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$51B Private equity takeover of Canada’s biggest Telco

July 3, 2007 - 0 Comments

OTTAWA – CANADA. This past Saturday, the Ontario Teachers Pension Plan with $106B+ (US$100B) in assets, along with Providence Equity and Madison Partners managed to reach an agreement with Bell Canada Enterprises (BCE) worth approximately $51B (US$48B) to take BCE private. Canadian telecom regulations prevent any non-Canadian company from owning more than 47% equity in a Telco.The deal to take Canada’s largest Telco private is well on its way. While the possibility of another bid coming out of the woods always exists, this seems to be the one. Undoubtedly, this will go a long way in securing a positive outlook for BCE’s future. As the country’s incumbent Telco, it was becoming increasingly bruised in its battles with other service providers, including cable companies that are seriously eating into BCE’s customer base. Industry analysts have pointed to a number of arguments as to why BCE started to slide from its dominant position, but as time always shows, markets provide the ultimate performance review for a company’s performance. In this case, elements of the market felt that their performance was worth $51B. Not a bad vote of confidence. A strong BCE is essential for the Canadian market not only in terms of increased competition, but innovation and increased productivity gains associated with the investments that are necessary to compete with its rivals. When the deal closes, senior execs will no longer have to use valuable resources and time to meet short-term market expectations, but rather focus on more aggressive long-term and sustainable growth.I wonder how long before other Canadian Telcos or cable companies follow suit?

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