Telus and Bell to merge ? Is that possible ? PLEASE NO !

by Jeff Wiener on August 12, 2009

Bell TelusHere’s some news that caught me by surprise. According to prominent RBC Dominion Research reporter Jonathan Allen, he speculates that a merger between Bell and Telus is somewhat likely over the coming year.

“Faced with cyclical and secular pressures on the top-line, we believe that a BCE-Telus merger is increasingly likely in the coming year or two as both companies look to cut costs and sustain margins,” Jonathan Allen, of RBC Dominion Securities Inc., wrote in a research report.

“The arrival of greater competition in the wireless sector through the launch of three to five new firms in the next year should help remove regulatory hurdles for a deal,” he said.

Although a merger between Bell and Telus might be good for profits and stockholders through consolidation, it would be terrible news for Canada’s already oligopolistic, and what would become monopolistic Telecom market.

According to Allen, increased competition in the cellular market would open opportunity for such a merger. Allen seems to be focusing on cellular, but, these businesses provide more then just cellular service to the Canadian marketplace. The Canadian business market is already limited to a small handful of TIER 1 carriers for Telco grade services including PRI, OC-3, SIP, T1, analog lines, and internet services. TIER 1 carriers include Bell, Telus, Rogers, Allstream, and to a lesser extent on a regional basis, Sasktel, and ManitobaTel (which owns Allstream). Bell and Telus also sell business services, hosted solutions, phone systems, and data solutions to the business market – this business makes up a substantial portion of their revenues and profits. Although probably good for Digitcom’s business since it would mean 1 less competitor in the market, it would spell disaster for the Canadian market.

While Allen’s report is entirely speculative, it does make for interesting news.

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October 26, 2009 at 6:23 am

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