Is it just me or is the buzz about a multi-billion dollar leverage buy-out of BCE Inc. becoming less attractive by day. The latest bad news was delivered in BCE’s first-quarter results, which show it lost another 107,000 local phone customers, while its wireless unit added a disappointing 13,000 subscribers (By comparison, Rogers added 90,500 while Telus added 85,800).
So tell me again why investment firms such as Kravis Kohlberg & Roberts, Ontario Teachers Pension Plan and Blackstone Capital are so anxious to get their hands on BCE? It’s not like this is a company with a healthy roster of high-growth or even modestly-growing assets. The wireless and local phone businesses suck, the satellite-TV business is barely growing, the high-speed Internet unit is seeing slowing growth, while the enterprise division is battling for business in a highly-competitive market where the margins on new IP-based services are nowhere near as healthy as everyone expected.
Maybe institutional investors see a fertile opportunity to radically restructure the business, even though BCE CEO Michael Sabia has been actively trying to re-invent BCE over the past five years. Maybe investors look at the wireless business, for example, and see all kinds of potential for improvement (as well as the opportunity to spin all of part of it off). Obviously, the number-crunchers see something given they’re apparently willing to fork over $30-billion to acquire BCE (financed, of course, by an awful lot of debt) but, frankly, BCE does little to excite me.
For more check out, Sean Silcoff’s commentary in today’s Financial Post on why Telus is unlikely to get involved in a strategic alliance with BCE.