As the smoke clears from a failed $50 billion leveraged buyout deal, Bell Canada now has to focus shoring up its bleeding business and trying to collect a $1.2 billion break-up fee from the potential buyers.
Analysts say that the failure of the buyout was the best news B.C.E. could hear, escaping a crushing debt load that would not have enabled them to do anything (See: Sam Zell, bankruptcy of Tribune publications).
Instead, the largest telecommunications company in Canada now has to play triple-play catchup. The company lags behinds Rodgers Communication and Telus in wireless, its satellite TV offerings lag "well behind" cable," and Rodgers and Videotron are grabbing 10 percent of Bell's traditional landline customers a year; estimates credit cable companies with providing about a quarter of Canada's local phone service since entering the business in 2004.
The only area where Bell remains strong is providing services to businesses and the government sector, but competition from Telus in the market has lowered Bell's profitability.
Most of B.C.E.'s problems are of its own making. In the late '90s, Bell Canada focused on buying media companies rather than upgrading its network. Today, B.C.E. competitors are able to offer better TV and higher-speed Internet services. Analysts believe Bell Canada has no choice other than to bite the bullet and invest in network upgrades or continue to lose market share to cable and wireless firms.
- NY Times reviews Bell Canada's future. Article.
BCE deal blows up
BCE deal participants reportedly have been debating the break-up fee for a while