Market doubting Bell going private

BellThe stock market appears to be pricing BCE with increased risk.

Let’s review. The deal from Ontario Teachers Pension Plan will provide shareholders with $42.75 per share. There are likely 2 dividends to be received between now and closing, for a total of another 65 cents. Assuming the deal is finalized in April, each share is worth $43.40.

As recently as a couple weeks ago, BCE traded for a little over $41.20. Right now, it is around $39.40. If the deal goes through, investors would make $4, a little over 10% in about 5 months, for a current yield of around 25%.

Does the recent drop mean that more investor sentiment is questioning whether the privatization will actually close?


Update [November 26, 5:00 pm]
Barron’s today agreed with the view that Bell is an interesting arbitrage opportunity.

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More than a bundle

Scotia CapitalI attended the Scotia Capital Telecom and Tech Conference yesterday and heard some interesting interviews with a variety of industry leaders – 4 of whom were speakers at The Canadian Telecom Summit last June.

Pierre Blouin, CEO of MTS Allstream, had a notable observation about bundles. In his view, telephony, TV and internet increasingly are seen by consumers as a single product. Mobile wireless is a separate, more personal product. The other 3 are more than a bundle; they are a complete household communications suite.

Speaking over the distraction of an annoying (false) fire alarm, Jim Balsillie, co-CEO of RIM, gushed about the upside potential represented by UMA (unlicensed mobile access) and FMC (fixed mobile convergence). He sees these capabilities as a threat to traditional wireline telephony but an opportunity for wireless carriers. WiFi simply won’t have the hand-off capabilities or the back-haul, so the wide area networks of the cellular carriers will be the glue to hold it all together.

The added benefit, which was also mentioned by Nadir Mohamed of Rogers, is the ability to off-load some of the data traffic from the carrier networks, easing pressure on capital resources.

The fourth Telecom Summit alumnus was Dave Caputo of Sandvine who presented some fascinating data about the internet traffic impact of Halo 3 it was released in September. Gaming traffic on ISP networks shot up five-fold, but there were virtually no new households added. So, while Microsoft enjoyed a spectacular opening day revenues, ISPs carried the significant increase in traffic without a measurable, let alone commensurate, contribution to their top line.

Pierre and Nadir are already confirmed to return as keynote speakers at The 2008 Canadian Telecom Summit.

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A viral approach to push mobile music

[youtube=http://www.youtube.com/watch?v=o00xESxCWCo]
I received an interesting email today from New York based SX Mobile Media.

They recently shot and launched a new music video for Samsung Mobile called Europe United. Interesting concept. They went to 10 European cities; London, Paris, Berlin, Rome, Prague, Ibiza, Barcelona, Moscow, Edinburgh and Galway and asked regular people to dance in the street.

Those who made it into the final cut of this video won a free Samsung phone.

And now the video is being spread via YouTube with only the lightest mention of Samsung.

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More mobile wireless spectrum

WRC 2007While Canada is awaiting the release of the rules on the AWS auction, attention south of the border is focussed on the next swath of radio spectrum – the 700 MHz band.

Last week, as the World Radiocommunication Conference wrapped up in Geneva, a consensus was reached on using 700 MHz for wireless broadband services including cellphones, mobile TV and WiMax, although at each country’s time of choosing, as reported in the NY Times.

While the European Broadcasters Union was concerned about potential intereference with its digital TV signals, many of the large countries in Asia — including China, India, South Korea and Japan — signed on to the American plan.

The NY Times article speculates that such a global consensus will help increasing the number of potential bidders (possibly including Google, Apple and Yahoo) and driving the value – and the resultant bids – higher when the 700 MHz band goes to auction.

There is more spectrum available for mobile applications beyond the frequencies under consideration in the current AWS auction consultation in Canada. WRC07 has ensured that the 700 MHz band will be globally converted, creating an attractive alternative for future requirements.

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Toward an innovation strategy

I had breakfast with a colleague last week and we were speaking about the growing chorus calling for various levels of governments to set out their innovation vision. I have some thoughts that have emerged from that meeting that I plan to share over the next few days.

I noticed that the Hill Times had a special Innovation supplement on November 5 with various interest groups submitting textual versions of the Ottawa handshake – you know the move – hold your right hand in front of you, palm facing to the left, straighten elbow, cup your hand and rotate it upward. Michael Geist’s column in that section has a subtitle that says we need more than tax breaks to maximize the value of research. I agree.

Let’s go back a few years. When the National Broadband Task Force was launched, its objective was to explore the best approaches to make high-speed broadband Internet services available to businesses and residents in all Canadian communities by 2004.

Unfortunately, as we approach the end of the year 2007, we still aren’t there.

In any case, I’d submit that broadband availability was insufficient as an ultimate goal; it is just a piece of the solution space. One step along the way.

If we are looking for Canada to lead in electronic literacy, what programs are we willing to establish to get there? This ties to a couple of my comments last week about the need to create the right environment to enable all citizens to be drinking from the digital fountain of knowledge.

Are any of the provinces willing to move forward on their own to set their own digital objectives? Across the broad spectrum of agencies, health care appears to have the lowest hanging fruit.

Ontario’s premier Dalton McGuinty has established a new $165M venture fund to “help create the jobs of the future by boosting cutting-edge companies here in the province”. It is an important contribution. But it strikes me as similar to making a charitable donation in lieu of rolling up your sleeves to volunteer sweat. We need governments to commit more than just money.

For an innovation strategy to take hold, can we energize further progress by changing the way government and public institutions deliver services?

For example, why are medical diagnostic labs still producing radiological films that require physical media rather than digital images? Doctors still keeping illegible paper records. Under a digital strategy, provinces would set a firm date by which all labs must upgrade in order to continue to be licensed or receive funding. Doctors – prepare to digitize your records.

What is the bold vision? Where is the leadership across all sectors and all levels of government to drive spending consistent with that innovation agenda. Where will innovation rank on political agendas?

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