Rogers, Shaw $26-billion merger opposed
Competition challenge boosts Quebecor’s chances
The federal competition commissioner’s opposition to the $26-billion merger of telecom giant Rogers Communications Inc. and Calgary-based Shaw Communications Inc., which became public over the weekend, could improve the chances of Quebecor Inc. getting Shaw’s wireless assets.
Those assets, which include spectrum, could also be acquired on better terms, whether that’s price or network-sharing arrangement, or both, industry watchers say.
“The Competition Bureau’s opposition to Rogers’ proposed remedy solutions puts Quebecor in an improved negotiating position,” Bank of Montreal telecom analyst Tim Casey said in a note to clients Sunday night.
“Rogers now has a weaker negotiation position with any potential remedy partner. This could include a lower price and/or more onerous operating conditions to close the deal, including a network sharing arrangement.”
Quebecor, which has openly challenged the national wireless dominance of Rogers, Telus Corp., and BCE Inc.’s Bell network and pledged to bring down wireless prices for consumers as it has done in its home province of Quebec, was not seen as a favoured buyer by Rogers, a company it has tangled with in court over network-sharing arrangements.
But industry watchers say pressure to get the deal done could bring the parties together or force other concessions by Rogers, with a $1.2-billion break fee in the mix.
Rogers and Shaw issued a joint statement Friday saying they remained committed to their merger — and selling Shaw’s Freedom Mobile wireless assets to get it done — even though the Commissioner of Competition is expected to file an application with the Competition Tribunal opposing their proposal.
The position taken by competition authorities has caused Rogers and Shaw to extend the “outside date” for closing their planned merger to July 31 from the initial June target.
Mark Goldberg, a telecommunications consultant, said the decision by the Commissioner of Competition to file an application opposing the merger of Rogers and Shaw doesn’t mean the deal is dead.
He pointed out that the Competition Bureau and the Competition Tribunal are “completely separate and have not always agreed on competition policy or interpretations,” adding that a number of significant applications brought forward by the bureau in recent years have been rejected by the tribunal or the courts.