Shaw Communications CFO Trevor English on Monday told the Competition Tribunal, which is reviewing Rogers’s proposed $26 billion acquisition of the company, that there is no “viable path forward” for the telecom giant if the Rogers merger falls through (via Bloomberg).
“This isn’t the first time that we considered consolidation within the sector,” English said during Monday’s hearing. “This has been part of our process that’s been going on for many years, and we just didn’t see a viable path forward as a standalone company.”
The Shaw CFO explained that the company has been struggling to compete with its primary competitor, Telus, in Western Canada ever since it acquired Wind Mobile (later renamed Freedom Mobile) in 2016. He added that Shaw’s underwhelming wireless performance over the past decade has led to “difficult conversations” with investors.
According to English, Shaw won’t be able to compete effectively unless it is taken over by Rogers. “We’ve really felt like the best outcome for all constituents was a partnership and a sale to a strategic operator that has the operational scale to effectively compete in the future,” English continued.
“This isn’t a distress. This is about a forward-looking analysis and the challenges that we had in our business.”
Rogers and Shaw require approval from three regulators — the Canadian Radio-television and Telecommunications Commission (CRTC), Innovation, Science and Industry (ISED) Canada, and the Competition Bureau — to merge.
While the CRTC and Industry Minister François-Philippe Champagne have both greenlit the deal, the Commissioner of Competition is holding out. The Bureau has taken the matter to the Competition Tribunal and is seeking a full block of the Rogers-Shaw deal, arguing that it will increase prices and decrease competition.
Earlier this year, Rogers and Shaw agreed to sell Freedom Mobile to Vidéotron as a potential remedy to antitrust concerns regarding their merger. However, the Bureau kicked off Tribunal hearings to determine the fate of the deal earlier this month by reiterating that the proposed Freedom sale isn’t enough to win its approval.
Pierre Karl Péladeau, CEO of Quebecor and its Vidéotron subsidiary, also appeared before the Tribunal on Monday. He asserted that the Vidéotron-Freedom deal would help lower wireless and internet prices across Canada.
Meanwhile, experts last week testified before the Tribunal that a combined Rogers-Shaw would raise prices for low-income Canadians and eliminate Canada’s fourth wireless competitor.
Tribunal hearings into the proposed Rogers-Shaw merger will last four weeks, with oral arguments scheduled for mid-December. The three-member panel conducting the tribunal is expected to reach a decision in January.
Rogers and Shaw previously extended their mutual merger deadline to December 31, 2022, hoping to close the deal by that time. However, both companies left room for a further extension up to January 31, 2023.
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Are Shaw’s TV and Internet suppliers so expensive that they aren’t making money from it or what? No viable path forward? You’re a huge company and everyone needs Internet how is there no path for you without Rogers?
it missed the part no path to boat #4
It doesn’t add up. They have only had one quarterly loss over the past 12 years, way back in 2015. Apart from that one quarter, they have comfortably had a profit of between $400 million and $1 billion every quarter since 2010. Their quarterly profit has been steady at around $500 million for the past seven years. Not only are they consistently making profit but their profits are not even going down.
The only conclusion I can draw is that the CFO is misrepresenting the facts because he stands to make significant personal financial gain if this deal goes through.
With that pick up they are driving, I’ve got no tears to shed.
Shaw CFO admits he and the rest of the leadership team are failures. That should be the headline here.
Shaw has a much bigger footprint than Videotron. So it is odd that on the one hand they would say that Videotron with Freedom mobile would be a viable fourth carrier, but Freedom with Shaw would not. Shaw and Rogers combining would allow them to compete much better with Telus and Bell, that’s true, but there is a place in there for Freedom mobile.
That sounds like blackmail using”alternative facts”.
“No path forward” for a network operator with over 2Bn/year profit????
Translation: “CFO is gonna cry if he doesn’t get his merger.”