Canadian Merger Lastly a Performed Deal


A protracted-running telecom saga got here to an finish final month with the conclusion of the C$25 billion ($18.4 billion) merger between Canadian operators Rogers Communications and Shaw Communications.

The deal—which first reached settlement in March 2021—combines Rogers’ nationwide cellular community with each operators’ coast-to-coast mounted networks. The ensuing nationwide cable, media, and cellular working firm gives fiber-powered cable web to almost 70% of Canadian households.

Rogers and Shaw declared they’ll now “bundle extra merchandise to extra Canadians, together with all the things from web, tv, telephone, and sensible dwelling monitoring; to wi-fi providers; bank card gives; sports activities and media content material.”

On account of the merger, the Shaw household is now one of many largest shareholders of Rogers.

Whereas the deal was initially valued at C$26 billion, the ultimate worth was underneath C$25 billion—comprising C$18.9 billion money, C$1.4 billion in shares, and the idea of C$4.5 billion of debt.

Competitors Considerations

The merger proceeded after remaining federal approval for the requisite switch of Shaw’s cellular subsidiary Freedom Cellular to Quebec-based Videotron.

In March 2022—a 12 months after the preliminary settlement—Canada’s Minister of Innovation, Science and Trade, Francois-Philippe Champagne, indicated that at the very least a few of Freedom’s mobile spectrum licenses would should be divested as a situation of merger approval.

Minister Champagne said: “The wholesale switch of Shaw’s wi-fi licenses to Rogers is basically incompatible with our authorities’s insurance policies for spectrum and cellular service competitors, and I’ll merely not allow it.”

A joint assertion from Rogers and Shaw adopted, studying: “We proceed to work constructively with the federal government and regulators to shut this transaction and ship the advantages of the merger to all Canadians.” Rogers then initiated talks with potential consumers of Shaw’s cellular enterprise.

The merger was placed on maintain in Could 2022 with the intention to resolve objections from Canada’s Competitors Bureau. The next month, Rogers and Shaw agreed to the sale of Freedom Cellular to Quebecor, the mother or father of cable and cellular community operator Videotron. A definitive settlement for the sale was signed on August 12.

Regardless of this sale settlement, mediation between the merger events and the Competitors Bureau was unsuccessful.

Regardless of this sale settlement, mediation between the merger events and the Competitors Bureau was unsuccessful. The regulator argued that the deal would “degrade competitors and result in increased costs for shoppers.” The proposed tie-up then went earlier than a Competitors Tribunal public listening to in November/December 2022.

The merger was ultimately cleared by the Tribunal on December 29, after the physique claimed it was unlikely to result in increased costs for shoppers in Shaw’s Western heartlands of Alberta and British Columbia. The Competitors Bureau instantly launched an enchantment, nevertheless it was rejected by the Federal Courtroom of Enchantment on January 24, 2023.

Champagne Second

Minister Champagne lastly accredited the switch of spectrum licenses from Freedom to Videotron on March 31, 2023, including “strict” and “unprecedented” legally-binding situations to the twin mergers.

The Minister declared: “This switch follows a collection of agreements signed by the events that may be sure that this new nationwide [mobile] fourth participant [Videotron] might be in it for the lengthy haul, be capable of go toe-to-toe with the massive three [Rogers, Bell and Telus], and truly drive down costs throughout Canada.”

The announcement of approval on the Innovation, Science and Financial Improvement Canada web site confirmed that Videotron:

  • Will supply plans which might be corresponding to these presently accessible in Quebec, and supply choices at the very least 20% cheaper than these accessible from the key gamers.
  • Can not switch the Freedom licenses for a interval of ten years.
  • Should broaden its 5G community in Freedom’s pre-existing working territory inside two years.
  • Will broaden cellular service into Manitoba through an MVNO settlement or different means and supply plans corresponding to what it gives in Quebec.
  • Will improve knowledge allotments of current Freedom prospects by 10% as a near-term bonus whereas it invests to carry down costs total.

Individually, Rogers might be topic to commitments requiring main investments to enhance connectivity throughout the subsequent 5 years, together with:

  • Creating 3,000 new jobs in Western Canada and sustaining them for at least ten years after the cut-off date.
  • Establishing a Western headquarters in Calgary and sustaining it for at least ten years.
  • Investing C$1 billion ($740 million) to broaden broadband web entry at speeds of at the very least 50Mbps/10Mbps (down/add), and 5G cellular service in areas the place it’s not presently accessible.
  • Investing at the very least C$2.5 billion to reinforce its 5G community in Western Canada, and C$3 billion in extra community service enlargement initiatives.
  • Increasing entry to low-cost broadband web plans and launching a brand new low-cost cellular providing for low-income Canadians.

As Minister Champagne underlined, “These agreements are topic to important monetary damages for non-compliance: as much as C$200 million within the case of Videotron and as much as C$1 billion within the case of Rogers. These agreements might be launched publicly and are topic to annual reporting necessities.”

Videotron and Rogers additionally entered into industrial community entry agreements—together with an MVNO and Home Roaming Settlement—on phrases that may assist Videotron compete extra successfully because it expands in different areas of Canada.

Alongside his determination, the Minister declared a moratorium on “giant scale” spectrum transfers and introduced the initiation of a “complete assessment” of the spectrum switch framework—“one thing which has not been achieved in nearly a decade.”

“Immediately’s announcement permits for the institution of [an effective] fourth nationwide participant for the primary time in Canada’s historical past. If Canadians don’t start to see a transparent and significant discount in costs inside an affordable period of time because of this determination, I’ll haven’t any alternative however to make use of additional legislative and regulatory powers to drive down costs,” Minister Champagne concluded.

Market Shake-up

TeleGeography’s GlobalComms Database notes that Rogers and Shaw had a mixed 4.38 million retail mounted broadband subscriptions at end-December 2022. The market chief at the moment, Bell Canada, had 4.26 million.

Canada Fixed  Broadband Market Shares by Subs (1)

Rogers was Canada’s cellular market chief as of end-2022 with 11.94 million subscriptions and 31.1% of the general sector. Rogers was adopted by Telus with 10.86 million (28.2%) and Bell Canada with 10.80 million (28.1%).

Canada Mobile  Market Shares by Subs (1)

The acquisition of Freedom Cellular by Videotron, in the meantime, has created a bigger fourth cellular market participant.

The acquisition of Freedom Cellular by Videotron has created a bigger fourth cellular market participant.

This participant stacks up with a mixed whole of greater than 3.5 million cellular subscriptions—alongside Videotron’s Quebec cable subscription base (1.9 million mounted broadband, 1.4 million TV, and 750,000 mounted voice)—and practically 7,500 workers.

Wanting ahead, Rogers plans to speculate greater than C$6.5 billion to reinforce and broaden its networks throughout British Columbia, Alberta, Saskatchewan, and Manitoba, together with C$1 billion to attach rural, distant, and Indigenous communities.

Rogers goals to broaden 5G protection to succeed in a complete of 300 communities—with a community overlaying 140,000 sq. kilometers—whereas additionally upgrading and increasing its fiber broadband infrastructure to cross 4.7 million houses in British Columbia and Northern Ontario.

Key Statistics
Canada, December 2022

Cellular Subscriptions 38.45 million
Cellular Inhabitants Penetration 99.6%
Fastened Broadband Subscriptions 16.25 million
Fastened Broadband Family Penetration 107.3%
Fastened Voice Subscriptions 12.89 million
Fastened Voice Family Penetration 85.8%

Supply: TeleGeography’s GlobalComms Database

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