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BCE regulatory hearing postponed until March

26/02/08

TORONTO (Reuters) - A regulatory hearing into the C$34.8-billion ($35.5-billion) buyout of BCE Inc by private-equity investors has been postponed until next month while broadcast watchdogs review the deal.

Among the concerns of the Canadian Radio-Television and Telecommunications Commission is the makeup of the board of directors at BCE, Canada's biggest telecom company.

A BCE spokesman said the hearings have been delayed until March 11.

The regulator wants to ensure BCE's broadcasting assets, such as its ExpressVu satellite TV unit, remain under Canadian control.

The buyout consortium is led by the Ontario Teachers' Pension Plan, but also includes U.S. private-equity groups Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity.

In his opening statement to the CRTC on Monday, Teachers' Chief Executive Jim Leech said the U.S. partners weren't sought out "in order to cede control to non-Canadians" but because of their past experience in telecom investments.

As well, Leech has said a majority of the equity in BCE will be held by Canadians once it is privatized and that the company will be supervised by a board "with Canadians in control."

The buyout group has offered C$42.75 per share for BCE, but the stock has languished well below that price as investors fret the deal could be delayed, repriced or scrapped altogether, given the recent turbulence in credit markets.

BCE shares were up 48 Canadian cents, at C$36.98, on the Toronto Stock Exchange.

Earlier this month, BCE said it expected the deal to close early in the second quarter of 2008.

Like competitors Rogers Communications Inc and Telus Corp , BCE has been preparing for stiffer competition in the lucrative wireless market ahead of a spectrum auction slated for late May.

The federal government has set aside some of the spectrum -- essentially airwaves over which wireless services are delivered -- exclusively for bidding by potential new entrants.

Quebecor Inc and Manitoba Telecom Services Inc have both expressed interest in bidding.

($1=$0.98 Canadian)

(Reporting by Wojtek Dabrowski; Editing by Bernadette Baum)

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