The Canadian Radio-television and Telecommunications Commission (CRTC) denied BCE Inc.’s $3billion takeover of Astral Media Inc. This may be as profound as Paul Martin’s decision to deny the merger of Canada’s banks. As with the banks, it may push BCE to seek growth beyond Canada.

In 1998 Martin, then Canada’s Finance Minister, blocked the merger of the RBC and BMO and of the CIBC and TD Bank. Martin thought the mergers would further concentrate Canada’s banking sector, reduce competition, and increase the banks market power. The CRTC has similar concerns with BCE’s acquisition of Astral.

The banks had a need to grow, as does BCE. For organizations of BCE’s size, Canada presents few opportunities for major growth within their sector. Martin’s decision took the banks proposed growth tactic off the table, as does the CRTC’s for BCE. Martin’s decision caused the banks to seek growth beyond Canada.

Banks Find Growth Opportunities beyond Canada

Subsequent to Martin’s decision, TD acquired small USA banks. Today, it has more USA than Canadian branches. Similarly, Scotia accelerated the growth of its global operations. Canadian banks, in the last two years, undertook 50 acquisitions valued at CDN$42billion. These assets are in Mexico, Columbia, China, the Caribbean, Luxembourg, USA, and Canada.

Martin’s policy created a stronger and less concentrated banking system, less vulnerable to recent international banking crisis, and more sustainable. His policy brought benefits to Canada. For BCE, the CRTC’s Decision presents a comparable opportunity.

Canadian Corporations Go Global, Except BCE

Banks are not alone in exploiting foreign opportunities. Toronto based Alamos Gold Inc. operates mines in Turkey, Mexico, and Canada. Alimentation Couche-Tard Inc. has USA and overseas operations, as has consulting firm CGI. Fairfax Financial Holdings Limited has insurance operations in Canada, USA, UK, Southeast Asia, Eastern Europe, the Middle East, and Brazil. Of FP’s Top 25 firms, 22 report sales outside Canada. BCE reports none!

Global Telecommunications Winners

In sharp contrast to BCE, its foreign rivals have exploited global opportunities.

Norway’s Telenor Group has cellular enterprises in Scandinavia, Eastern Europe, and Asia. It has 203 million cellular customers, 27 times BCE’s 7.5 million!

U.K.’s Vodafone Group Plc. provides cellular in 30 countries and partners in 40 more. The world’s second-largest cellular provider has 439 million subscribers, 58 times BCE’s!

South Africa’s MTN Group operates in 21 African and Middle Eastern countries. It boasts 183 million cellular customers, 24 times BCE’s!

Digicel Group Limited has 12.8 million cellular subscribers in 31 markets, in the Caribbean, Central and South America, and the South Pacific. It built its business in the last 11 years! BCE in the same period added 4.3 million cellular subscribers, 1/3 that of Digicel!

Telenor, Vodafone, MTM, and Digicel found global cellular market opportunities beyond their home market. By contrast, BCE stayed home preferring to remain a very, very, small cellular provider with low ambitions.

Contrasting Performance Raises Questions

In the cellular market alone, the contrast between BCE, Telenor, MTN, Digicel, and Vodafone is startling. It raises a number of questions.

What prevents BCE from following the example of its rivals? Is it lacking experience in the delivery of cellular services? Why is it content with only 7.5 million cellular customers? Why is it not embracing global opportunities, as is the majority of Canada’s Top 25 Corporations?

Is BCE the victim of bureaucratic persecution, as it often suggests? Or has the CRTC and Industry Canada made it so comfortable for BCE that it is content with its low performance?

Has BCE paid too much attention to the limited vision of Bay Street? Why has BCE failed to step up to a grander strategy? Is it so fixated on operations it cannot conceive of a more noble purpose?

Passive Performance

BCE enjoys a favoured position in Canada, a cosy comfortable existence in a well-protected oligopoly market structure. No surprise it has delivered decades of passive performance, at a significant cost to consumers and to our national detriment.

Globally oriented rivals have outplayed BCE. There is no lack of global opportunity to satisfy BCE’s desire to grow its business, except its own lethargy.

BCE’s challenge is to change its thinking.

The CRTC’s Chair, Jean-Pierre Blais, Decision to deny BCE permission to acquire Astral may have the same effect as Martin’s bank sector decision. It may shake BCE from its lethargy. Cause it to seek and seize global growth opportunities and create benefits for Canada.

 

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