Telus-Microcell: An Unholy Union?

Just when you thought Telus was about to make a hostile bid for Allstream Inc., it catches many people off-guard with a $1.1 billion deal for Microcell Telecommunications. The deal doesn't make much sense from a technological basis because Telus uses different wireless technology – CDMA – than Microcell – GSM. So, it's not like Telus can easily migrate Telus' customers over to its network to improve operating efficiency. This has to be seen as a defensive move because if Telus did not move first, there was a risk Rogers Wireless or Manitoba Telecom Services would launch a bid for Microcell. Rogers appears to be the most likely suitor because it also uses the GSM platform. There are plenty of questions surrounding this deal: is Telus willing to pay too much for Microcell, how is it going to address the two disparate technical platforms, and will Rogers step into the fray. At the very least, this is a bad deal for consumers who will have less choice. Microcell was seen as the one “unreasonable” player in the market that kept everyone else honest on prices. Given how Bell, Telus and Rogers have all adopted the mantra of higher ARPU and bottom-line profits, Microcell's elimination will likely mean one thing: higher prices.