Tuesday, March 21, 2023

Rogers inks $2.85 billion deal to sell Freedom Mobile to Qubecore

Rogers Communications Inc. will sell Freedom Mobile Inc. to Quebecer Inc. for $2.85 billion in a deal it hopes will appease federal regulators opposing the proposed acquisition of Shaw Communications Inc.

The cash-free, debt-free deal was announced late Friday and will buy all of Freedom’s branded wireless and Internet customers, as well as its infrastructure, spectrum and retail locations.

The parties had been working to reach a deal for weeks, while the Competition Bureau wanted to block the $26-billion Shaw merger over concerns that it would substantially stifle or reduce competition in wireless services.

Rogers, Shaw and Quebecer argued that their agreement would effectively address those concerns and keep a “strong and durable” fourth wireless carrier alive in Canada as the deal would expand Quebecer’s wireless operations nationally.

“This agreement between proven cable and wireless companies will ensure the continuation of a highly competitive market with strong future investments in Canada’s world-class networks,” Rogers President and CEO Tony Stafieri said in a release.

Shaw’s CEO and Executive Chairman Brad Shaw called the deal “an important milestone in our bold and transformational journey to engage with Rogers.”

Meanwhile, Pierre Carl Peldeau, president and chief executive of Quebec, called the agreement “a turning point for the Canadian wireless market.”

“We have always believed that only a player with a proven track record for healthy competition in wireless services can successfully enter the market,” he said in the same release as Stafieri.

“This is a value-added transaction for all consumers and the Canadian economy.”

Quebec defeated several other parties to reach a deal.

Globaliv Capital signed a network and spectrum sharing agreement with Telus Corp in May to boost its bid to buy Freedom. Formerly known as Wind Mobile, Freedom was founded in 2008 by Anthony Lacavera, founder and president of Globaliv.

Lacavera said in an email to The Canadian Press that Quebecer’s offer was $900 million less than Globalive’s bid.

He claimed that Rogers did not accept his bid because Globalive would be a long-term competitor, while Quebec’s Videotron, a regional cable company that could not afford retaliation from the Big Three – Rogers, Telus Corp and BCE Inc.

“Rogers is afraid to compete,” Lacavera said. “They have bought this deal into a succession of billionaire-friendly and friendly parties that will not compete with them[and]are willing to sell Freedom back at any time.”

EastLink, a Halifax-based telecommunications company, and New Brunswick-based rural Internet provider ExploreNet Communications Inc. was also said to be interested in independence.

The Rogers-Shaw transaction, announced in March 2021, has already received approval from shareholders of Shaw and the Canadian Radio-television and Telecommunications Commission.

However, it is subject to review by the Bureau of Competition and the Minister of Innovation, Science and Economic Development.

The Competition Bureau detailed its opposition to Rogers’s proposed acquisition of Shaw in a new submission to the Competition Tribunal on Friday.

In a legal filing released after the market closed, the agency challenged Rogers’ claims about potential, saying that acquiring its closest competitor is competitive and serves consumers through high prices, low-quality services and lost innovation. will do harm.

It also argued that Shaw’s proposed sale of Freedom “is not an effective remedy” as it would not replace increased competition Shaw Mobile would distribute in Alberta and British Columbia and would make Freedom a “later weak competitor”. Gone.

The bureau said that Rogers’ claims that the deal is insufficient to address anti-competitive effects and are “speculative, unproven and unlikely to be achieved … or grossly exaggerated.” It states that said abilities are “based on unrealistic assumptions.” and erroneous methods.”

The Competition Bureau also said that a subsequent increase in prices would result in an influx of money from low- and middle-income groups to shareholders, including ultrarich members of family-owned groups of companies.

The Competition Tribunal’s five-week hearing on the matter is scheduled to begin from the week of November 7, followed by written and oral arguments.

–With files from John Couture in Edmonton

This report by The Canadian Press was first published on June 17, 2022.

Companies in this story: (TSX:RCI.B, TSX:SJR.B, TSX:T, TSX:BCE)

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