Sprint’s proposed merger with MCI Worldcom and displeased shareholders were clouding the future of Call-Net Enterprises Inc., parent of Sprint Canada, as of press time.
“It’s very much up in the air. It’s the glory of speculation only,” said Iain Grant, an analyst with the Yankee Group in Canada, in Brockville, Ont.
New York-based Crescendo Partners L.P. was poised at press time to meet with Call-Net shareholders to discuss the possibility of dissolving the company and selling off the assets, Grant said. Crescendo was displeased when their purchase of Call-Net shares earlier this year turned sour
as share prices fell.
Also, on Oct. 6, a letter from BCT.Telus to Call-Net expressing interest in acquiring Call-Net was made public, along with Call-Net’s reply that the proposed acquisition was not necessarily accepted, but available for discussion.
“The Telus offer has made good sense for the last year,” said Grant. “The combination of BCT.Telus and Call-Net/Sprint Canada as an operating entity makes tremendous sense and should speak enormous shareholder value.”
Grant said it would not make as much sense for BCT.Telus to simply buy Call-Net’s assets, should Crescendo be successful in its intentions.
“Telus needs a robust presence in central Canada, and that takes more than just having the bricks and the buildings. It needs the people. I think the most important assets that Sprint Canada has go home at night.”
What remains unclear is whether or not BCT.Telus is seeking to outright acquire Call-Net, or simply become a large shareholding partner. Grant said BCT.Telus’s consideration of buying all of Call-Net a year ago was deemed too expensive at the time, but things have changed now.
“With Call-Net, they’re looking for a partner now, and weren’t six months ago, because of this Crescendo initiative. They need to have friends.”
Grant said as far as he knows, Sprint in the US (about to be acquired by MCI-Worldcom) is not getting rid of its 25 per cent share in Call-Net, and the deal by which Call-Net uses the Sprint branding in Canada does not expire until 2003. He also said Bell’s current dealings with MCI are up for renewal in the spring, but emphasized neither of those issues are of strong relevance right now.
