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    Repairs at Bell have just begun  
    Financial Post  

Jay Bryan

    September 22, 2007  

The knives have been out for Michael Sabia almost since he took the reins at BCE, the telecommunications giant that runs Bell Canada. Some of the criticism was doubtless unfair, but one thing seems certain: even if Bell is a better company than it was when Sabia took over, it has a long way to go.
It's hard to blame Sabia for pulling the ripcord yesterday on a multimillion-dollar golden parachute. After all, his sale of the company to a private equity group finally gives BCE shareholders a decent return on their long-stagnant shares. Why hang around for more abuse?
By many accounts, he did a decent job after inheriting a fixer-up company whose organization chart looked like something cobbled together by an eccentric handyman.

here was Teleglobe, a long-distance carrier bought at a premium price, rusting on blocks in the front yard. There was a slapped-together collection of newspaper and television assets, Bell Globemedia, tacked on to the back of what was supposed to be a telephone company.
Worse, a U.S. company held a heavy mortgage on Bell, incurred in order to buy some of this stuff. Most of these problems are now history.
Fixing the damage from what telecommunications analyst Iain Grant calls Bell's "dalliance with convergence" was not a small accomplishment. "The fundamentals of the company are now sound, and that's the architecture that Sabia built," Grant says.
Still, it's possible that the new private-equity bosses at BCE gave Sabia a hint that his talents no longer quite fit the needs of a company that, for all the progress it made during his watch, is hardly agile as a cat.
While he did a good job of patching the self-inflicted wounds, there wasn't a lot of evidence that Sabia could inject
vision and adrenaline into a slow-moving organization that often acts more like a government agency than a business.
One example might bring this into focus.
In the cellular business, Bell has some of the best real estate in Canada. It's the dominant carrier in Quebec and Ontario, the country's most populous region. So how come, in a business with only three competitors, it's No. 3 after Telus and Rogers?
A close friend of mine who's a big user of his cellphone has an inkling. He was shopping for a new cellular carrier recently, so he analyzed his bills for the previous year and decided to see who would offer the best deal on the exact combination of services he uses.
The first call was to Telus, where a sales rep listened to what he wanted, put him on hold for a few minutes, then offered a deal custom-fitted to his needs. There was the right amount of text messaging, daytime calling, and evening and weekend minutes, all for a surprisingly good price.
Then it was Rogers, where an equally helpful salesperson analyzed the request and took a couple of minutes to see what he could do. His friendly advice: the Telus deal was too good to match, and my friend should grab it while it was still available.
Then a call to Bell, where the process suddenly lurched back in time a couple of decades.

There was no effort to analyze or respond to his needs, just a robotic repetition of sales pitches for existing packages. The best he could get was a package that cost 67 per cent more than Telus for a group of services that didn't quite match what he wanted.
Guess which company got the business?
This is only one anecdote, but it is suggestive. If Bell's future depends on developing an entrepreneurial culture and responding to what customers want instead of telling them what they can have, it has work to do. And that's exactly why Bell's purchase by new owners and its impending choice of a new boss are probably good things.
Having a tough new owner and a change in the executive suite sends a powerful signal, believes Karl Moore, a specialist in business strategy at McGill University. What's the signal? "You'd better get with the program or you're out the door."
That's pretty brutal, but maybe it's what Bell needs, especially among managers.
After all, it's not as if the world is standing still while Bell fixes its problems. Even as its cellular business stagnates, Grant points out, Bell's basic home-telephone business faces "a huge threat" from competitors like Vidéotron, Quebec's biggest cable company.
Grant estimates that Vidéotron has stolen half a million Bell customers after only two years of competing in the telephone business.
To stop such losses, Grant believes that Bell will need to spend billions on new technology, improving services and cutting costs even as it reinvigorates its corporate culture. Now that there's a complete change at the top, maybe this will actually happen.


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