Rogers and Shaw on Friday announced an agreement with Quebecor to sell Freedom Mobile to the latter for $2.85 billion. The pair are divesting Freedom Mobile to sway regulatory approval for their proposed $26 billion merger.
Rogers’ planned takeover of Shaw is being held up by the Competition Bureau, while the Ministry of Innovation, Science and Economic Development (ISED) Canada has yet to decide on the deal.
Both authorities are opposed to the merger on the grounds that it will reduce wireless competition and raise prices. The Competition Bureau has officially petitioned the competition tribunal to block the Rogers-Shaw merger.
Quebecor plans to acquire Freedom’s subscribers, infrastructure, spectrum licences, and retail outlets in the hopes of fast-tracking its longstanding plans to expand nationally. Freedom Mobile has 1.75 million subscribers in Alberta, British Columbia, and Ontario.
However, experts don’t think the deal will preserve a strong fourth player in Canada’s wireless scene — reports The Star.
Quebecor-owned Videotron’s absorption of Freedom will merely create a “weaker” competitor in the cellular market, Carleton University professor Dwayne Winseck said on Monday. The Quebec-based company operates mainly in its home province and has an arduous road ahead for national expansion, Winseck added.
He also said Videotron lacks the brand recognition and network deals it would need to expand fruitfully. In Winseck’s view, selling Freedom Mobile to Quebecor won’t be enough to appease regulators. That said, market analysts on Monday indicated the move has likely increased the chances of the Rogers-Shaw deal being greenlit.
Other experts closely following the telecom industry have expressed similar concerns. Quebecor is unlikely to be “as aggressive as someone who’s truly independent,” John Lawford, executive director at the Public Interest Advocacy Centre, told The Star.
Freedom Mobile’s original founder, Anthony Lacavera, said something similar when the sale was announced.
“Rogers has shopped this deal to a succession of billionaire friends and friendly parties who won’t compete with them and are willing to sell Freedom back to them at any time,” said the Globalive Capital chairman, who had a higher bid of $3.75 billion in to buy Freedom back.
“I just don’t think (Quebecor) will be a real game changer with lower prices,” Lawford added. “At best it will be sort of like where Shaw was, but weaker.”
Another expert noted that Freedom customers would be worse off after Quebecor takes over. “For Freedom customers in Ontario, they stand to lose if Vidéotron replaces Freedom,” said Ben Klass, a Ph.D. candidate at Carleton University’s School of Journalism and Communication.
However, he ceded that “there’s no doubt that Vidéotron as fourth competitor is better than a market dominated by the Big Three.”
