BCE's Privatization Deal Falters, Will Its Collapse Alter Telecom Industry?

Two of BCE Inc.'s (BCE) biggest rivals are taking a hit on markets Wednesday, as the big news this morning that BCE Inc.'s privatization is in jeopardy gives investors pause for thought on the telecom industry's make up going forward.

Rogers Communications Inc. (RCI) is down 3% and Telus Corp. (TU) is down 4% heading into the afternoon session in Toronto, after BCE said its C$52-billion privatization deal is in jeopardy after independent adviser KPMG said the buyout put the company's solvency at risk. BCE was down 35%

Scotia Capital analyst John Henderson says if the deal does eventually collapse, it resets the competitive landscape in Canada for shareholders, with BCE Inc. looking leaner and meaner given its already significant housecleaning to improve synergies.

"BCE is going to be that much stronger," he says. "It will have a big impact on Rogers and Telus, but also the rest of the industry." Cogeco Inc. (CGECF.PK) and Quebecor Inc. (QBCAF.PK), two other names that Mr. Henderson says will be impacted were down 2%, and 9%, respectively.

In the case of Telus, the analyst says also possibly weighing on the stock, is speculation that Telus could may take a run at BCE if the privatization deal folds.