Deal should cinch planned merger and launches a fourth national carrier, says Rogers CEO
Canadian mobile network operators Rogers and Shaw Communications announced on Sunday a plan to sell Shaw’s Freedom Mobile subsidiary to rival Quebecor for 2.85 billion Canadian dollars, or US$2.19 billion. The move paves the way for Rogers and Shaw’s proposed merger and will help create a fourth national wireless carrier for Canada, said Rogers’ President and CEO, Tony Staffieri.
“Our agreement with Quebecor to divest Freedom is a critical step towards completing our proposed merger with Shaw. We strongly believe the divestiture will meet the Government of Canada’s objective of a strong and sustainable fourth wireless services provider,” said Staffieri.
Final approval for the deal ultimately rests with the Canadian Competition Bureau and the Minister of Innovation, Science and Industry (ISED). Rogers announced plans to buy Shaw for $16 billion more than a year ago. Rogers, along with Bell and Telus, dominates the Canadian telecom market. The high market concentration of Canada’s three major carriers has long vexed Canadian regulators, who have agitated for more market competition to lower rates and improve access for Canadian customers. The deal with Shaw, threatened to shake up both telecom and cable businesses in Canada.
Canadian regulators said not so fast. The Commissioner of Competition objected to Rogers and Shaw’s merger and its impact on the competitive landscape of Canadian telecom. The two companies objected, underscoring plans to divest Freedom Wireless. Rogers and Shaw promised more than $2 billion in 5G network expansions, a new public fund to help connect rural and indigenous communities, promises of new jobs and infrastructure money for government projects and more. But earlier this month, Rogers and Shaw announced plans to pause the merger process until a settlement could be reached.
Quebecor, which has been advocating for change to the Canadian telecom landscape, stands a lot to gain from this deal. Quebecor is a Quebec-based media and communications business with deep roots in newspapers and commercial publishing. The company’s millennial acquisition of Videotron catapulted it into the fledgling digital publishing and video markets.
Videotron is also one of several smaller 4G LTE network operators in Canada. Videotron enjoys particularly strong home field advantage compared to other minor players in its native Quebec; it has been gradually rolling out 5G service since December, 2020. This deal puts Videotron on a much better track to provide service to all Canadians, said the company’s president.
Pierre Karl Péladeau, Quebecor CEO and president, called the deal “a turning point for the Canadian wireless market.” He said that combining Videotron’s current footprint with Freedom Wireless’ extensive network in Ontario and Western Canada will deliver “concrete benefits for all Canadians.”
“Quebecor and Rogers have always had a strong relationship. This trilateral agreement with Shaw is yet another example,” said Péladeau.
Under the terms of the agreement, Quebecor gets all of Freedom Mobile’s infrastructure, spectrum, and retail locations. The deal also includes long-term roaming and backhaul and backbone service agreements between the carriers.
