Wednesday, July 9, 2008

Sorry but wasn't it Jim Apprentice who just approved the LBO of BCE to US private equity?

What did he expect, lower costs and better service?

How did Jim Prentice think BCE's new private equity purchasers were going to pay off $44 billion of junk bond acquisition debt? A bake sale? This Prentice guy is naive inthe extreme. Dare I say Apprentice?

Canada Industry Min Slams Bell, Telus Fee Plan, Summons CEOs

OTTAWA (Dow Jones)--Canada's Industry Minister Jim Prentice Wednesday said Bell Mobility and Telus Corp.'s (TU)plan to charge for incoming text messages is "poorly thought out" and has summoned the heads of both companies to Ottawa to explain the decision.

Prentice said he has "no desire to interfere" in their daily business decisions but he has a duty to protect consumers' interests.

"I believe this was a poorly thought-out decision," Prentice said in a statement.

He said he has sent letters to the chief executives of both companies, asking them to meet him before Aug. 8 "to explain this aspect of their text messaging pricing structure with a view to finding a solution that provides the best service to consumers at the best price."


Anonymous said...

What until the major surgery starts at BCE!! The interest on the LBO will have to be funded even more with cost cutting if BCE can't increase revenues for texting. Aren't these Neocons supposed to be business types.


Anonymous said...

*"I believe this was a poorly thought-out decision," Prentice said in a

*Was he referring to the BCE buyout approval? Sounds like...


Anonymous said...


You mean, how will BCE cope with the debt? No pun intended.

Anonymous said...

Question for the Apprentice: "poorly thought out".....or blatant collusion?

Brent Fullard

Anonymous said...

Excerpts from Catalyst letter hand delivered to Industry Minister Prentice dated February 26, 2008

7. Profound impact of Leveraged buyout on BCE’s Cost of Capital and consumers’

Under the leveraged buyout of BCE, which will see BCE’s debt increase from $12 billion to $44 billion, the credit rating of BCE is dramatically lessened to junk bond status. This material downgrade in BCE’s credit rating will see a commensurate increase in BCE’s cost of borrowing, increasing by over 240 basis points on what will now be 85% of BCE’s capital structure.

The following observations from the April 2003 Report of the Standing Committee of Industry, Science and Technology are relevant to why this should be of vast concern to Industry Canada:

“A higher cost of capital slows the rate of capital investment and, in turn, the roll out of competitive services

A cost of capital differential of approximately 1.18% exists between Canada’s incumbent telephone carriers and Canadian cable companies. This incremental cost equates to about $1.46 per month per cable subscriber.”

12. The uncertain nature of the financing will exacerbate cost

The inherently uneconomic nature of this deal will manifest itself in one or more unfavorable outcomes.

The most obvious negative outcome is that the cost of the leveraged buyout financing will be at the highest conceivable level, which means that the cost borne by consumers and the impact on job losses will be at their greatest, as if these pressures weren’t great enough already.

15. Moral hazard assumed by Industry Canada

The existence of an alternative means that Industry Canada will assume the moral hazard of the negative outcome that will accrue to consumers and Canada’s telecom sector if Industry Canada allows the leveraged buyout to continue.

The moral hazard being assumed by Industry Canada can probably be best captured by the words of BCE’s financial advisor, Goldman Sachs, in their letter to BCE’s board:

“We express no opinion as to the impact of the transaction on the solvency or viability of BCE or the ability of BCE to pay its obligations when they become due.”

Brent Fullard

Dr Mike said...

Would we be in this mess if BCE & Telus had become income trusts????

I guess we will never know.

Dr Mike Popovich

Anonymous said...

And the income trust decision was well thought out? These government idiots care more about text messages than they care about senior's retirements!


Robert Gibbs said...

Nothing more than the usual cheap ploy by Harper, Prentice and the CON smoke-screen brigade to appear to the "Tim Horton's crowd" to be concerned about their pocketbooks.

Another replay of the ATM fee and the US/Canadian pricing "debates."

I await with baited breath for the CON calls to the beer companies concerning beer pricing in Ontario vs. Quebec.

And as the above anonymous poster elucidated, what a bunch of hypocritical CRAP on the part of Harper and Prentice when lined up with their "well thought out" income trust betrayal - a $35 billion betrayal at that.

Robert Gibbs said...

And of course what the CONs conveniently fail to mention is that the Canadian government itself is partly responsible for increased telecom fees due to the usurious amounts "pulled" from these companies for such things as "airwave or spectrum auction fees" and licenses.

Just as the CON government claims that it isn't in favour of new or higher taxes, it surreptitiously increases personal tax rates upon taking power in 2006 and shortly thereafter imposes a new 31.5% income trust double tax.

Doublespeak is a hallmark of this CON government.

Look up various words/terms in new encyclopedias such as Hypocrite, Liar, Betrayal, Treachery, Dishonesty, Undemocratic, Unaccountable, etc. and you'll see a picture of Stephen Harper.

Anonymous said...

When it comes to our economy; from Lying Harper right through to Finance Minister Flatulence, these bunch of Conservative clowns could not slap their ass, even if they used both their hands.