I saw some erroneous articles [such as this one] and tweets [such as this one] today that makes me think that there are a lot of people who don’t know a lot about Allstream, the target of the acquisition denial issued by the government last night.
Allstream doesn’t play in the consumer market; it doesn’t offer cell phones so most of us don’t ever see their ads. But the company has a rich and storied history.
Let me quote from the for Long Distance Application, filed with the CRTC by Unitel in May of 1990 when it sought to introduce competitive services [disclosure: I was part of the Unitel team at the time]:
On December 19, 1846, thirty years before the telephone was patented, the first telegram transmitted in Canada was sent from Toronto to Hamilton by a small telegraph company that would evolve into what became Canada’s first national facilities-based telecommunications carrier…
That pioneering achievement of the Toronto-Hamilton-Niagara and St. Catharines Electro-Magentic Telegraph Company marked the birth of Canada’s telecommunications industry…
At the time of Confederation, much of the telegraph traffic in Canada was routed through the United States. With Confederation, however, the new Canadian government was presented with the challenge of linking the scattered parts of Canada into a nation from sea to sea.
Resolved to establish an all-Canadian communications link from coast to coast, Parliament granted a charter to the Canadian Pacific Railway Company in 1881. The charter empowered the company to construct, maintain, and operate telegraph lines and to provide both telegraph and telephone service to the public.
The railway based telegraph companies merged to form CNCP Telecommunications, which successively became known as Unitel, AT&T Canada and Allstream – with a restructuring or two thrown in for good measure.
The company has evolved a lot over 167 years, sporting an 18,000 km intercity fibre optic backbone, 8 border crossings into the United States, 30 local city networks and nearly 3000 buildings connected by fibre. Allstream offers an array of advanced communications services riding across that fibre, as well as connectivity through its global partnerships. Its revenues peaked in the order of $1B.
As I mentioned in yesterday’s blog post, Allstream has won some significant government business recently. Government has always been an important vertical market for all of Canada’s major carriers. Frankly, it isn’t surprising that national security concerns might arise in connection with Allstream’s communications network.
But a fair question might be raised about why it took so long – nearly 5 months – for the government to say “no”.
It seems to me that financial markets – and industry participants – would like to have clarity, consistency, and predictability in the policy framework.
Should foreign ownership reviews trigger greater disclosure in order to increase transparency for the industry, the investment community and Canadians?