AT&T, BT buy into Rogers Cantel

The acquisition of 33 per cent of Rogers Cantel Mobile Communications by AT&T Corp. and British Telecommunications plc (BT) earlier this month should give the wireless subsidiary of Rogers Communications Inc. more clout with corporate users, according to one analyst.

Rogers Cantel has had a branding agreement with AT&T since 1996, but the ties between Cantel and AT&T are much stronger now that AT&T has a significant financial interest in the Canadian wireless service provider, said Jordan Worth, a telecommunications analyst with IDC Canada Ltd. in Toronto.

“Now Cantel can go out and say these guys own a third of the company,” Worth explained. “They have a stake and an interest and will share their intellectual property and services.”

Although most of Rogers Cantel’s current customer base is residential, Worth noted the company has been trying to make inroads into Canadian corporate accounts over the past year.

“They’ve been more successful on the corporate side in competing with Bell for the heavy users,” he said. “It’s the same in the wireless world as it is in the wired. Residential customers are good, but they don’t spend as much money as the corporate users.”

Worth said the investment should also mean corporate users will see more bundling of services between AT&T Canada and Rogers Cantel.

This thought was echoed by AT&T president John Zeglis.

“The investment guarantees a place for wireless in the bundles AT&T Canada will market to its customers and the investment deepens the relationship between AT&T Canada and Rogers Cantel,” he said.

Charles Hoffman, president and CEO of Rogers Cantel, added that Rogers Cantel and AT&T Canada will soon be cementing their relationship by creating a unified corporate sales force and service organization to better serve larger customers.

IDC Canada’s Worth noted that AT&T isn’t the only telco looking for a tighter coupling of wireless and wireline services. One week prior to the AT&T/BT investment, Bell Canada bought all outstanding shares in its wireless arm, Bell Mobility.

“They (Bell) wanted control over the wireless to do whatever they wanted with the bundling,” Worth said. “They don’t want to worry about shareholder interests.”

The 33-per-cent stake in Rogers Cantel is estimated to be worth $1.4 billion. AT&T and BT will each own 16.5 per cent of Rogers Cantel. Rogers Communications still holds 51 per cent.

AT&T and BT have been teaming together over the past year on the development of a global network. In Canada, AT&T Canada will be selling access to the global network to corporate users.

Separately, BT acquired 30 per cent of AT&T’s 31-per-cent investment in AT&T Canada. The investment is worth $600 million. Ultimately, AT&T and BT intend to own all of AT&T Canada, said Alfred Mockett, president and CEO of BT Worldwide.

“We have secured a path to increase our combined holdings in AT&T Canada to 100 per cent in the next four years as foreign ownership restrictions are relaxed.”

Mockett said he believes Canadian ownership restrictions will disappear as commercial pressures and World Trade Organization initiatives lead to greater trade liberalization.

Rogers Cantel will use some of the $1.4-billion investment to improve its digital wireless network, Hoffman said. But most of the money will be used to pare down Rogers Cantel’s $2.2-billion debt.