Rogers, Shaw may need to divest more mobile assets in merger: Report

Rogers and Shaw last week agreed to sell Freedom Mobile, the cellular business owned by Shaw, to Montreal-based Quebecor

Canada’s competition bureau is expected to ask Rogers Communications to sell Shaw Communications’ cellular unit Shaw Mobile to overcome competition concerns presented by the proposed merger between Rogers and Shaw, Reuters reported, citing two sources familiar with the matter.

Canada’s competition bureau has put on hold Rogers’ proposed purchase of Shaw, as it believes the deal will negatively impact competition in the domestic telecom sector, leading to increased mobile bills for consumers.

In a move to overcome these concerns, Rogers and Shaw last week agreed to sell Freedom Mobile, the cellular business owned by Shaw, to Montreal-based Quebecor for CAD2.85 billion ($2.20 billion). But the country’s competition bureau has previously said that the sale of Freedom Mobile would be insufficient to bolster competition in the Canadian mobile telephony market, Reuters reported.

“Our agreement with Quebecor to divest Freedom is a critical step towards completing our proposed merger with Shaw. We strongly believe the divestiture will meet the Government of Canada’s objective of a strong and sustainable fourth wireless services provider,” said Rogers’ President and CEO, Tony Staffieri.

Under the terms of the deal, Quebecor gets all of Freedom Mobile’s infrastructure, spectrum, and retail locations. The agreement also includes long-term roaming and backhaul and backbone service agreements between the operators.

According to the report, it was unclear if the sale of Shaw Mobile would satisfy the competition bureau, or if it would demand more concessions in order to approve the merger.

Launched in 2020 to offer low-cost cellular services to Shaw internet’s customers, Shaw Mobile has some 450,000 subscribers in western Canada.

In March last year, Rogers Communications had announced that it will purchase Shaw Communications in a CAD20 billion deal.

The transaction has already been approved by the shareholders of Shaw and the Court of Queen’s Bench of Alberta, and the Canadian Radio-television and Telecommunications Commission (CRTC) has approved Rogers’ acquisition of Shaw’s broadcasting services, subject to conditions and safeguards designed to ensure that the transaction benefits Canadians. The transaction remains subject to the approval of the Canadian Competition Bureau and the Ministry of Innovation, Science and Economic Development.

Rogers and Shaw promised more than $2 billion in 5G network expansions, a new public fund to help connect rural and indigenous communities, promises of new jobs and infrastructure money for government projects and more.

Currently, Canadian residents have four options for mobile operators — Rogers, Shaw, Telus Corp. and BCE Inc. — but if the deal is approved, Canadians will have one fewer provider to choose from.

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