access a digital network that will cover more than 80 percent of the North American continent,” stated Rogers. “This is the largest percentage coverage of any of the rival companies or rival technologies.”
Together, the companies serve more than 8 million subscribers and cover 100 million people.
Rogers assured investors and the media that “the agreement doesn’t affect control or management of Cantel. There will be no jobs affected. Our relationships with our customers won’t change. It is business as usual, only better.”
The partnership has been a long time coming, said the companies, and work on formal agreements began in January. The companies noted AT&T Canada Inc.’s President and Chief Executive Officer Jim Meenan performed an instrumental role in designing the specifics of the deal.
Stanley Kabala, president and CEO of Rogers Cantel Inc., said the agreement facilitates cross-border communications, that customers of both companies will operate with the same user interface, access the same services and be able to receive messages throughout North America. “The information about (customers’) performance and movement across the network will be … deeply shared between the two of us,” he added.
The alliance also extends purchasing power and facilitates market research.
AT&T Chairman Bob Allen stated that the alliance represents “another step toward AT&T’s goal of becoming a full service telecommunications provider in Canada,” adding that AT&T intends “to participate (in Canada) in a complete range of communications services local, long distance, online, access to home entertainment and, of course, wireless,” through partnerships, alliances, joint ventures and brand licensing agreements.
AT&T and Rogers have historic roots. Steve Hooper, president and CEO of AT&T Wireless Services, joked, “We have worked very closely with the Cantel team since we hired their chief technical officer (Nick Hauser) six years ago, and he was successful in hiring a bunch of engineers that came down to Kirkland, Washington, as well.”
