Rogers is still poised to gain almost half a million new wireless subscribers from its proposed $26 billion acquisition of Shaw Communications Inc., despite selling Shaw-owned Freedom Mobile to Quebecor — reports The Globe and Mail.
Rogers, Shaw, and Quebecor last week announced they had struck an agreement for the Quebec-based telecom operator to purchase Freedom Mobile. The deal comprises Freedom’s 1.7 million customers, infrastructure, wireless licenses, and retail stores. However, the deal does not include 450,000 Shaw Mobile customers in Alberta and B.C.
Rogers CEO Tony Staffieri told analysts in weekend briefings that the company will retain these customers since neither Quebecor nor any other prospective Freedom buyers bid on the division.
While Shaw generates about $100 million in annual revenue from non-Freedom wireless subscribers, acquiring that business doesn’t make much sense for buyers since it relies heavily on bundling cellphone service together with Shaw’s cable and internet offerings.
Rogers ultimately accepted a $2.85 billion offer for Freedom Mobile from Quebecor, which was actually lower than a $3.75 billion offer from Anthony Lacavera, Freedom’s original founder.
Lacavera said on Saturday that Rogers chose to sell to Quebecor because it would be a less aggressive competitor. “Rogers has shopped this deal to a succession of billionaire friends and friendly parties who won’t compete with them and are willing to sell Freedom back to them at any time,” the Globalive Capital chairman said in an email.
Pierre Karl Péladeau, president and CEO of Quebecor, called the agreement “a turning point for the Canadian wireless market.” Acquiring Freedom Mobile, which serves customers in Ontario, Alberta and B.C., will jumpstart Quebecor’s longstanding plans to expand nationally. Up until now, Quebecor and its Montreal-based cable subsidiary Videotron Ltd. have operated mainly in Quebec.
“Quebecor’s Videotron subsidiary is the strong fourth player who, coupled with Freedom’s solid footprint in Ontario and Western Canada, can deliver concrete benefits for all Canadians,” Péladeau said in a statement on Friday.
Rogers and Shaw decided have opted to divest Freedom Mobile to allay regulatory challenges to their merger. The Rogers-Shaw deal was greenlit by the Canadian Radio-television and Telecommunications Commission (CRTC) in March, but still requires approval from the Competition Bureau and the Ministry of Innovation, Science and Economic Development (ISED) Canada.
The Competition Bureau has officially petitioned the competition tribunal to block the Rogers-Shaw merger. Both the Bureau and ISED Canada were opposed to letting Rogers absorb Freedom as part of its Shaw takeover and are seeking to keep a strong fourth wireless carrier alive.
Rogers believes the Quebecor deal will satisfy both authorities. Staffieri said in an email that the company has “worked very hard to find a new owner for Freedom that we believe meets the requirements that the government and regulators have laid out to promote competition and affordability in wireless.”
Regulators are yet to provide Rogers with feedback on the agreement to sell Freedom Mobile to Quebecor.