Microcell Reports Strong Third Quarter 2004 Results

Business Wire, Oct 27, 2004

In March 2004, we received a comment letter from the U.S. Securities and Exchange Commission ("SEC") in connection with its review of our registration statement filed on March 3, 2004 for the registration of our Class A Restricted Voting Shares ("Class A Shares") and Class B Non-Voting Shares ("Class B Shares") issuable upon exercise of the Warrants 2005 and the Warrants 2008. We responded to the SEC's March letter and filed an amended registration statement on June 29, 2004. We received a letter to our response on August 9, 2004 and we responded to the SEC on October 22, 2004. SEC staff, among other things, has questioned whether our Fido brand name has an indefinite useful life and, consequently, whether it should be subject to periodic amortization. We believe such brand name should be considered to have an indefinite life. However, were such periodic amortization to be applied, assuming hypothetically a useful life of ten years, this would decrease the Company's net income by $0.7 million and decrease basic and diluted earnings per share by $0.02 for the three-month period ended September 30, 2004 and increase the Company's net loss by $2.1 million and increase basic and diluted loss per share by $0.11 for the nine-month period ended September 30, 2004. There would have no effect on cash flows for the three- and nine-month periods ended September 30, 2004. In addition, opening deficit would be increased by $1.9 million.

Corporate developments

- On September 20, 2004, we announced jointly with Rogers Wireless
  Communications Inc. and Rogers Commmunications Inc. (collectively,
  "Rogers") the signing of a support agreement under which Rogers
  agreed to make offers to purchase our Class A Shares, Class B
  Shares for $35.00 per share, and our Warrants 2005 for $15.79 and
  Warrants 2008 for $15.01. The members of our board of directors
  have agreed that the Rogers offers are fair to our shareholders and
  in the best interests of Microcell. The board of directors of
  Microcell recommended to our shareholders to support the Rogers
  offers. The board of directors received opinions from its financial
  advisors, JP Morgan Securities Inc. and Rothschild, that the Rogers
  offers are fair, from a financial point of view, to our
  shareholders. The offers, which are subject to receipt of certain
  regulatory approvals and other customary conditions, are open for
  acceptance until 5:00 p.m., Eastern Standard Time, on November 5,
  2004. The Directors' Circular relating to the Rogers offers has
  been sent to our securityholders on September 30,2004;

- Subsequent to the end of the third quarter on October 12, 2004,
  TELUS Corporation announced that it would not extend its offers to
  purchase all of the issued and outstanding publicly traded shares
  and warrants of Microcell initially made in May 2004;

- Microcell was added to the S&P/TSX Composite Index after the close
  of business on September 17, 2004. A market-weighted index of the
  largest Canadian incorporated public companies traded on the
  Toronto Stock Exchange, the S&P/TSX Composite Index is used to
  measure the price performance of the broad Canadian equity market;

- The Canadian Radio-television and Telecommunications Commission
  (the "CRTC") made a ruling under Decision 2004-46 to expand local
  interconnection regions and to rationalize the compensation rules
  between local exchange carriers. The ruling will enable Competitive
  Local Exchange Carriers ("CLECs") to deploy fewer network points of
  interconnection, to further consolidate trunking facilities, and to
  offer local number portability across much wider areas. Microcell
  is the sole wireless carrier with CLEC status in Canada, and the
  only Canadian wireless operator currently offering number
  portability;

- Industry Canada announced a decision rescinding the mobile spectrum
  cap policy, previously set at 55 MHz, which limited the amount of
  radio spectrum that cellular companies could hold;

- We signed a multi-year wholesale network services agreement with
  PRIMUS Telecommunications Canada Inc. ("PRIMUS"), the largest
  alternative communications provider in Canada, providing PRIMUS
  with access to our national PCS network as a Mobile Virtual Network
  Operator. The services are expected to be launched in fall 2004 by
  PRIMUS;

- On September 7, 2004, we launched a new $70 per month airtime
  package that allows for unlimited local calling, no long-distance
  charges on incoming calls, and 850 minutes of outgoing long
  distance within Canada and to the United States. We also introduced
  a new free interactive on-line service called Fido(R) Showdown,
  which provides customers with a tool for comparing their current
  airtime package with Fido's line-up of services;

- During the quarter, we expanded our device portfolio with the
  introduction of five new wireless devices, including the Siemens
  CF62 and C65 handsets, the Sony Ericsson T610 handset, the Nokia
  3100 handset, and the Nokia N-Gage(TM) QD mobile game deck.