Shaw Tells MPs: Telus and Globalive Working Together Like ‘Geppetto’ and ‘Pinocchio’

MPs on the House of Commons’ industry and technology committee on Wednesday expressed concerns about the impact of Rogers’ proposed $26 billion takeover of Shaw Communications on jobs, competition, and affordability in Canada’s telecommunications sector (via The Globe and Mail).

During another hearing on the long-embattled merger just a week before its January 31 deadline, executives from Rogers and Shaw fielded questions on job cuts, their union’s potential impact on cellphone bills, and the pair’s selection of Quebecor’s Vidéotron as the buyer for Shaw-owned Freedom Mobile, which is being divested in a side deal that’s part of the broader transaction.

Conservative MP Rick Perkins said he had heard from company insiders that Rogers could cut between 4,000 and 5,000 jobs after taking over Shaw.

Executives from Rogers and Shaw argued that their deal will ultimately benefit competition across Canada. Rogers CEO Tony Staffieri admitted that some overlapping positions will be eliminated after the merger. He didn’t offer an exact number, and said the company “will look to deploy resources in areas that are growing.”

“There will be a net investment in more jobs,” the Rogers CEO said.

Other witnesses at the hearing included Quebecor execs, legal experts, academics, and Globalive chairman Anthony Lacavera, who founded Freedom Mobile (then known as WIND Mobile) and unsuccessfully offered to buy it back for $3.75 billion.

Representatives for Rogers, Shaw, and Quebecor all argued that opposition from Telus and Bell is evidence of the merger being a competitive threat to these companies. Quebecor president and CEO Pierre Karl Péladeau brought up “Project Fox,” Telus’s name for efforts to “kill, slow and shape” the Rogers-Shaw merger.

Shaw, meanwhile, claimed that Telus “conspired” to install Globalive in a position to purchase Freedom instead of Vidéotron.

“What we learned is that Globalive is a clear surrogate for Telus,” added Shaw president Paul McAleese. He went on to call Anthony Lacavera a “Pinocchio” to Telus CEO Darren Entwistle’s “Geppetto.”

Lacavera responded by highlighting his independence from Telus and track record of competing with larger players and driving down prices when Globalive owned Freedom.

“Our offer, in the end, was $900 million higher than the offer that [Rogers] accepted,” said Lacavera. Rogers and Shaw have agreed to sell Freedom to Vidéotron for $2.85 billion.

“When a company like Rogers is able to select who their competitor is, of course their job, actually, from the ownership and leadership’s perspective is to select the weakest possible competitor they can that will get approved by government,” Lacavera continued.

“This is why, again, we really think government needs to intervene and oversee a fair and open and transparent process.”

In a statement, Telus reiterated that the government should intervene and block the merger.

“Our opposition is no secret, nor should it be a distraction from the fact that this merger is clearly against the interests of Canadians, particularly those residing in rural areas or in Indigenous communities,” said a Telus spokesperson.

“We encourage the government to listen to the wide range of independent voices that have publicly voiced concerns, and stop the merger.”

Despite its concerns and questions, the House industry and technology committee doesn’t hold any actual sway over the fate of the Rogers-Shaw merger. That said, pressure from MPs could influence Industry, Science and Technology Minister François-Philippe Champagne’s decision on the transaction.

With the Federal Court of Appeal rejecting the Competition Bureau’s appeal of the merger on Tuesday, Rogers and Shaw only need Minister Champagne to approve the Freedom-Vidéotron deal in order to proceed.

Minister Champagne said on Tuesday that he will review the appeals court’s ruling and render his own decision “in due course.”

Telus, Globalive, and Bell aren’t the only ones opposing the Rogers-Shaw deal. In addition to several consumer groups, independent internet service provider TekSavvy is urging the Industry Minister to block the deal.

TekSavvy is also petitioning the Canadian Radio-television and Telecommunications Commission (CRTC) to investigate “unlawful” internet rates Rogers has agreed to offer Vidéotron as part of the Freedom deal.

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