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Rogers’ Freedom Mobile Sale Process Called ‘Non-Competitive Sham’ by Original Founder

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Globalive Capital’s Anthony Lacavera, the original founder of Freedom Mobile and now one of the bidders looking to buy the company, told Ottawa that the sale process for the wireless provider is a “non-competitive sham” — reports The Globe and Mail.

After Innovation, Science, and Industry Minister François-Philippe Champagne said last month that the government will not allow the “wholesale transfer” of Shaw Communications Inc.’s wireless business to Rogers Communications Inc., the two have been looking to sell Freedom Mobile to win regulatory approval for their proposed $16 billion CAD merger.

Following rumours of Xplornet Communications Inc. being in talks to acquire Freedom Mobile from Shaw last month, Rogers earlier this week presented Ottawa with a deal for the rural internet provider to acquire Shaw’s wireless unit.

However, there are still plenty of other bidders for Canada’s fourth-largest wireless carrier, which has a user base of about two million in Alberta, B.C., and Ontario. Lacavera, who originally founded Wind Mobile before it was sold to Shaw in 2016 and rebranded to Freedom Mobile, has offered $3.75 billion to buy it back.

According to three sources close to the situation, the Aquilini family, which owns the NHL’s Vancouver Canucks, is also discussing the possibility of acquiring Freedom Mobile with Rogers.

Lacavera is accusing Rogers of conducting a “closed and secretive sales process” that discourages competition for Freedom Mobile and is unlikely to result in the provider emerging as a strong fourth player in Canada’s wireless space.

In a letter sent last month to Industry Minister Champagne, Competition Commissioner Matthew Boswell, and the Prime Minister’s Office, Lacavera alleged that Globalive and other potential suitors have been “deliberately excluded” from participating in the sale of Freedom Mobile and that Rogers is not dealing with Globalive “in good faith.”

“In fact, we were told numerous times by Rogers that no such process existed, and that neither the fourth carrier business nor its constituent parts were for sale,” Lacavera wrote in the letter, dated March 24.

The Freedom Mobile founder said the government should be “highly skeptical of any transaction presented to you that is a product of this non-competitive and engineered process, which appears to have as its goal the establishment of an anemic and ineffective owner of the fourth carrier business.”

Lacavera says that Rogers and its bankers have refused to negotiate with Globalive, even after receiving its bid for Freedom Mobile, unless they sign a confidentiality agreement that, according to him, contains “extraneous restrictions” around financing and communications with regulators pertaining to the deal.

“We also surmised (and were told by various parties) that the secretive process was a non-competitive sham,” he wrote in the letter.

Lacavera also told The Globe and Mail that Industry Minister Champagne “should be very concerned about the backroom deals that have underlined this process and iced out viable competitors.”

Asked on Friday about Lacavera’s letter, a spokesperson for Minister Champagne referred to an earlier statement, which said, “As the regulator responsible for approving the transfer of licensed spectrum, [Mr. Champagne] will review any applications on their merit and what is in the best interest of Canadians.”

The Rogers-Shaw merger requires approval from three regulators: the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC), and the Ministry of Innovation, Science and Economic Development (ISED) Canada.

The CRTC, which was responsible for reviewing the broadcasting side of the merger, approved the deal last month. The Competition Bureau is looking at the merger’s possible impact on competition across relevant industries, while ISED Canada is evaluating the transfer of Shaw’s spectrum licences to Rogers.

Rogers reiterated in its announcement of strong first-quarter results for this year on Wednesday that it expects the deal to close sometime in the second quarter of this year. Rogers and Shaw have a deadline of June 13 for the merger.

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