The Fallout of Bell Canada’s Debt
When the mega-billion dollar acquisition of Bell Canada finally closes later this year, one thing is assured: the company will be awash in debt - somewhere in the range of $25-billion to $30-billion.
To deal with this burden, Bell’s private equity investors will have to tap the bond markets, which are already swamped with LBOs looking to be financed. What this means is Bell’s probably going to have to pay through the nose to sell its mega-deal.
To be sure, there will be operating cost reductions - expect thousands of people to lose their jobs and budgets across the board to be tightened. Do not be shocked, however, if the Bell you once knew and love/hated is gone forever.
A good example of what will likely disappear in a frenzy of cost-cutting is many of Bell’s corporate and community sponsorship programs. Whether it’s sporting events, conferences or music festivals, Bell has enjoyed a high profile - and happily paid for the privilege over the years.
If, however, Bell’s new owners squeeze its marketing budgets, many of these programs will disappear or be scaled back. Maybe Telus, Rogers, Videotron or Cogeco will step into the breach but there are no guarantees they’ll be willing or able to expand their own marketing spending.
A common phrase is the near future could be: “Remember when Bell used to sponsor.…”
July 16th, 2007 at 10:13 am
This is going to mean MORE outsourcing of jobs to India. That and more nickel and diming (although I’m sure they’ll be asking for more than a dime) for every little service Bell provides.
If you think it’s bad now, it’s only going to get worse.