Rogers and Shaw could be poster children for the old saying, “If at first you don’t succeed, try, try again.” It hasn’t been easy for the companies to advance their desire for Rogers to purchase Shaw for $16 billion. But they haven’t given up. Today, they again said Shaw will sell its Freedom Mobile wireless business to Videotron, a subsidiary of Quebecor.
This deal was first announced in June. The $2.2 billion sale to Quebecor includes all Freedom branded wireless and internet customers, as well as Freedom’s infrastructure, spectrum and retail locations. Shaw and Rogers also agreed to provide Quebecor with long-term backhaul and backbone transport services and roaming.
The parties believe/hope that divesting Freedom Mobile will meet the requirements of Canadian antitrust regulators who are concerned that a merger between Rogers and Shaw will lead to higher prices and fewer choices for Canadian consumers, particularly in the wireless sector.
Rogers is the largest wireless carrier in Canada with more than 10 million phone subscribers and about 2.25 million internet customers. And Freedom Mobile is Canada’s fourth largest mobile provider. It provides wireless services to more than 2 million customers in Ontario, Alberta and British Columbia.
Bell Mobility and Telus Mobility are the other top Canadian wireless operators.
Rogers and Shaw say the new combined business of Quebecor and Freedom Mobile will be well-positioned to launch a competitive national 5G offering, using Quebecor 3500 MHz holdings.
Brad Shaw, CEO of Shaw said, “Bringing Freedom Mobile and Quebecor together will expand Freedom’s scope to create a national provider with greater ability to invest and compete for the future growth and technology Canadians will need.”
But the transaction is conditional on clearance under the Competition Act and approval of the Minister of Innovation, Science and Industry. It is also conditional on the closing of the Rogers-Shaw merger.
And it’s not at all clear whether the antitrust regulators will ultimately approve these deals. As of early July, they still hadn't come to an agreement with the Canadian government about their proposed merger.
It hasn’t helped that in the midst of its merger hopes, Rogers experienced a mass outage of fixed and mobile services in July, which disrupted the lives of several million Canadians and prevented access to such services as 911 and emergency alerting.
At the time the Canadian Radio-television and Telecommunications Commission (CRTC) said, “Events of this magnitude paralyzing sectors of our country’s economy and jeopardizing the safety of millions of Canadians for several hours or days are simply unacceptable, and telecommunications service providers such as Rogers should have mitigation strategies in place to address such possibilities.”
If regulators approve everything, the Freedom Mobile/Quebecor and Rogers/Shaw deals would close around December 31, 2022.