Subject: [NEXTEL-1] Canadian consolidation looms with Telus bid for Microcell

From: [email-masked]
Date: Mon, 17 May 2004 01:02:00 -0400

Canadian consolidation looms with Telus bid for Microcell
By Dan Meyer
May 14 12:59:00, 2004

Canadian telecommunications provider Telus Corp. said it intends to make
a $780 million all-cash takeover bid for rival Microcell
Telecommunications Inc., which is best known for its Fido-branded
Canadian wireless service. The deal would cut the number of wireless
providers in Canada to three and move Telus Mobility ahead of BCE Inc.
and Rogers Wireless Communications Inc. as the country’s largest
wireless carrier.

The proposal values Microcell’s stock at approximately $20.82 per share,
which was a more than 30-percent premium over its closing price
Thursday, though Microcell’s stock shot up more than 48 percent
following the takeover proposal announcement to $22.58 per share in
early Friday trading.

Telus, which operates both CDMA-based and iDEN-based networks, said the
takeover bid was consistent with its plans to focus on growth segments
of the telecommunications industry, including wireless, Internet
Protocol and data, and increases its presence in Quebec and Ontario,
where most of Microcell’s customers are based.

“Telus’ bid is also consistent with the current North American
consolidation in the scale-driven wireless business,” added Telus
President and Chief Executive Officer Darren Entwistle.

Microcell, which formed in 1996 after being awarded a nationwide
30-megahertz PCS license from the Canadian government, said it has been
informed of the takeover bid and declined to comment on the offer until
it received and reviewed the proposal.

The carrier, which currently operates a GSM-based network, also
completed a recapitalization plan early last year after declaring
bankruptcy. It has roaming agreements with T-Mobile USA Inc, providing a
broad North American footprint, and announced a deal last year with
Sprint Canada to offer bundled services.

Standard & Poor’s Ratings Services placed its “CCC+” long-term corporate
credit ratings and “B-” senior secured debt rating for Microcell on
CreditWatch with positive implications and Telus’ debt on CreditWatch
with negative implications, citing the possibility of
higher-than-expected costs that could drag on cash flows following the
takeover bid.

http://rcrnews.com/cgi-bin/news.pl?newsId=18107

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