Rogers Wireless has made a $1.4-billion bid to take over Microcell Communications and said it will not disrupt Fido users in the process.
Days after confirming it was in talks to buy Microcell, which has been subject to a hostile takeover bid by Telus Corp. since May, Rogers said it would finance
the deal with a combination of cash on hand and a loan from its parent, Rogers Communications. The combined firm would have 5.1 million customers, the companies said.
Microcell is the country’s smallest cell-phone provider but also one of its most competitive. Earlier this year, for example, it announced plans to expand a low-cost service called CityFido — which offers unlimited local talk time for $45 a month — to Toronto. Since its launch in Vancouver, CityFido has prompted fierce counter-marketing efforts from other wireless carriers.
In a Sept. 20 teleconference, Rogers Wireless president Nadir Mohamed would not confirm the company’s plans for CityFido, saying it was too early to speculate.
“”I’ll tell you what I like about CityFido,”” he said. “”It really attacks the premise of the wireline local business and allows customers to take advantage of wireless for all of their needs.””
Apart from its presence in Quebec, Rogers Communications chief executive Ted Rogers said Microcell’s most attractive asset is its network, which like Rogers operates on the popular global system for mobile (GSM) standard. A takeover would mean Rogers would be able to quickly expand its general packet radio service (GPRS) and EDGE services to Microcell customers without asking them to get new phones or numbers, Rogers said.
Microcell chief executive Andre Tremblay said its network already has interoperability between Nortel and Ericsson products, which would make the transition easier. “”I don’t believe that there will be any major issues,”” he said.
A Telus Mobility spokesperson said the company was examining Rogers’ bid and would comment shortly. Telus had said a recent Canadian Radio-television and Telecommunications Commission (CRTC) decision to lift the spectrum cap would clear the way for its takeover.
Iain Grant, managing director of research firm the Seaboard Group, said if the deal from Rogers is successful, it would vault from the No. 2 position in the Canadian wireless market into first place.
Rogers was opposed to programs such as CityFido principally because its network was engineered without a lot of overhead, Grant said, and it couldn’t handle the potential surge in usage. “”(Ted) Rogers could see that if that was to happen on his network, it would crash and burn — you’d see the smoke coming off of these cell sites and they would burst into flames.””
Microcell, in contrast, built a new network with empty lanes, Grant added.
Ted Rogers said there were obvious benefits to what his company is proposing over what Telus would do with Microcell.
“”We’re talking about merging two GSM networks — keeping what we have and building on it instead of someone coming in and tearing everything down, closing it up and firing the people,”” he said.