Accustomed in recent years to seeing regulators take the side of the industry to the detriment of their wallets, Canadian consumers could emerge winners this time from a possible acquisition of Shaw by Rogers. Experts believe that the new conditions imposed on Tuesday by the Federal Minister of Innovation, Science and Industry, François-Philippe Champagne, will play to their advantage.
Champagne said on Tuesday that he opposed Rogers’ $26 billion takeover of Shaw “in its original form.” The minister then set out a few criteria that would make him more receptive, including the sale of Shaw’s wireless assets to Quebecor, provided that the latter agrees to keep them for at least ten years.
Minister Champagne also demanded that Quebecor establish pricing across Canada that would be identical to that which it already offers in Quebec, where wireless costs are on average 20% lower than elsewhere in the country, according to him. .
“I think this is the best case scenario for the Canadian consumer,” said Nadir Marcos Mechaiekh Simon, CEO of price comparison site PlanHub. “The conditions are clear for the approval of the spectrum transfer: Videotron would become the fourth player in Canada. There would be a real challenger which has proven itself. »
Justin Trudeau’s government has wanted for years to see the appearance of this famous “fourth player” in a national wireless market almost monopolized by Rogers, Bell and Telus. Only a few regional players are standing up to them, including Videotron in Quebec, but also Freedom Mobile, previously owned by Shaw, in the west of the country.
By putting a little more pressure so that Freedom and Videotron become one, François-Philippe Champagne is thus dictating the way to the industry so that his government can achieve this objective. “Over the years, successive governments have tried to encourage competition to lower prices. And, let’s be honest: even today, Canadians deserve a wider range of wireless service choices,” the minister said Tuesday.
Network sharing
The CEO of Quebecor, Pierre-Karl Péladeau, quickly committed in a press release on Tuesday evening to respect the conditions imposed by François-Philippe Champagne if his Videotron division were indeed to acquire the assets of Freedom Mobile. To extend its service across Canada, Videotron will also need to sign network sharing agreements with at least one other supplier. In Freedom’s takeover proposal, it is also mentioned that Quebecor will be entitled to special wholesale rates from Rogers to access its infrastructure outside Quebec.
This agreement between Rogers and Quebecor could even be enhanced to include the sale of part of this infrastructure to the Montreal operator. According to what the Globe and Mail Tuesday, Rogers would have under the elbow a revised version of its purchase offer of Shaw which aims to allay the concerns of the federal government so that the transaction is finally authorized.
Rogers and Shaw are due to meet with the federal competition commissioner on Thursday to find common ground that would make the deal better in the eyes of the public and the government. The revised offer will be presented at this time.
If proven, and if accepted, this modified version of the acquisition of Shaw by Rogers will have the collateral effect of placing Quebecor in a position of strength in the Canadian wireless sector. Already, by having accepted the conditions imposed by the Minister Champagne, Pierre-Karl Péladeau has rendered a service which will certainly be appreciated by the leaders of Rogers, estimates in an interview with The duty Desjardins Securities financial analyst Jérôme Dubreuil.
“It is certain that the leaders of Rogers must have been reassured to see the boss of Quebecor accept the conditions of the minister, said Mr. Dubreuil. The entire transaction rested quite a bit on his shoulders. Quebecor seems to me to be in an advantageous position after this statement. »
In his note to investors published on Wednesday, the Montreal analyst also said he believed that the exit of Minister Champagne was calculated to accelerate the conclusion of this transaction. “Why would Minister Champagne impose conditions if he is preparing to refuse the transaction? he wrote, indicating that, in his opinion, and contrary to what one might believe in light of the minister’s remarks on Tuesday, Mr. Champagne “is preparing to approve” the acquisition of Shaw by Rogers if the Bureau competition does the same.
Only not “in its initial form”, as qualified François-Philippe Champagne.