Toronto-based Call-Net Enterprises Inc has signed a $48m strategic alliance with Sprint Corp, which means that all three of the major US long-distance carriers have formed tie-ups in Canada (CI No 2,227). The news follows the announcement at the beginning of the year that AT&T Co had bought a 20% stake in Canada’s Unitel consortium, and the announcement last year of a technology exchange between MCI Communications Corp and the Stentor group of telephone companies, which really put AT&T’s nose out of joint. Call-Net reckons that the new deal will make it the second largest carrier in Canada for the residential market, although until now it has not provided a residential service, concentrating instead on the small- and medium-sized business market. It will now also go after the large business market. In practical terms, the deal also gives Call-Net access to the Sprint name and its marketing programmes and advertising. Under the terms of the agreement, Call-Net is to issue 3.1m non-voting shares to Sprint, giving it a 25% stake in the company, and entitling it to three representatives on the nine person board. Although Call-Net simultaneously announced an equity placing to raise the equivalent of $80m , it says that Sprint will subscribe further cash to maintain its holding in the Canadian company at the 25% level.
