Bittersweet taste in Telus

One has to wonder just how bittersweet a taste there is right now in the mouths of those who make up the Telus Corp. upper crust. Sure, they just put the wraps on a $6.6-billion deal to buy Clearnet Communications Inc., the largest in Canadian telecommunications history.

Sure, the acquisition of the Toronto-based wireless giant gives the Western telco powerhouse its long sought-after entry into the Eastern half of the country.

Sure, the deal accelerates Telus’s timeline to gain a foothold in the East by about three years. By deciding to buy an existing infrastructure and to forego the previous company policy of building its own national wireless network, Telus has moved from the right lane of the collectors into the wide-open wireless express lanes.

And sure, Telus’s president and CEO, Darren Entwistle, comes out of the process looking everything like Canada’s hottest telecom executive, credited by many industry observers as being the prime mover behind getting the buyout completed.

Despite all these rosy appearances, however, they constitute only the sweetness lingering in Telus’s corporate mouth. The bitterness that is no doubt sitting there, too, is being provided by the fact that this whole happy picture could have been painted about a year ago at this time – at a much lower price for Telus.

Back in September of 1999, then-Telus CEO George Petty recommended to the company’s board that the best way to attain a foothold in Eastern Canada, and thereby take a serious wireless run at giant competitor BCE, was to do exactly what Telus has just done – buy, not build.

The suggestion fell on deaf ears. Within less than half a year, Petty had announced his resignation, claiming that with no prospects of a Clearnet-like acquisition on the horizon, there was really no reason for him to hang around anymore. He left his old company to stew in its decision and carry out its build-not-buy strategy without him.

So much for that plan. Enter Darren Entwistle to the CEO’s chair earlier this year, and a revival of the Petty plan that looked so unsavoury just a few months earlier. Suddenly, the idea of going for the BCE jugular as soon as possible seemed like a grand idea.

One has to wonder what accounted for such a dramatic philosophical change in the collective minds of Telus’s corporate upper crust. Perhaps the wireless landscape of this country has changed so quickly and thoroughly in the time between the Petty era and that of his successor that Telus had no choice but to abandon its somewhat slothful wireless network build-out plan and adopt a more speedy approach. There is after all, a modicum of validity to the oft-heard refrain that the telecom sector, and the IT sector in general, for that matter, is the fastest-moving industry in the Western world economy. Perhaps it had nothing to do with Petty, but instead had everything to do with bad timing.

That’s one explanation for the sudden shift in attitude at Telus, but not the only one. Perhaps it was the injection of new blood, in the form of Entwistle, that brought about the attitudinal sea change. It might have required the same message from a different voice to finally wake up Entwistle’s workmates that the Clearnet option just made too much sense.

Whatever accounted for the change, it can’t be denied that it didn’t come too late for Telus to conclude the deal and become an even bigger player on the national wireless front. Now their job of capturing the valuable Eastern customer becomes that much easier. If the new, expanded Telus plays its cards right, it might not be too long before that bitterness in their mouths is a thing of the past.

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Jim Love, Chief Content Officer, IT World Canada

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