Telus Says Freedom Mobile Sale by Rogers-Shaw Will Likely Reduce Competition

Telus’s President of Mobility Solutions, Jim Senko, said in an interview last week that Rogers and Shaw’s proposed sale of the latter’s wireless business, Freedom Mobile, to Quebecor will reduce competition in Canada’s wireless market (via the Financial Post).

Quebecor “doesn’t truly understand the Western markets and would have to wholesale there any kind of wireline services at very thin margins, and will not be able to compete as well as Shaw who owns those assets,” Senko said during a telephone interview following Telus’s Q2 financial results announcement.

Telus reported $4.4 billion in revenue and a record 93,000 mobile subscriber additions for the second quarter, with 247,000 customer additions overall.

Rogers and Shaw have agreed to sell Freedom to Quebecor for $2.85 billion as a remedy to regulatory concerns against the pair’s planned $26 billion merger.

The Competition Bureau has gone to the federal competition tribunal to block the deal, asserting it endangers competition in an already oligopolistic industry rife with high prices and low service quality. Canada’s Ministry of Innovation, Science and Economic Development (ISED) is also yet to sign off on it.

However, Telus’s mobile head doesn’t think Freedom’s divestiture will do any favours for wireless competition. In fact, Senko said Freedom is unlikely to be able to compete after being separated from Shaw.

“I think Shaw was a very strong competitor,” the Telus exec said. “They had the bundling in the West and they executed well in the Greater Toronto Area with Freedom Mobile.”

Telus has opposed the Rogers-Shaw merger since the beginning. The company urged Canada’s telecom regulator to block the deal late last year, even before a Freedom Mobile sale was ever on the table.

Meanwhile, Quebecor is ecstatic about its Freedom acquisition. The company, which primarily operates in Quebec, sees Freedom as the key to its longstanding plans for national expansion.

However, the Freedom sale still requires a green light from the Competition Bureau. Last week, Quebecor CEO Pierre Karl Péladeau said the competition watchdog’s resistance to the company’s Freedom Mobile acquisition is “incomprehensible.”