(Montreal) Ottawa’s refusal to acquiesce to the full takeover of Shaw Communications’ wireless service licenses by Rogers Communications is good news for two Quebec companies: Quebecor and Cogeco.
Updated yesterday at 5:29 p.m.
Innovation, Science and Industry Minister Francois-Philippe Champagne said Thursday that a full buyout would be “fundamentally incompatible” with the policies of the Trudeau government.
This statement by the minister paves the way for the sale of part of the wireless service licenses to another operator, said Adam Shine of National Bank Financial. “It is very likely that Rogers has taken parallel steps to discuss with parties interested in Shaw’s wireless business,” said the financial analyst.
Rogers and Shaw have also indicated that they will continue to work with the regulatory authorities in order to conclude the transaction of 26 billion.
The discussions could lead quickly, judge Mr. Shine. “We believe that these efforts will accelerate, because any potential buyer will have to obtain the green light from the government quickly to conclude the transaction at the desired time, that is to say by June. »
Two potential Quebec buyers
Two Quebec companies, Quebecor and Cogeco Communications, had separately opened the door to a possible acquisition of Shaw’s assets, but both said they needed to know more about the regulatory context.
On more than one occasion, the president and chief executive officer of Quebecor, Pierre Karl Péladeau, said that Videotron’s parent company was considering expanding into other provinces. In November, the leader pointed out that the Quebec market was now “quite mature” and that he believed that the rest of Canada, where competition is less strong, offered lucrative business opportunities.
In 2021, the Montreal company acquired 294 blocks of spectrum in the 3500 MHz band, for an amount of 830 million. More than half of this investment is concentrated in four Canadian provinces: Ontario, Manitoba, Alberta and British Columbia.
Quebecor’s interest in Shaw’s assets is clear, says Michael Geist, Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa. “I think it’s clear that Quebecor anticipated the government’s position and was prepared to make an offer. It would make the company a stronger national player. »
Montreal cable company Cogeco Communications is considering entering the wireless telephony market. The Montreal company is still waiting to find out the regulatory conditions that would allow it to lease access to the network of major Canadian telecommunications companies.
In January, its president and CEO, Philippe Jetté, had not ruled out making an offer for Shaw’s licenses if that became possible. “We’re considering all the options on the table, but the one that’s suggested, it’s just not available. We are patient. We will wait to see what happens. »
The action of Quebecor gained, at the close of the Toronto Stock Exchange on Friday, 65 cents, or 2.39%, to $27.84. Shares of Cogeco Communications rose $1.16, or 1.15%, to $101.90.
A matter of competition
Rogers’ takeover bid, announced in 2021, is being reviewed by three federal regulators. Among them, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Competition Bureau are two federal agencies that operate, for the most part, independently of government.
Innovation, Science and Economic Development Canada (ISED) is the third agency. Its responsible minister, François Champagne, opposed Thursday an end of inadmissibility to the transaction in its current form.
The complete transfer of wireless licenses from Shaw to Rogers would be fundamentally inconsistent with our government’s policies regarding spectrum and competition in mobile services. I just won’t allow it.
Excerpt from a press release by François Champagne, Minister of Innovation, Science and Economic Development Canada
Even though the statement sounds strong, Scotiabank’s Jeff Fan says he’s not surprised. “It is in line with our expectation that ISED and the Competition Bureau will seek the sale of the wireless business, either all or a large portion of the licenses. »
At Quebecor, we said we were satisfied with Mr. Champagne’s statement. A complete takeover of the licenses would have been “contrary to the public interest”, judged Mr. Péladeau.
“While Bell, Rogers and Telus already control 90% of the wireless market share in Canada, it is imperative to implement the conditions favorable to the emergence of real competition in order to provide consumers with more choices, better prices, better services and more innovation,” he said in a statement.
Same story at Cogeco where we welcome the minister’s statement. “Canadians want more choices for their mobile phone services,” responded Youann Blouin, the company’s spokesperson, by email. Allowing Rogers to acquire and merge the operations and licenses that Shaw obtained as a new entrant would erase nearly 15 years of federal policies and run counter to this desire to encourage more competitiveness. »
Selling some of Shaw’s licenses won’t necessarily solve all the competition issues, Geist said. “Even with spin-off assets, there remain concerns that the transaction will reduce competition for many Canadian consumers and that frustrations over high wireless prices remain. »