GSM eyes northern borders

The nationwide consolidation of GSM operators could cross borders. Speculation surrounding Canadian GSM operator Microcell suggests that Voice-Stream, which recently acquired Omnipoint Communications and Aerial Communications, could become a major investor in the carrier.

Microcell is one of two PCS start-ups in Canada; Clearnet is the other. "There are constant rumors about Microcell and Clearnet being acquisition targets," said Ian Angus, president of Angus Telemanagement Group. While many Clearnet rumors involve other Canadian CDMA operators, Microcell is the only GSM player in Canada. "That takes you to the U.S.," Angus said.

The recent spate of Microcell rumors stems from a troubled investor, Call Net, which had to offload its 11% stake in Microcell. Some analysts speculated that Voice-Stream, in a move continuing its U.S. buying spree, might snatch that 11% and more.

"The strategy of the larger players is they really view it as a North American market, not a U.S. market," said Rob Norcross, vice president for Mercer Management Consulting.

While the consolidation of GSM operators is positive for that technology, the recent MCI WorldCom/Sprint combination eliminates a "natural home" for a nationwide GSM footprint, Norcross said. MCI WorldCom, which doesn't have wireless play without Sprint, would have been a logical buyer of GSM networks.

Microcell would welcome a VoiceStream investment more for the equity than for improved roaming capabilities. Although Microcell is financially "holding its own very well," additional equity would help, said Johanne Lemay, co-president of Lemay-Yates Associates. Roaming is fairly painless among GSM operators due to strides made by the GSM Alliance.