Rogers Communications of Toronto has agreed to pay C$1.8bn (US$1.4bn) for AT&T Wireless Services' 34 per cent stake in Rogers Wireless Communications, which is a joint venture between the two companies, and is Canada's second-biggest mobile phone operator.

Rogers, which already owns 56 per cent of Rogers Wireless, will pay C$36.37 a share, well above the C$31 a share it offered and AT&T rejected earlier this year. The companies said there was an agreement in principle, but cautioned there were no assurances of a final deal.

Some analysts see the deal clearing the way for further consolidation in Canada's mobile phone market. Rogers said earlier this month that it was considering a bid for Microcell Communications of Montreal, which is currently trying to fend off a proposed takeover by Telus Corporation of Vancouver.

AT&T said in April that it planned to dispose of its stake in the Canadian joint venture as part of a review of its businesses following its acquisition by Cingular Wireless.

Brian Sharwood, analyst at Seaboard, a Toronto consultancy, said that the departure of four directors representing AT&T from Rogers Wireless's board would make it easier for Rogers to bid for Microcell.

" Rogers is short of capacity, and Microcell has lots of capacity," Mr Sharwood said, adding that Rogers and Microcell also had a more similar corporate culture than Telus and Microcell.

Taking over Microcell's well-known Fido brand could also give Rogers another arrow in its bow for a looming battle against Virgin Mobile, which is expected to enter the Canadian mobile phone market next year in partnership with Bell Mobility, a subsidiary of Bell Canada Enterprises, the country's biggest telecoms company. Seaboard estimates that Rogers has a 29.4 per cent share of the mobile phone market, compared with 34.4 per cent for Bell, 27.1 per cent for Telus and Microcell's 9 per cent.

Other analysts, however, are sceptical that Rogers will go ahead with a bid for Microcell. They cite the federal government's decision last month to lift the "spectrum cap", or the limit on the amount of air space that wireless operators can use.