Xplornet Communications Inc. is making headway in talks with Rogers Communications Inc. (RCI) for a possible acquisition of Shaw Communications’ wireless unit, Freedom Mobile — reports The Globe and Mail.
Telecom industry experts said last year that Rogers’ proposed $16 billion CAD acquisition of Shaw Communications should exclude Freedom Mobile. Rogers absorbing Freedom Mobile would reduce the number of wireless players from four to three in Ontario, Alberta, and British Columbia, and likely lead to higher phone bills for consumers.
It now looks like Rogers won’t be able to win regulatory approval for the merger unless it divests Shaw’s wireless business. Innovation, Science, and Industry Minister François-Philippe Champagne said earlier this month that the government will not allow the “wholesale transfer” of Shaw’s wireless business to Rogers as that could endanger competition in the industry.
Three sources familiar with the talks told The Globe and Mail that Xplornet has been negotiating with Rogers for Freedom Mobile.
Based in Woodstock, Xplornet is a rural internet service provider (ISP) that currently has about a million customers across Canada. Freedom Mobile has around two million subscribers in major cities across Ontario, British Columbia, and Alberta.
Getting into the cellular business would be a slight pivot for Xplornet, but the company does have some prior experience in the space.
In 2017, Xplornet acquired 24,700 subscribers along with some retail stores and wireless spectrum in Manitoba BCE Inc. was forced to divest those wireless assets by the Competition Bureau.
Last year, the Manitoba government helped Xplornet develop its network, which serves 125,000 homes and businesses in the province, by providing the company with 3,200 kilometres worth of unused fibre optic network cables.
Xplornet isn’t the only company interested in Freedom Mobile, however. A report from last week indicated that Rogers was talking to several potential buyers.
Anthony Lacavera, Freedom Mobile’s original founder, said a while ago that he is willing to buy the mobile carrier back. Lacavera’s Globalive Capital last week offered Rogers $3.75 billion for Freedom Mobile.
Montreal-based Quebecor Media Inc., which has publicly expressed interest in buying Freedom Mobile and even demonstrated that it can afford the acquisition, has been notably absent from the talks.
Executives from Rogers and Shaw have said they expect the merger to close by the end of June. Experts have said that forcing Rogers to divest Freedom Mobile will keep “the dream of four wireless options alive in Canada.”
However, offloading Freedom Mobile will require Rogers and Shaw to demonstrate that the carrier will be able to effectively compete with Canada’s ‘Big 3’ telcos under the buyer’s ownership.
Bell Canada Enterprises (BCE) Inc.’s chief financial officer, Glen LeBlanc, said earlier this month that Freedom Mobile will struggle to compete with Rogers, Bell Canada, and Telus Corp. on a national level under new leadership and without Shaw’s backing.
Separately, a proxy circular issued on Monday by Rogers announced the company’s plans to add two more directors, including a Rogers family member, to its board this year, following a dramatic (and public) boardroom battle that culminated in chair Edward Rogers replacing five of the company’s independent directors last year.
The company has nominated David Robinson, the nephew of Rogers family matriarch Loretta Rogers, and Ryerson University president and vice-chancellor Mohamed Lachemi to be elected to the Rogers board at the company’s annual general meeting on April 20.
The same circular also disclosed former CEO Joe Natale’s total compensation for the previous year and his severance package, weighing in at $27.4 million and $14.1 million, respectively.