Ross Marowits, THE CANADIAN PRESS

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MONTREAL - Board members of Bell Canada parent BCE Inc. (TSX:BCE) will have to put Humpty Dumpty together again if - as now seems all but certain - the plan to privatize Canada's largest telecommunications enterprise collapses.

Iain Grant of technology consultancy SeaBoard Group said Monday that the directors who might have thought their jobs would end next week must now dig deep and look at running the business for the long term.

That requires a self-examination since the Ontario Teachers' Pension Plan initiated its takeover bid a year and a half ago because it saw room for improvement in Bell's performance.

"The company was not being as aggressive as it ought to be to drive value, and so if the board is going to retake the driver's seat I think they might want to take some lessons from what the Teachers taught them," Grant said in an interview.

Among the decisions the BCE directors will likely have to start tackling when they meet Tuesday is whether to pay shareholders the dividends that were suspended to help the deal be completed or invest $2.8 billion of cash reserves fattened from the sale of Telesat.

Investors are hoping the company will reinstate its 36.5-cent quarterly common share dividend and pay three dividend payments totalling $1.05.

"This is not going to be an easy meeting; the issues are real," Grant said.

Such moves could lead to lawsuits from unhappy shareholders. But a lawyer for a class action lawsuit over $588 million in unpaid dividends said the suit may not survive a collapse of the private equity takeover.

"I think it may change whether we'd be seeking anything at all," Tony Merchant of the Merchant Law Group said in an interview.

BCE officials declined to discuss the agenda of the meeting - or even confirm its date.

Canaccord Adams analyst David Lambert said BCE's $3-billion pension shortfall may force the company to increase its pension funding by up to $600 million per year as of 2009, resulting in a lower annual dividend of $1 per share going forward.

He said BCE's fallback position could be to acquire or combine Bell and Telus's (TSX:T) wireless services which account for 62 per cent of the Canadian market to save $1 billion a year in synergies.

The combination makes sense in the longer term, but regulatory hurdles prevent the merger creating "Belus" within the next two years, said UBS analyst Jeffrey Fan.

The private equity consortium got a head start on making changes when BCE's board agreed to install George Cope as CEO in July to replace Michael Sabia.

In a 100-day plan, Cope oversaw the layoff of 2,500 managers, reduced the layers of bureaucracy, signed a deal with rival Telus to share in the construction of an upgraded wireless network, and rebranded the company with a new marketing strategy.

Fan said he expects BCE will continue to invest in the network but not in a full blown fibre strategy, be competitive on pricing and promotion but not to the point of diminishing margins and cash flow, and focus on growing the dividend and returning excess capital to shareholders.

Industry observers had expected private equity would begin to sell various assets, including its 15 per cent stake in CTVglobemedia, to help pay off debt.

With the company remaining in public hands, however, there would be no need to offload these assets, said Grant.

"In terms of your main job as a director which is finding value for shareholders and keeping the company viable enough for bondholders I'm not sure that being a seller in today's market is in fact what you want to do if you don't have to."

BCE shares lost another $1.89 or 7.58 per cent to close at $23.06 Monday on the Toronto Stock Exchange, after briefly reaching a low not seen since at least 2001.