Ottawa approves the merger of Rogers and Shaw and the side deal agreed last year between Quebecor and the two Canadian telecommunications giants by which the Quebec conglomerate acquires Shaw’s wireless subsidiary, Freedom Mobile.
The Canadian Minister of Innovation, Science and Industry, François-Philippe Champagne, however, approves this transfer of wireless licenses from Shaw to Videotron, owned by Quebecor, by attaching conditions and providing for financial penalties that may reach hundreds of millions if these conditions are not met.
“I have obtained unprecedented and legally binding commitments from Rogers and Videotron,” the minister said Friday.
François-Philippe Champagne specifies that the transfer of licenses aims to ensure that Videotron can operate in the long term as the fourth national player, compete with the three big companies, and lead to lower prices across the country.
With Freedom, Videotron’s parent company can expand its reach in Ontario and Western Canada and become the fourth largest wireless player in the country.
In particular, the Minister expects Videotron to offer packages comparable to those currently in effect in Quebec, and to offer options at least 20% cheaper than those offered by the big players (Rogers, BCE and Telus).
In addition, Videotron is not permitted to transfer Freedom Mobile’s licenses for a period of 10 years, will be required to expand its 5G wireless network into Freedom Mobile’s pre-existing territory within two years, and extend mobile service to Manitoba through a Mobile Virtual Network Operator (MVNO) agreement or other means in addition to offering plans comparable to those it offers in Quebec.
Ottawa also expects Videotron to increase the data allocated to Freedom Mobile customers by 10% as a short-term bonus, while investing to lower prices overall.
Roger is also subject to commitments requiring it to make “major” investments to improve connectivity in the next five years (creation of 3,000 jobs in the west of the country, expansion of broadband internet access, etc.).
This approval from Ottawa was the final hurdle in completing the Rogers takeover of Shaw.
The federal green light comes on D-Day for this mega-deal valued at $26 billion including debt. The proposed combination of Rogers and Shaw was announced exactly two years ago. Postponed several times, the deadline for proposed transactions had recently been extended to March 31.
Due to competition concerns from regulators, Rogers and Shaw agreed last year to divest Freedom Mobile to Quebecor for $3 billion.
The Competition Bureau opposed the merger of Rogers and Shaw, but the Competition Tribunal ruled in late December that the transaction is unlikely to significantly prevent or lessen competition. The Federal Court of Appeal later dismissed the Competition Bureau’s challenge.
The Radio-television and Telecommunications Commission (CRTC) had given the green light to the acquisition of Shaw’s broadcasting services by Rogers in March last year.
