The telecom sector started the day with two big news: Mitel’s IPO and Qwest’s acquisition by CenturyTel. Unfortunately, the IPO flopped and I think the CenturyTel-Qwest merger is doomed in the long term.
Ottawa-based Mitel was hoping for a $18-20 public offering per share, but investors got ’em for $14 apiece. Yikes. The company wanted a cash infusion to pay off some debts as well as leverage for acquisitions to fend off top-tier competitors like Avaya and Cisco. But this Canadian company has reported net losses every year since inception in 2001 except 2008 and postponed its first IPO effort in 2006 because of the Inter-Tel acquisition. Just something about Canadian telecom companies that make investors queasy?
A friend’s first reaction this morning upon learning about the CenturyTel-Qwest merger was “WTF?” Then he alluded to the infamous marriage of MCI and Worldcom. “Two wrongs don’t make a right” was another friend’s take on the merger (he works in the telecom industry). An all-stock swap between these two major landline players — “all-stock” and “landline” worry me already. Landline subscribers are on the decline in recent years as people move to mobile and VoIP products. The new merged company will have to do something drastic and exceptional in order to keep up with competitors… Best luck to them.
Related articles by Zemanta
- Qwest to be sold to CenturyTel (bizjournals.com)
- CenturyTel makes $22.4 bid for Qwest (news.cnet.com)
- Qwest: A Scrappy, Bold Company That Never Quite Lived Up To Its Ambitions (huffingtonpost.com)