Premier asks SaskTel to respond to report that says profits at risk

An independent review has foundSaskTel at risk of losing net income following the proposed sale of MTS to Bell.

"The report provides an excellent high level assessment of the potential impacts this transaction may have onSaskTel," said Ron Styles,SaskTelPresident and CEO.

"It is also worth noting that some of the risks in the report are not new to the corporation; however, those risks may increase due to this acquisition," Styles said.

The review conducted by Mark H. Goldberg& Associates Inc. was released Monday morning.

It found "there is a risk that SaskTel's net income will be unable to support the level of dividends that have been returned to the province in recent years."

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Several factors led to that conclusion according to the analysis, including:

• The possibility that reduced numbers of facilities-based carriers in Manitoba could lead Federal government policy makers to create incentives for additional wireless competition to develop through lower costs for new entrant spectrum or other measures.Such measures could reduce the costs for competitors and increase costs or restrict capacity expansion for SaskTel.
• The further concentration of the market in Manitoba could see removal of the four carriers objective by the federal government, possibly enabling Shaw to sell its acquired WIND Mobile business or partner with other telecoms. If Shaw launches a competitive mobile service, there is a risk that SaskTel's consumer communications services will face significant pressure from a second bundled service package in Saskatchewan.
• There is a risk the establishment of Winnipeg as a western headquarters for Bell could lead to an erosion of SaskTel's share of the Saskatchewan business market.
• There is a risk that Rogers will look to replace its lost partnership with MTS by developing retail partnerships with cable companies in Manitoba and Saskatchewan. This would improve the competitive positions of Rogers, as well as local cable companies.

Premier says any SaskTel salewould go to public vote

Premier Brad Wall said Monday that the government has asked SaskTel for a response to the risk assessment. Specifically, actions it will take to address the potential weak spots outlined in the risk analysis.

Wall said if there was a takeover offer it would go to apublic vote, either in a referendum or election.

"As I've said in the past,if there was ever to be someoffer that came to SaskTel that for example preserved jobs, that provided a good return, that ensured better coverage across Saskatchewan, I would not have the authority based on our campaign promise to say yes to that. Neither would I perhaps have the authorityto just say no without checking with Saskatchewan people," Wall said.

"If SaskTel is healthy obviously that's good for the economy and quite franklyit's also good for the governmentfinances," Wall said.

Bell's takeover will add pressure to SaskTel

"More pressure on the bottom line our net income could probably drop a little bit because of this and it's going to continue to put pressure on us to build. We need to continue to up our game to improve our networks to provide more products and services," Styles said.

The crown corporation has moved with the times according to its president.

"Over 50 per cent of our revenues come from new products and services versus six years ago," Styles said."That tells you how much change is rippling through the corporation. So my staff understand that. They've adapted to it, they've adjusted to it as our financial numbers are able to show."

SaskTel says the risks analysed in this report will be part of annual strategic planning.

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