JAA'S Analyst Blog - Current Posts

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I've been too tied up to post lately, but wanted to quickly draw your attention to two big stories playing out this week in the Canadian telecom space.

First is the AWS - Advanced Wireless Spectrum - auction that officially got underway today. I haven't had time to track it closely, but if you want to keep score, you can track the results at the Industry Canada website. It's also being widely covered in the business press, and blogging colleague Mark Goldberg is a good place to go for ongoing commentary.

There will be lots of drama around the process, both for those with winning bids as well as those who drop out. Some bidders have been quite secretive, not wanting to tip their hand against the Big Three who dominate the wireless market here - Bell Mobility, Rogers and Telus. Once the dust settles there will be all kinds of winners/losers implications, and some stock speculators will no doubt do very well. While it's always good to encourage competition, I've been skeptical that the Canadian market can really support more wireless players long term. Time will tell, but it will certainly be interesting to see how this plays out, and I'll comment again as time permits.

Second is the status of privatizing BCE, our largest telco. This has been an ongoing drama, with the latest wrinkle being quite interesting. There has been a contentious issue with bondholders who feel they will come out on the short end under current market conditions. BCE had a chance to settle with them earlier, but took their chances and passed when it would have cost them very little. Now, the courts have ruled in favor of the bondholders and the cost to settle will be much higher and could kill the deal. I'm not a legal expert, but this is a lower court ruling, and BCE is trying to get it overturned by the Supreme Court in time for the transaction to be consummated. There are no guarantees here, but if BCE does not get their way, the deal is in jeopardy of falling apart.

There are many implications from such a scenario, with the most interesting one being the possibility of Telus stepping in to take over BCE. Telus was in the mix right from the beginning and I posted about this last year. They weren't a suitable candidate then for a number of reasons, but if the current deal fails, they will probably be the only exit available for BCE - but probably at a better price now. Interesting scenario, and one that would definitely shake things up here. With Telus being an offspring of Bell Canada, there are some strong parallels to how SBC acquired AT&T a few years back.

Technorati tags:

BCE, Jon Arnold, wireless spectrum, Canada, Telus