SBC Communications Inc.’s purchase of AT&T Corp. south of the border could impact Canadian telecom buyers — for better or for worse, according to industry observers.
Montreal-based Forrester Research Inc. telecom analyst Brownlee Thomas said Canadian companies looking for communication products in the U.S. would have fewer choices in that country. The SBC buy-out spells one less States-side service provider for Canadians to consider when looking for U.S.-based branch office and manufacturing location connectivity.
But the merger’s result may be “fewer, more national providers,” Thomas said, pointing out that AT&T and SBC make a more stable company together than they were separately.
Toronto-based analyst Brian Sharwood with the SeaBoard Group said SBC’s acquisition could hit Canadian companies in a couple of ways. First, the deal could change how Canadian service providers deal with AT&T, which provides many a Canuck telco with connections into U.S. networks.
Second, the acquisition “might make [AT&T] less timid” about providing services in Canada, Sharwood said, noting that the telco’s financial woes have kept it from expanding its product portfolio here. Through AT&T Global Services, which operates in Canada, telecom buyers might see more offerings on tap.
That said, “it’ll be a while before they change strategies,” Sharwood added, pointing out that the merger could take time to finalize, and it’s too soon to say just what the new company’s plans for Canada and Canadian service provider-customers might be.
Thomas pointed out that SBC and AT&T face many state and federal regulatory hurdles before their marriage shapes up. “That will take time,” she said, adding that the companies won’t cross the final “t” in their agreement until early 2006. As a result, the short-term impact for corporate Canada will be “minimal or none,” Thomas said.
SBC spokesperson Denise Koenig in San Antonio, Tex. said, regarding her company and Canada, “decisions haven’t been made yet. This is still very new.” She added that SBC and AT&T would operate as separate companies until the deal is final.
SBC and AT&T announced their US$ 16 billion agreement January 31. In a joint statement the companies said they would combine SBC’s local phone and broadband assets with AT&T’s experience serving large businesses and its voice over IP (VoIP) expertise to build a juggernaut of a telco.
“We will renew America’s leadership in communications technology, with products and services that set the standard for how businesses and individuals communicate,” said Edward Whitacre, SBC’s chairman and CEO.
News of the acquisition comes after some major moving and shaking in the Canadian telecom sector. In 2004 Winnipeg-based Manitoba Telecom Services Inc. (MTS) scooped up Toronto-based, business-minded service provider Allstream to create MTS-Allstream, now one of the country’s largest communication firms. Allstream used to be known as AT&T Canada.
Meanwhile Bell Canada purchased long-haul link provider 360networks Corp., and then sold whatever 360 assets it didn’t want to Call-Net Enterprises Inc. (Sprint Canada).
And in the wireless arena, Telus Corp. made a play for Microcell Telecommunications Inc., but lost a bidding war for this “Fido” mobile network operator to Rogers Wireless Communications Inc.