Canada's Ma Bell, unlike AT&T, is expanding and diversifying
Canada's big phone company is expanding into everything from pipelines to real estate. Unlike the American Telephone & Telegraph Company, this one has no restrictions, no orders to break into eight pieces; it is just one of Canada's biggest companies, and getting bigger. The latest acquisition by Bell Canada Enterprises Inc. (BCE) is Daon Development Corporation of Vancouver, British Columbia, a major property developer. Daon had almost gone bankrupt when the recession and oil glut ravaged the real estate market in western Canada, where Daon had the bulk of its leveraged real estate. Analysts say Daon had already rid itself of debt, so the phone company picked up a bargain.
BCE has been a hit on the Toronto Stock Exchange. The price of its shares has risen from $24 in the beginning of 1983 to more than $37 today. It alone makes up 9.16 percent of the TSE 300 Index, the listing of the important shares on the exchange.
Bell Canada Enterprises is actually the holding company that controls Bell Canada, the telephone company operating in the two big provinces of Ontario and Quebec; 52 percent of Northern Telecom, the telecommunications equipment manufacturer; and other assets including varying percentages of some provincially regulated phone companies.
Bell Canada Enterprises is one of Canada's industrial giants. It has assets of $17.5 billion (US$13.12 billion), fourth largest in Canada by that measure, and is first in net income at $745 million (all figures in Canadian dollars). The company says net income will be ``considerably higher'' this year. For what was once thought to be a sleepy utility, it has a five-year growth rate of 101 percent.
Despite its size, BCE has just started to flex its muscles. Until a couple of years ago it wasn't allowed to. In 1982 Bell Canada decided it wanted to get out from under government regulators.
Every time it wanted a phone rate increase, the Canadian Radio and Television Commission in Ottawa wanted to know the profits from Northern Telecom and other businesses.
So management of the company set up Bell Canada Enterprises to hold its 52 percent interest in Northern Telecom and the other nonregulated businesses and left Bell Canada as a government-regulated telephone utility.
The holding company moved quickly into businesses outside telecommunications. In December of 1983 it bought 42 percent of TransCanada PipeLines for $694 million and later increased its holdings to 47 percent. TransCanada is Canada's largest pipeline company, with an extensive oil and gas pipeline system in Canada and the United States.
BCE has extensive holdings in the US through Northern Telecom, which has 15 plants employing 20,000 people in the US. Its American headquarters is in Nashville, Tenn. Worldwide, Northern Telecom employs 47,000 people at 47 plants in Canada, the US, the United Kingdom, Malaysia, and Brazil.
Bell paid more than $11 million for General Computer Systems Ltd., a British computer maintenance company, and it bought British American Banknote Inc. of Ottawa, which prints dollar bills, traveler's checks, bonds, and stock certificates -- for about $70 million.
Bell has also bought the Case-Hoyt Corporation, a printing company in Rochester, N.Y. The company does high-quality printing such as annual reports and catalogs.
BCE was active in real estate even before its Daon move. It bought an office building in downtown Toronto for an estimated $50 million. And it is building a major office complex in Toronto's financial district called BCE Place.
Analyst Jonathan Cunningham, of Nesbitt Thomson Bongard Inc. in Toronto, feels the company almost has an urge to grow. ``Bell's management seems to feel that if you stand still you're dead.''
Buying Daon Development was related to BCE's real esate ambitions, Mr. Cunningham says. ``What they were missing was powerful management in real estate, and they got that with Daon.''