Telus looking into GSM

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Breaking News from The Globe and Mail

Telus in talks with Bell on GSM pact

Tuesday, September 09, 2008

Telus Corp. says it is still investigating the pros and cons of a cost-sharing alliance with BCE Inc.’s Bell Canada that would see the two communications giants convert their networks to a more popular wireless standard.

Robert McFarlane, chief financial officer and executive vice president of Telus, said the company is in the “advanced stages” of its investigation and will likely make a decision before the end of the year.

The network overlay would be an interim step on the way to preparing both Telus and Bell for the next wave of wireless technology, called 4G for “fourth generation,” which should be in the market by 2012.

About 75 per cent of cell phones are made for the GSM standard, used by rival Rogers Communications Inc., which makes the devices less expensive than the alternative CDMA-based devices that Telus sells. GSM networks also attract the more popular devices, such as Apple Inc.’s iPhone.

Mr. McFarlane said Telus was unlikely to benefit from significant cost savings for several years, however. That’s because the more powerful, 3G or third-generation smart phones just coming to GSM networks today do not offer the same cost advantage.

Speaking at BMO Nesbitt Burns Inc.’s media and telecom conference in Toronto, Mr. McFarlane also said that Bell Canada faces its own corporate strategies and constraints which complicate the decision-making process.

Genuity Capital Markets’ Dvai Ghose, who has been advocating all year that Bell and Telus work together to upgrade their network from the CDMA standard to the GSM standard, estimates the conversion would cost each partner as little as $400-million.

Greg MacDonald of National Bank Financial Inc. puts the probability of a network overlay alliance between Bell and Telus at “greater than 50 per cent and growing.”

Telus shares were trading up 35 cents at $40.26 in afternoon trading on the Toronto Stock Exchange.


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