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Rogers Wireless Communications Inc. has bid $1.4-billion for Microcell Telecommunications Inc., in a bold move that would make it the largest wireless provider in the country but saddle it with even more debt.

The friendly deal to acquire the upstart Microcell, known for its youthful Fido brand, could also unleash a counterbid from rival Telus Corp., which has had its own hostile $1.1-billion offer on the books since May.

Last night Telus extended its $29-a-share bid for Microcell, but did not raise the price against Rogers Wireless' $35-per-share offer. Bob McFarlane, chief financial officer of Telus, said in an interview that his company's offer represented "full and fair value" and said the extension was made to keep the company's options open.

Telus first made its offer in May and later extended it until Sept. 20.

Mr. McFarlane insisted that Telus can afford to let Microcell's 1.2 million subscribers go to Rogers Wireless if the price isn't right, saying his company is well positioned for organic growth. Mobile services are the hottest part of today's telecom market, driving growth and profitability inside Telus and BCE Inc., owner of Bell Canada and Bell Mobility.

Analysts have not ruled out a higher bid coming from Telus or even Bell Mobility, but with no clear signals coming out of the companies themselves yesterday, investors priced Microcell shares a few pennies lower than the $35 value that the Rogers offer puts on them. Microcell shares climbed 6.4 per cent to $34.95.

Rogers Wireless closed down 13 cents to $38.22 and Rogers Communications Inc. closed down 35 cents to $25.40.

"I don't know if this is over yet," said Iain Grant of SeaBoard Group, a Montreal-based consultancy. Darren Entwistle, the president and chief executive officer of Telus, has shown he is not shy about spending money.

Mr. Entwistle paid an inflated $6.6-billion for Clearnet Communications Inc. in 2000. That deal, which turned out to be the best thing he ever did, may stick in his mind right now, Mr. Grant speculated.

Bell Mobility is currently the largest wireless carrier in the country with about 4.6 million customers. A company spokeswoman said it is too early to comment on Rogers Wireless's bid as Bell Mobility hasn't seen the full agreement.

If Rogers Wireless, a subsidiary of Rogers Communications Inc., completes its bid, it will not only knock out a low-cost competitor, it will bolster its customer base in urban centres across the country, with the greatest gains in Southern Ontario and Quebec. Rogers would also acquire certain tax-loss carry-forwards as part of the deal, estimated by analysts to be worth about $300-million.

Microcell customers, in return, would gain access to a more extensive network that reaches about 93 per cent of the population. They would also benefit from the fact that, unlike Telus and Microcell, both Rogers Wireless and Microcell run their networks using the same platform, called GSM.

Switching between two compatible networks means customers would not have to switch phones or numbers.

Rogers Wireless said it will finance the purchase with a $700-million bank credit facility, and a bridge loan of up to $900-million from Rogers Communications, for a total of $1.6-billion in new debt. As of the end of June, the company had reported debt of $2-billion. The proposed Microcell deal was announced just days after Rogers Communications signed a $1.8-billion deal to buy back a minority stake in Rogers Wireless from AT&T Wireless Services Inc.

On a conference call with investors and media, Nadir Mohamed, Rogers Wireless's president and CEO, declined to say whether the company will continue to offer the City Fido plan, which offers unlimited local calling for $45 a month.

The infrastructure of the two companies fits well together in another way. While Rogers Wireless has built out its network conservatively, adding new towers only when it nears capacity, Microcell has taken a "build it and they will come" approach, Mr. Grant said. Microcell's spectrum amounts to a significant chunk that would have taken Rogers Wireless another four years to build on its own, he said.

Brahm Eiley, president of Convergence Consulting Group Ltd. in Toronto, speculated that Rogers Wireless may try to extend its reach in Quebec by partnering with Vidéotron Ltée, the cable television unit of Quebecor Inc., and Cogeco Inc., which provides cable service in Quebec and Ontario.

Neither of the two cable companies has its own wireless service, but by reselling Rogers' service each could offer bundled services of cable, wireless and Internet, Mr. Eiley said.

Both Vidéotron and Cogeco plan to sell fixed-line residential service next year using Internet technology.

"This is about more artillery in Quebec as Rogers goes against Bell," Mr. Eiley said.

Heather Armstrong, a spokeswoman for Rogers, said it is too early for the company to consider announcing such a partnership.

Dominion Bond Rating Service Ltd. said yesterday that it has placed the ratings of Rogers Cable Inc. "under review with negative implications," saying the Microcell deal would add "substantial debt to the capital structure of Rogers Wireless and increase leverage at other Rogers subsidiaries in the short term."

A mobile marriage?

If the $1.4-billion deal goes through, Rogers Wireless Communications would boost its customer base by Microcell Telecom's 1.2 million.

The big four

Wireless voice and data customers

Bell Mobility: 1.6 million

Rogers Communications: 4.9 million

Telus: 3.6 million

Microcell Telecom: 1.2 million

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