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Crafty Rogers Plan Aims to Back Investment Firm to Buy WIND, Cutting Off Verizon

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Rogers has crafted two deals to sidestep Ottawa’s wireless policies on industry mergers and prevent U.S.-based Verizon Wireless from entering the Canadian market, reports the Globe and Mail:

Rogers Communications Inc. is backing a Toronto-based investment firm, Birch Hill Equity Partners Management Inc., on a proposed acquisition of Wind Mobile, a financially struggling wireless company with about 600,000 customers across the country, according to five sources familiar with the matter.

If the plan proceeds, Birch Hill would own a controlling stake of WIND Mobile, backed by Rogers, but the latter would not get equity stake, but rather a network-sharing agreement. One source says Birch Hill has been “doing their due diligence” on how the deals would work out.

“[Birch Hill] needs a network sharing partner to make the deal happen and they’ve approached Rogers,” said one source who spoke on condition of anonymity. “For Rogers it’s all about network sharing. Data demand is growing rapidly and they’re focused on making sure they can meet future data demands.”

Sources tell the Globe Birch Hill is also looking Mobilicity led by a private-equity firm, with again Rogers as the backing partner. If such deals were to be approved by Ottawa, Bell and TELUS would surely oppose them. Moreover, Rogers would have to prove Birch Hill is not a puppet for the former to avoid being accused of sidestepping Federal spectrum transfer rules.

Rogers said “We don’t comment on rumours or speculation,” in an email statement to the Globe.

Analysts See Rogers Plan to Fail Due to Industry Regulations

Vince Valentini, analyst at TD Securities believes Industry Canada would ultimately reject the deal:

“If the amount of influence and quasi-ownership by Rogers in this new ownership structure is too significant, then we believe Industry Canada will reject it,”

“Then we are just back to the Verizon overhang.”

Dvai Ghose, head of research at Canaccord Genuity says the Rogers plan is most likely to fail at the hands of industry regulators:

“Consequently, we continue to assume that Verizon seems well positioned to acquire Wind and Mobilicity and enter Canadian wireless on favourable terms, as the Government is bending over backwards to entice Verizon to Canada.”

TELUS, Bell and Rogers have recently joined together to launch a massive PR campaign to sway public opinion to oppose Verizon from entering Canada. Yesterday Rogers issued a statement seeking to engage in talks with Ottawa for a “fair and level playing field” in the wireless sector.

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  • websnap

    “If such deals were to be approved by Ottawa, Bell and TELUS would surely oppose them.”

    Odd. While I’m in no way supporting any of the big three, here in Manitoba – Bell and Telus have the exact same deal – Network Sharing. It always seems like the big three don’t know how to NOT be hypocritical.

  • Chrome262

    Its pretty tricky but I don’t see Birch hill getting approved for this.

  • Chrome262

    Kind of funny though how they are all so worried, because what, isn’t Rogers making most of its money on wireless? Which is surprising since they have tv and internet.

  • This is why they are worried. TELUS and Rogers aren’t as diversified as Bell, since the latter has other investments to compensate for any negative Verizon influence on its wireless division.

  • This is why they are worried. TELUS and Rogers aren’t as diversified as Bell, since the latter has other investments to compensate for any negative Verizon in

  • FragilityG4

    If they would only put all this time and money into satisfying even one of their customers, all of this would be moot.

  • wstoneman

    Exactly. This just expresses how little they care about their customers… and how much they care about profits.

  • wstoneman

    Trust me thats not how Bell sees it.

  • ward09

    These guys just can’t stop digging their own graves.

  • Mark Mark

    I love how the big three are squirming. This is absolutely making my day.. Can not wait for Verizon to enter the Canadian market. I would sign up with whatever kind of plan they put out there EVEN if it costs more than the big three’s plans just so I won’t have to give another penny to those lying, thieving bastards.

  • Mark Mark

    Oh and if anyone wants example of why they are lying thevieng bastards let me know. I can give you a long long list!

  • Jason

    i just heard one of those “that’s not fair” radio ads from the big three and it made me laugh. They go as far as creating a website with no comments or open forum section for the public? I wonder why? They are crying to the government “its not fair” and expect change in their favour. Look how long it took before we got something as simple as no three year contracts or the removal of the system access fee. Whats not fair… i laugh at them

  • ward09

    That’s not necessary, we each have our own lists.

  • xxx

    Bring on Verizon! The bs ad’s Telus and Bell and Rogers have put up about this sale is pathetic! The big three are sivs! Trying to play on the emotions of Canadians! You Idiots! Money talks and bullshit walks! It’s about time someone came in and smacked you arrogant bitches around!

  • 1His_Nibs1

    Man, I sure wish Ottawa sees this as trying to circumvent their rules and penalizes Rogers with a fine for an obscene amount of cash. Either that or disqualify them from the upcoming spectrum auction as a penalty for being underhanded. These actions on the government’s part are the only way to send these bastards a message that they (the government) aren’t screwing around about bringing a sustainable 4th wireless carrier to Canada and that if you’re going to try and be sneaky by trying to manipulate the process there’s a penalty to be paid for the attempt!

  • iv

    This just shows how far ROGERS will go to protect their cash cow! They have been milking the cow for way too long! Instead of offering the best value to customers they are fighting tooth and nail to keep competition out! They should have never been allowed to buy FIDO years ago! WELCOME Verizon!

  • hub2

    Ottawa/CRTC didn’t see something so obvious that most consumers saw it as soon as the mandate came through to eliminate 3-year contracts: They didn’t put ANY restrictions or regulations on price increases.

    So now we have mandatory $55-ish plans to cover unlimited nation-wide calling and texting, which I don’t care for… but for data, which is what I really want more of, they’re charging ridiculously high rates for ridiculously low amounts.

    So expect the idiots in Ottawa and at the CRTC to be just a little blind here as well.

  • Nightfly

    Could not agree more, but they keep spending time and my money on screwing customers like me.

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