BCE reorganization hailed as move to make corporation more efficient

The recently announced restructuring of BCE Inc into five distinct sections should make for better operations of the telecom colossus, but analysts do not expect to see any major changes in the way the corporation does business. At the end of October, the firm said it was creating four divisions to handle Canadian and global connectivity, content and commerce, with another section acting as a holding company for the rest of the firm’s properties. The new structure will be in place by December 1. "I don’t see them abandoning anything major that they’re in," Lawrence Surtees, senior research analyst for telecommunications at IDC Canada told Network Letter. When he first saw the announcement, Surtees says he wondered what important changes were underway, but upon closer examination decided it was business as usual. "You can call it a reorganization but it basically dovetails with what Mr. Monty and his predecessor Mr. Wilson have been focusing on for at least the last five years. That’s how I see it," says the analyst, a former Network Letter editor who has written a biography of Jean Monty. Under the reorganization, Bell Canada will focus on Canadian connectivity, while the international market becomes the bailiwick of Teleglobe. BCE Emergis will be responsible for commerce while content will be the purview of an as-yet-unnamed media company. BCE Ventures will be the home for all other sections. That includes BCE’s 100 per cent interests in Telesat Canada, BCE Capital, Bimcor and Excel Communications and its holdings in Bell Canada International (74 per cent), CGI (46 per cent) and Look Communications (25 per cent). The changes are getting the thumbs up from Wall Street. Bill Laemmel, research director with the May Davis Group, praises the move. "We think Jean Monty is doing the right things. We think he’s bought a membership in the SBC hegemony with the 20 per cent SBC ownership of Bell Canada," he told Network Letter from his New York office. "If you’re in eastern Canada you’re sort of in the corner, and if you want to be worldwide you have to leverage the Canadian shareholder into the worldwide situation. That’s one way to do it. And he’s gone multimedia in the services." Promotion of corporate officers Concurrent with the reorganization was the promotion of several men in the BCE hierarchy. Michael Sabia moves from being EVP of BCE to the presidency. John Sheridan is the new president of Bell Canada, while erstwhile CTV president Ivan Fecan takes over the media group. Bill Anderson, CFO of BCE, will be in charge of the BCE Ventures division. The announcement of the restructuring came just as AT&T in the United States revealed that it is also breaking up into four separate sections. Surtees finds that coincidental. The American market is different than the Canadian one, he points out, with AT&T choosing LD over local following the break up ordered by the U.S. government in 1984. Bell, on the other hand, is a powerhouse in both local and LD in Canada. AT&T also made disastrous investments in cable south of the border. Surtees notes that AT&T is somewhat late in restructuring, as its Canadian partner AT&T Canada sold off its residential LD to Primus Communications last year (NL, June 7/99). The BCE declaration was timed with the release of the company’s third quarter results. Surtees considers it a fluke the AT&T statement occurred the same time. "I would think that’s really a coincidence because I don’t think they work that fast. Or that smart," he opines slyly. Speculation about IPO The separation of the sections into different units raises the possibility of issuing Initial Public Offerings in the stock market or even breaking the units off into independent companies. However, both analysts discount the possibility. "I certainly don’t see this as any prelude to BCE spinning off or divesting any of this. Monty is very wedded to scale and scope and I think he’s right," says Surtees. "Now that doesn’t mean that you wouldn’t take any sort of division someday public. Why not? But that doesn’t mean you sell them. You keep a majority stake." Citing the recent decline of Nortel stock, he adds, "But that’s a ways off, the markets aren’t anywhere sympathetic to any of that right now." Laemmel is even more blasé, using an analogy from gaming. "It doesn’t matter at this point. You could say the Canadian shareholder’s playing bridge and he’s got 36 cards in his hand." Monty himself downplayed the likelihood of a spinoff, telling the Globe and Mail such developments are years away, if at all. "Spinoff is a strong word. With some of them, if we get interesting proposals, we’ll consider that," he told the newspaper, itself part of the BCE empire.

BCE reorganization hailed as move to make corporation more efficient

News | November 6, 2000

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