Bell & TELUS to merge within “the coming year or two”

John Connors

August 12, 2009 11:24am

bellusimageRumours of Bell and TELUS merging have been going on for a number of years. It started to heat up again late last year when the failed $52 billion takeover bid by the Ontario Teachers’ Pension Plan was “officially terminated. At that time Scotia Capital anylist John Henderson said “We believe Telus remains very interested in entering merger discussions”… but this was defused by himself about a month later “A new head of the Competition Bureau this month makes it less likely in our view that BCE or TELUS will consider proposing a merger in the near term”.

Bell and TELUS together control about 60% of the Canadian wireless market and with the new competition coming in a couple months, brings new “Bellus” merger rumours to the table.

Jonathan Allen, of RBC Dominion Securities Inc. has said in a report today that “Faced with cyclical and secular pressures on the top-line, we believe that a BCE-Telus merger is increasingly likely in the coming year or two as both companies look to cut costs and sustain margins. There is only so much cost cutting that can be achieved individually. The scale benefits from a merger of Bell and Telus are substantial”.

He states that together they would save over $1.2-billion annually and that if merged Telus shareholders would receive one-third of the new entity and BCE shareholders getting two-thirds.

They are both launching a new HSPA network within the next few months. A deal would make sense, but a massive undertaking that could take years to finalize.

More here from the Globe
Thanks Jeremy!

  • theninjasquad

    Sustain margins? Canadian cell phone companies have some of the highest profit margins in the world!

  • Joe Ball

    great. and then there were two.

    CAN NOBODY CALL DUOPOLY ON THIS CRAP??

  • Sid Ali

    So instead of colluding behind the scenes, they can create ‘synergies’ by colluding out in the open now? Well in two years time.

    They really believe the new companies will garner so much market share that having these two companies join up won’t be an issue for the competition bureau?

  • blueadept1

    This is not going to happen. Trust me on this one. The CRTC would never let it happen, nor would it go through on the grounds of a duopoly.

  • Jessie

    They already share their CDMA towers… the HSPDA build out is certainly joint in nature but they already are very tightly married together behind the scene.

  • market watcher

    Do they really need to merge? Telus is building a new HSPDA netowrk in the west they will be sharing with Bell… a virtual merger