Rogers Wireless Trumps Telus With CDN$1.4B Bid For Microcell

In 2002, Techdirt writer Prashant Agarwal covered a rumor about Rogers Wireless buying Microcell. Back in July 2003, I wrote on Techdirt that “Microcell is, ‘the fourth horse in a three-horse race.'” Well, we finally get to say we told you so after today’s announcement of a Rogers purchase offer for Microcell of CDN$1.4M. The Microcell board approves the deal, so it just has the usual shareholder and regulatory hurdles before it’s part of history. We’re unsure whether the Microcell executives issued themselves as much of a “merger bonus” as the AT&T Wireless team did, but to be fair, they didn’t do as good a job at running their company into the ground. Telus Mobility had made the first public offer for Microcell at CDN$1.1, but was rebuked by the Microcell executives who valued the company higher. However, Telus, as a CDMA carrier, would only be buying Microcell (a GSM carrier) for access to spectrum and customers. The GSM network equipment is incompatible with Telus, and would basically have to be sold on eBay. Rogers, as a fellow GSM carrier, shares greater synergies with Microcell, and thus can justify a higher purchase price. While consumers in Canada may fret that going from four carriers to three will reduce competition, they need only look to South Korea or Japan. In 2001 SK Telecom bought Shinsegi, reducing Korean wireless choices to three, but competition has remained fierce in that market. Furthermore, the anticipated arrival of Virgin Mobile as a Canadian MVNO will stimulate competition in the pre-paid and lower tier of the market.


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