Shaw Says ‘No Viable Path Forward’ if Rogers Deal Fails

Shaw Communications CFO Trevor English on Monday told the Competition Tribunal, which is reviewing Rogers’s proposed $26 billion acquisition of the company, that there is no “viable path forward” for the telecom giant if the Rogers merger falls through (via Bloomberg).

“This isn’t the first time that we considered consolidation within the sector,” English said during Monday’s hearing. “This has been part of our process that’s been going on for many years, and we just didn’t see a viable path forward as a standalone company.”

The Shaw CFO explained that the company has been struggling to compete with its primary competitor, Telus, in Western Canada ever since it acquired Wind Mobile (later renamed Freedom Mobile) in 2016. He added that Shaw’s underwhelming wireless performance over the past decade has led to “difficult conversations” with investors.

According to English, Shaw won’t be able to compete effectively unless it is taken over by Rogers. “We’ve really felt like the best outcome for all constituents was a partnership and a sale to a strategic operator that has the operational scale to effectively compete in the future,” English continued.

“This isn’t a distress. This is about a forward-looking analysis and the challenges that we had in our business.”

Rogers and Shaw require approval from three regulators — the Canadian Radio-television and Telecommunications Commission (CRTC), Innovation, Science and Industry (ISED) Canada, and the Competition Bureau — to merge.

While the CRTC and Industry Minister François-Philippe Champagne have both greenlit the deal, the Commissioner of Competition is holding out. The Bureau has taken the matter to the Competition Tribunal and is seeking a full block of the Rogers-Shaw deal, arguing that it will increase prices and decrease competition.

Earlier this year, Rogers and Shaw agreed to sell Freedom Mobile to Vidéotron as a potential remedy to antitrust concerns regarding their merger. However, the Bureau kicked off Tribunal hearings to determine the fate of the deal earlier this month by reiterating that the proposed Freedom sale isn’t enough to win its approval.

Pierre Karl Péladeau, CEO of Quebecor and its Vidéotron subsidiary, also appeared before the Tribunal on Monday. He asserted that the Vidéotron-Freedom deal would help lower wireless and internet prices across Canada.

Meanwhile, experts last week testified before the Tribunal that a combined Rogers-Shaw would raise prices for low-income Canadians and eliminate Canada’s fourth wireless competitor.

Tribunal hearings into the proposed Rogers-Shaw merger will last four weeks, with oral arguments scheduled for mid-December. The three-member panel conducting the tribunal is expected to reach a decision in January.

Rogers and Shaw previously extended their mutual merger deadline to December 31, 2022, hoping to close the deal by that time. However, both companies left room for a further extension up to January 31, 2023.