Playing ‘what-if’ with Bell’s future

Interesting times, indeed. For a while last month, it looked distinctly possible that Canada could end up with a monolithic, monopolistic carrier coast-to-coast. Reaction to Telus’s bid to takeover Bell didn’t meet with universal public approval. The knee-jerk reaction here was that eliminating one of the players — or merging two, if you prefer — would take off any competitive pressure that exists in the Canadian marketplace and result in higher rates and lesser services. A consolidated “Bellus” would also likely shed thousands of jobs as it rationalized its staff and infrastructure.

There was an flipside to the proposition that few talked up. Efficiencies would be gained, especially on the administrative and customer service sides, which could actually drive down costs — a savings that might be shared with users. In theory, it would be the best performers in both companies that would survive, meaning superior performance and service.

We’ll never know now — although the maxim “never say never” applies here with a vengeance — in the wake of the Teachers Pension Plan’s $51.7-billion winning bid which would be the outcome.

Now we have a different set of outcomes to consider.

Teachers will have to take on considerable debt to finance the buy, and how it’s managed is going to effect your services. Analysts have floated a couple of options: push margins, and thus prices, up; shutter unprofitable services; sell off attractive infrastructure. None of those suggests a focus on innovative new services for customers.

A private Bell, free from the responsibility to public shareholders, could be a more creative Bell. But Teachers is in business to make money, not lose it, so any long-term creativity will face a tough business case test.

To be fair, Telus would have incurred massive debt taking over Bell, and its management style would be similarly cramped. But a Bell-Telus merger would have offered the option of slimming down from redundant resources rather than saving money by slashing into the muscle.

Of course, Telus could get back in the picture with a hostile bid any day now. Interesting times, indeed.

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