Rogers-Shaw, Freedom-Quebecor deals finally closed

After a two-year struggle, Rogers Communications Inc. has successfully completed its takeover of Shaw Communications Inc. The deal closed Monday, the same day that Shaw divested itself of Freedom Mobile, which it sold to Quebecor Inc.’s Videotron subsidiary. “Rogers and Shaw have been connecting Canadians for more than 50 years, and we’re thrilled to come together as one company to build on a shared legacy of investment, innovation and entrepreneurship,” chairman Edward Rogers said in a statement. “As a proud Canadian company, we’re committed to investing for Canada and Canadians for decades to come.” “For more than 50 years, Shaw has been a fixture in millions of homes and thousands of communities across Canada,” Brad Shaw, outgoing CEO of the eponymous firm said in the same news release. “Today, we close one chapter of our story and we open another that, together with Rogers, will see more Canadians have access to higher-quality networks and expanded connectivity to rural, remote and indigenous communities.” Shaw and his CFO Trevor English will be joining the Rogers board of directors, effective Apr. 4. The news release also reiterated the terms and conditions laid down by Innovation, Science and Industry Minister François-Philippe Champagne on Friday when he approved the transfer of Shaw spectrum to Videotron. Those dictates were also mentioned in the news release about Freedom Mobile. “We are very pleased to be closing the acquisition of Freedom Mobile today, bringing its Canadian footprint as well as the expertise and experience of its employees into our fold,” Quebecor CEO Pierre Karl Péladeau was quoted as saying in his release. “The alliance of Freedom and Videotron will permanently transform Canada’s wireless market for the benefit of consumers and create a new competitive environment that delivers innovative products and services at better prices.” Later on he added, “Finally, we also want to thank Shaw and Rogers for their ready cooperation throughout this process, which is so important to Canada’s economic future.” Quebecor also announced that Videotron and Rogers had resolved a commercial dispute over a shared 4G/LTE network in Quebec and Ottawa. Market reaction was bullish. Aravinda Galappatthige of Concord Genuity issued a note Monday that stated the minister’s conditions on the parties was “quite achievable.” He predicted that Rogers would continue with wireless-wireline bundles with the added benefit of an improved wireless network. (Rogers has a 5G network, Shaw did not.) Galappatthige expects Quebecor to proceed with a bundling strategy moving forward. “The key question for us is how aggressively Videotron positions itself at the outset–would it be aimed at a sharp upswing in net adds share, or one that is more surgical and develops over time,” he wrote. Ontario features a lot of low-hanging fruit for the new fourth national wireless player to go after, the analyst added. Galappatthige listed Rogers as a Buy while Quebecor is rated as a Hold. Drew McReynolds is an analyst with RBC Dominion Securities, which advised Quebecor during the process. He, too, liked what he saw. “We genuinely believe the government ‘got it right’,” he wrote in a Sunday note. He repeated his cautious outlook on the Canadian telecom sector for this year and looked ahead to the next merger candidates. He predicted a robust fight for market share from incumbents BCE Inc. and Telus Corp. “We expect Telus and BCE to each face increased competition from a stronger Rogers-Shaw as well as a potentially more disruptive Quebecor,” McReynolds forecast. “While such an increase in competition will warrant investor scrutiny, we believe the Canadian telcos will lean on a number of strengths that include bundling, accelerated FTTH deployment, wireless differentiation, the tactical use of multiple wireless brands, and a potential execution advantage as Rogers works through a relatively sizeable and complex multi-year integration.” –Reporting by Paul Park at ppark@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Rogers-Shaw, Freedom-Quebecor deals finally closed

News | April 3, 2023

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