Tribunal hears of Shaw’s challenges
Free cash flow associated with Shaw Communication Inc.’s wireless business has been “consistently negative” since the telecom company acquired Wind Mobile in 2016, its chief financial officer told a tribunal convened to determine the fate of its merger with Rogers Communication Inc.
Testifying before the three-member tribunal on Tuesday, Shaw CFO Trevor English, in a witness statement shown during the hearing, said the company uses this measure to assess its ability to repay debt and pay dividends to shareholders.
On Monday, English told the tribunal that, to date, Shaw has not been able to realize a reasonable return on its $4.5 billion investment in Wind Mobile, the previous branding of its Freedom Mobile business.
“Free cash flows is very important to the company, however, we have not generated any free cash flow from our wireless operations,” English said later in the day. The executive added that Shaw has invested roughly $5.55 billion in the wireless business, with the cumulative investment still net negative by about $3.3 billion.
Shaw is currently in the process of selling Freedom Mobile to Quebecor Inc.’s Vidéotron for $2.85 billion, a potential divestment of assets that Rogers hopes would offset concerns about reduced competition from their merger.
Last week, an expert hired by the Competition Bureau, which is attempting to block the merger, said divesting Freedom Mobile would not mitigate the potential lessening of competition in mobile services in Canada as a result of the merger.
The expert witness, Michael Davies, told the tribunal that Shaw’s ability to compete strongly and evolve its network came to “more or less a dead halt” after its merger with Rogers was announced in March 2021. Shaw was ready to deploy 5G but due to the announcement, Shaw could not participate in the spectrum auction and stopped its migration to 5G, he added.
Rod Davies, who oversees TD Securities’ investment banking efforts in the media and telecom industry, also took the stand on Tuesday.