Proposed Shaw-Rogers Merger | Ottawa imposes conditions on Quebecor accepting

The proposed merger between Rogers and Shaw — which will have major ramifications outside of Quebec — is still alive as Quebecor meets the Trudeau government’s demands for a side deal struck last June between the Quebec conglomerate and the two Canadian telecommunications giants.

Posted at 6:11 p.m
Updated at 9:01 p.m

Julien Arsenault

Julien Arsenault
Press

A few hours after the departure of the Federal Minister for Innovation, Science and Industry François-Philippe Champagne, Videotron’s parent company responded favorably to the requests. It thus commits to maintaining the Shaw (Freedom Mobile) telephone network for at least ten years and also to reduce the prices of mobile telephone services outside of Quebec.

“We intend to accept the set conditions […] and integrate them into the new version already negotiated in the Rogers-Shaw / Quebecor-Freedom Mobile transaction, Quebecor President and CEO Pierre Karl Péladeau said in a press release. These are part of the same business philosophy crowned with success in Quebec. »

Rogers and Shaw’s presence in Quebec is limited. In the rest of the country, the proposed merger is raising concerns because it involves the consolidation of two major players in the telecommunications industry.

Hoping to assuage the Trudeau government’s competition concerns, Rogers and Shaw agreed to sell Freedom Mobile to Quebecor for about $2.9 billion. The transaction allowed the Quebec company to break into the wireless sector and become the fourth largest player in the country.

With conditions

Mr. Champagne came to add a grain of salt on Tuesday at the end of the afternoon.

In Ottawa, the minister warned that he would not allow Quebecor to acquire Freedom Mobile without a commitment from the Quebec conglomerate to keep its new wireless frequencies for “at least 10 years.” In Ontario and Western Canada, prices for wireless services must be comparable to those offered by Videotron in Quebec. In the Quebec market, prices are on average “20% lower” than in the rest of the country, Minister Champagne noted.

“I’m saying these are my expectations and they (Rogers, Shaw and Quebecor) are better than meeting them,” he said. Of course there are other elements that we will look at, but those are the two main things. »

At the same time, the minister officially blocked the transfer of wireless licenses from Shaw to Rogers, a commitment that was made earlier this year. That’s what prompted the two companies to strike a deal with Quebecor to get rid of Freedom Mobile.

Planning a trip?

The minister’s departure comes as a new mediation meeting between Rogers, Shaw and the Competition Authority is set to begin on Thursday. The federal body, which must rule on the transaction estimated at 26 billion, is challenging the merger. They believe the transaction would hurt consumers with higher prices, lower quality of service and lost innovation.

However, according to Globe and MailRogers is said to have already made suggestions on how to try to find common ground during mediation. The board will advise the Trudeau government, which will have the final say on the proposed merger.

Mr. Champagne does not necessarily appear to be opposed to Shaw Rogers’ takeover, said analyst Jérôme Dubreuil of Desjardins Securities.

“He (Mr. Champagne) sets conditions, but these are conditions for the success of the transaction, he explains in a telephone conversation with Press. He had the power to say no and block the transaction, but he didn’t. »

As for National Bank Financial, analyst Adam Shine questions whether the Department for Innovation, Science and Industry wants to move faster with the Competition Authority.

“Perhaps (the ministry) felt the process had gone on long enough,” Mr. Shine wrote in a memo. If so, this second mediation may turn out to be more productive than expected. »

Freedom Mobile would make Videotron the fourth largest player in the mobile phone industry, behind Bell Rogers and Telus. Freedom Mobile has approximately 1.7 million customers in Ontario, Alberta and British Columbia. In Quebec, Videotron has the same share of active lines.

The transaction between Rogers and Shaw has already been approved by shareholders and the Canadian Radio-television Commission (CRTC).

Find out more

  • 17 months
    The announcement of the merger between Rogers and Shaw takes about a year and a half.

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