Rogers announced in its recent third-quarter earnings a big move, that it would be selling part of its network for $7 billion.
This part of the network, known as the “backhaul,” is what connects its cell towers to its main network and keeps everything running. The plan is to use the money to pay off debt from Rogers’ recent $20 billion purchase of Shaw. Now, analysts think Bell and Telus might be interested in selling off their own network pieces as well.
Historically, Canada’s ‘Big 3’ telcos believed they needed to own all their network equipment to deliver quality service. But Rogers is breaking tradition, choosing to sell off some of its hardware, which is something telecom companies in the U.S. and Europe have been doing for a while, reports The Globe and Mail.
Rogers CEO Tony Staffieri called this financing deal “the first of its kind in Canada.” In other countries, major telecoms, like T-Mobile in the U.S., moved away from owning their network gear long ago, opting to lease instead.
This sale is also exposing the hidden value of telecom equipment. Scotiabank analyst Maher Yaghi thinks this deal has opened Bell and Telus’ eyes to the potential of selling their assets to pay down debt without needing approval from each other, despite having a shared national network.
Globally, telecoms have pulled in billions by selling their network equipment, like cell towers, to investors who want a piece of the digital economy (mainly pension plans and infrastructure funds). Rogers plans to keep control over how this part of its network is run, which means it can still manage customer experience. However, if this part of the network becomes super valuable, buying it back could be expensive.
With Rogers being the first to offload its network, there’s speculation as to whether Bell and Telus will follow suit in lockstep, like what normally happens with the ‘Big 3′.
Update October 31, 2024: New York-based Blackstone is in talks to buy Rogers’ backhaul business, according to two sources familiar with the deal who spoke to The Globe and Mail under condition of anonymity. Rogers invited Blackstone, Apollo, and other asset managers, including Brookfield and KKR, to bid on the data-carrying business, which generates revenue from data transport fees.
Blackstone reportedly offered the best terms and is finalizing an agreement, though Apollo is still vying to improve its bid. Rogers expects to close the sale by year-end, a transaction that won’t require regulatory approval, according to the sources.
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Don't worry. Canadian consumers will still get shafted and pay some of the highest prices in the world for some of the worst service.
Wouldn't the service get even worse if they sell their towers….
What does this comment have to do with anything… like at all? You just read "Rogers" and made a useless comment because you hate your cell phone bill. Selling the network to pay off debt does not imply in any sense that you should get a lower rate. It's basically a consolidation loan. They will still have to pay for it and they'll use any freed capital to invest in local access to be competitive service-wise. That doesn't get cheaper.
Go put some new socks on and enjoy the day.
Spoken like a true social media advocate for Robellus. I'll enjoy my socks and my day comfortably agreeing with the comment of Jason H. Question anyone who is seemingly fine with exorbitant Telco gouging
Another example of why we are wasting our taxpayer dollars on the CRTC. They are an outdated, dollar grabbing institution. If they mattered, they'd be dealing with what will ultimately just cost the consumer more money. This sale will only benefit Rogers and no one else. But of course, the CRTC won't (or can't) act. Where were they when they should have said no to the Shaw acquisition by Rogers?
Could there possibly be a new line item fee we have to pay? Think utilities were we have to pay a “transportation” fee tacked onto our bills
It's like selling your house for a million, then agreeing to buy it back for two. Sure, you get a fat stack of cash today, a bigger balance sheet, and maybe avoid some taxes in the process, which probably means a nice bonus for the execs. But down the line, you're stuck paying a premium just to keep the lights on. Makes you wonder who's really benefiting from this deal?
Big business in Canada chopped up the country long ago to the tune of "This Land Is My Land, This Land is Your Land"". They sold the concept of price stabilization (price fixing) as being competitive, many CDNs bought that concept and some are naive enough to still believe it. A few years ago big grocers admitted they were in constant communication (the front line worker bonus ended in the same month, same week, same day, same hour, typical of big business Canada style). Some Canadians think the "telco business" is different. SAD.
Yeah they're selling off because they see the future collapse with satellite technology coming.
Didn’t taxpayers foot the $20 billion dollar bill in the 90s for this high speed network expansion?! And now they will profit off it AND rent it back from Evil Corp Blackstone and claim it as a business expense to pay less tax. Amazing. Selling the country out from under us.
Well who to blame whe it goes down? This is stupid.
Finally entering the modern world. Part of the reason why other places have cheaper phone plans than Canada is the telecoms typically don't have to invest in network builds because they just lease from another company that spends their money on that with multiple clients. Having more of this will allow for more entrants into the market. Something like this was the original intent behind the TTC subway deal, but unfortunately the big 3 all said they needed to have their own infrastructure in there instead of leasing from BAI like Freedom did.