Glentel Inc GLNIF

RE:Feb 5 Globe article

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1. After BCE funds the $297-million cash portion of consideration on the Glentel transaction, BCE’s net cash position will in fact improve by $95-million, so their liquidity and financial position will be strengthened as a result. Rogers agreement will reduce the net effective cost to BCE of acquiring its 50-per-cent interest in Glentel to $202-million. They think that’s really good value for securing this distribution channel, particularly as they head into a period of increased volumes of wireless subscriber contract expirations.
2. Rogers want this deal badly since it does not want to loose distribution channels to competition at the time of high activity period when 2 and 3 year contracts are expiring what is being called the “double cohort” later this year. If BCE gets all distribution channels their business will be booming bringinging Rogers to lower position since Glentel is responsible for 10% activations in Canada.
3. BCE and Roger's will now share control over the retailer when the transaction closes. Glentel shareholders approved the deal on Jan. 12 and a court approved it on Jan. 14. So only competition Bereu approval is needed and that is BCE's responsibility. Instead of paying $594 million and then keeping Roger's products, BCE will pay $202 million only a net saving of $392 million which is very lucrative deal for BCE. Competitive bidding might have incresed purchase price further, so it is in their best interest.
4. Though Target outlets are lost but all inventory, shelves and front dispays can be used at new locations. It will be saving on lease/rent to Target since Target decided to close it. So losses will be minimum. On the contrary US dollar being higher, the value of 735 US stores in terms of canadian dollar has inncreased by 25%, so it is a blessing for Rogers and BCE. Also gives them international footprint for expansion.
5. From Competition Bereau's point of view nothing has changed in distribution channel network for any competition, so it is just a process before shareholders get their dues.
GLTA