The shakeups at Bell Canada Enterprises Inc. continue with word that Bell Aliant CEO Stephen Wetmore will leave the east coast telco at the end of the year.
Its one of a number of changes at BCE that one industry analyst believes will start Friday when new BCE president and CEO George Cope takes over and may lead to the sale of Aliant to either another telco or to an investment fund. Aliant is a regional income trust fund, of which BCE owns 44 per cent.
“If it’s true that George Cope wants to commit himself to only Ontario and Quebec then one has to wonder why he’d want to keep those properties,” said Toronto telecommunications consultant Eamon Hoey.
He believes Cope’s strategy for BCE will be to focus on the two provinces where its prime subsidiary, Bell Canada, is based. As a result, he says, not only will Bell’s investments in the CTV television network, the Globe and Mail newspaper and telecommunications properties in the U.S. be under review, Aliant will also be on the table.
The new regime moved quickly. On Friday morning Karen Sheriff was appointed Aliant’s chief operating officer and a director. She had been president of Bell Canada’s small and medium business division.
Cope, BCE chief financial officer Siim Vanaselja and David Wells, a seasoned telecommunications executive with over 30 years of industry expertise, have been appointed members of the Bell Aliant operating company boards. Cope is also now chair of the boards, while Vanaselja was appointed trustee and chair of the Aliant fund itself.
Potential Aliant buyers include western phone companies looking to expand their coverage such as SaskTel or MTS Allstream. However, Hoey thinks that it would more likely be bought by a pension or equity fund looking for steady returns.
BCE needs cash because it is about to be privatized. A consortium led by the Ontario Teachers Pension plan is borrowing some $30 billion to take the company off the stock market and revitalize it away from the pressure to deliver quarterly returns to shareholders.
If Aliant is to go, Hoey for one the company will be better off . “It was never a strategic fit [for BCE] to begin with. It was just empire building. The Aliant phone companies were better off pre-BCE than they are today. They served the communities better.”
Aliant Inc. was created in 1999 with the merger of four Atlantic phone companies: Bruncor Inc. of New Brunswick, Island Telecom Inc. of PEI, Maritime Telegraph and Telephone Company Ltd. of Nova Scotia and NewTel Enterprises Ltd. of Newfoundland. Corporate communications buyers dealt with its business services division, called xWave.
But before that, in the 1990s New Brunswick Tel was one of the world’s leading telcos in technology, customer service and marketing, says Hoey, including early explorations in IPTV. In his opinion BCE management set it back.
Aliant’s holdings since its creation then expanded when in 2006 Bell Canada shifted its wireline properties NorthernTel, which covers central and northern Ontario and Telebec, which covers central and northern Quebec, to Aliant to create Bell Aliant Regional Communications Income Fund. As part of that transaction Bell Canada acquired Aliant Mobility for its Bell Mobility wireless division.
Earlier this year Aliant bought Kenora Municipal Telephone System from the northern Ontario town of Kenora, Ont. for $27 million. BCE has been Aliant’s largest shareholder since the beginning with just over 41 per cent of the shares, which has grown to 44 per cent. Wetmore has been president and CEO since Aliant’s formation.
The third largest incumbent telco in the country after Bell and Telus with annual revenue last year of $3.4 billion, Aliant serves some 5.3 million customers with 10,500 employees.
Hoey believes Wetmore’s departure is part of a wave of old managers and corporate directors leaving BCE and its subsidiaries so Cope can put in people closer to him and the conglomerate’s incoming new owners. Those leaving Friday include the man Cope is replacing, BCE chief executive officer Michael Sabia, and BCE vice-president of regulatory affairs Lawson Hunter.
