Rogers wins big with Call-Net acquisition, says analyst

Rogers Communications Inc. will reap several benefits, including a head start in the integrated telecom-data space through its $330 million planned acquisition of Call-Net Enterprise Inc., an industry analyst said today.

The buy gives Rogers a far more extensive portfolio of telecom and data services, according to Lawrence Surtees, director of telecom and Internet research at IDC Canada Ltd.

With this deal, Rogers Business Solutions – the company’s business telecom arm – joins the ranks of the heavy weights in this space – such as Bell, Allstream and Telus, Surtees said.

Toronto-based Call-Net Enterprises Inc., a wholly owned subsidiary of Sprint Canada Inc., is a full-service telecommunications company providing integrated communications products including local, long distance, and enhanced voice, data and IP services.

Surtees said while the acquisition is also good news for Call-Net – as it is integrated into the national wireless market – “the bigger implication is for Rogers.”

Call-Net currently ranks fourth among Canadian enterprise business telecom companies.

According to Surtees, the Call-Net buy suddenly gives Rogers Business Solutions access to a bigger portfolio of services and a really interesting roster of cross-border Canadian-US customers, including Air Canada and Hudson’s Bay.

Rogers was previously a player in the business solutions market through a subsidiary called Metronet, which it subsequently sold to AT&T Canada, Surtees said. The sale contract included a non-compete clause, which ended last year.

Now that the media company is no longer bound by the non-compete clause, it has revitalized its offerings for the enterprise market and Call-Net brings into the picture significant technology and customer base, said Surtees.

In a teleconference held yesterday, Rogers’ president and CEO Ted Rogers said the acquisition gives the company a “dramatic kick-start” in the local telephony market.

“It provides both a substantial additional base of customers to cross sell our portfolio of communication enterprise products, as well as the skill and the knowledge of employee group,” Rogers said.

He added the deal would likewise accelerate Rogers’s deployment of voice over IP on cable service.

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