Competition Bureau’s Resistance to Freedom Mobile Sale ‘Incomprehensible’, Says Quebecor CEO

Quebecor CEO Pierre Karl Péladeau finds it “incomprehensible” that the Competition Bureau is opposed to the company’s proposed acquisition of Freedom Mobile from Rogers and Shaw — reports The Globe and Mail.

Back in May, the Bureau petitioned the federal competition tribunal to block Rogers’s proposed $26 billion acquisition of Shaw. Canada’s competition watchdog argued the deal would reduce competition in the country’s telecom market and lead to even higher wireless prices.

The two telcos agreed to sell Shaw-owned Freedom Mobile, Canada’s fourth-largest carrier, to Quebecor for $2.85 billion in hopes of addressing regulatory concerns. However, the Competition Bureau has refused to approve the Freedom sale so far, saying last month that it does not ensure a competitive future for the wireless space.

“It is incomprehensible to us that the Competition Bureau believes that the level of competition in telecom in Canada will be higher if the Shaw-Rogers transaction is rejected,” Péladeau said during a quarterly earnings call on Thursday.

Quebecor reported $1.12-billion in revenue for the second quarter ended June 30, 2022, down 1.4% year-over-year. Net profits for the period saw a healthy gain to $156.3 million, from $124.7 million in Q2 2021.

Péladeau argued during the conference call that Freedom would be “much weaker” if Shaw continues to run it. He added that the carrier has already competed less aggressively since the Rogers-Shaw deal was announced.

Freedom Mobile has 1.75 million subscribers in Alberta, British Columbia, and Ontario. Acquiring the company will help jumpstart Quebecor’s longstanding plans to expand nationally. Quebecor last year purchased $830 million worth of 5G spectrum licenses, more than half of which were for Ontario, Alberta, Manitoba and B.C. to further the company’s ambitions for national growth.

More recently, the company bought independent internet, TV, and phone service provider VMedia. With a large chunk of VMedia’s user base located in Ontario, analysts believe the move underpins Quebecor’s expansion plans.

If the Freedom sale falls through, Péladeau said Quebecor could use the Canadian Radio-television and Telecommunications Commission (CRTC)’s new network-sharing policy to expand instead.

Quebecor’s CEO urged the regulator to promptly finalize the prices, terms, and conditions for the facilities-based mobile virtual network operator (MVNO) access service.

“We respectfully think that the Competition Bureau and the CRTC should realize that the longer they wait to act, either by approving the sale of Freedom or by finally establishing a competitive [mobile virtual network operator] framework, the longer they encourage the current oligopoly that is actively limiting competition outside Quebec,” Péladeau said.

The Competition Bureau has requested a delay of at least six weeks in merger proceedings to investigate the Freedom Mobile sale. Rogers on Thursday filed an official objection against the request, saying the Bureau has an “obligation” to fast-track a tribunal hearing on the fate of the merger.