Rogers/Shaw merger gets green light
April 3, 2023
By Colin Mann
François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry, has given the go-ahead, subject to a number of conditions, for the C$26 billion (€21.8bn) merger of multiplay telcos Rogers and Shaw first announced in March 2021.
“Since the proposed merger between Rogers and Shaw was announced, I have been very clear: affordability and competition are central to any decision I make in my role as Minister of Innovation, Science and Industry,” he said in a Statement.
“That’s why last October, I officially denied the request to transfer Shaw’s wireless spectrum licences – held by their subsidiary, Freedom Mobile – to Rogers. At the time, I also outlined my expectations for the separate proposed transfer of Freedom Mobile’s spectrum licences to Videotron.”
“Since then, the Competition Bureau, the Competition Tribunal and the Federal Court of Appeal have all weighed in on the potential competitiveness a fourth national player could have on our telecom industry.”
“The evidence is clear: Having a strong fourth competitor does lead to lower prices, as we’ve seen in Atlantic provinces, Quebec, Ontario, Alberta and British Columbia.”
“Today, I am informing Canadians that I have secured on their behalf unprecedent and legally binding commitments from Rogers and Videotron. And, after imposing strict conditions, the spectrum licences of Freedom Mobile will be transferred to Videotron.”
“This transfer follows a series of agreements signed by the parties that will ensure that this new national fourth player will be in it for the long haul, be able to go toe-to-toe with the big three, and actually drive down prices across Canada.
“As part of these agreements and conditions, Videotron:
- Will offer plans that are comparable to those currently available in Quebec, and offer options at least 20 per cent cheaper than those made available by the major players;
- Cannot transfer the Freedom Mobile licences for a period of ten years;
- Will have to expand its 5G wireless network in Freedom Mobile’s pre-existing operating territory within two years;
- Will expand mobile service into Manitoba via the use of a signed Mobile Virtual Network Operator (MVNO) agreement or other means and offer plans comparable to what it offers in Quebec; and,
- Will increase data allotments of existing Freedom Mobile customers by 10% as a near-term bonus while it invests to bring down prices overall.
“Separately, Rogers will also be subject to strict and legally binding commitments requiring them to make major investments to improve connectivity within the next five years, including:
- Creating 3,000 new jobs in Western Canada and maintaining them for a minimum of 10 years after the closing date;
- Establishing a Western headquarters in Calgary and maintaining it for a minimum of 10 years after the closing date;
- Investing C$1 billion to expand broadband Internet access, at speeds of at least 50/10 megabits per second, and 5G mobile service in areas where it is not currently available;
- Investing at least C$2.5 billion to enhance its 5G network in Western Canada, and C$3 billion in additional network service expansion projects; and,
- Expanding access to low-cost broadband Internet plans and launching a new low-cost mobile offering for low-income Canadians.
“These agreements are subject to significant financial damages for non-compliance: up to C$200 million in the case of Videotron and up to C$1 billion in the case of Rogers. These agreements will be released publicly and are subject to annual reporting requirements.”
“Should the parties fail to live up to any of their commitments, our government will use every means in our power to enforce the terms on behalf of Canadians.”
“Videotron and Rogers have also entered into commercial network-access agreements, which includes a MVNO and Domestic Roaming Agreement, on terms that will help Videotron compete more effectively as it expands in other regions of Canada. This will ensure more Canadians can benefit from lower prices for their wireless services.”
“I am also looking forward to similar commercial MVNO agreements being signed expeditiously by the major players with regional players across Canada, as they are an essential tool to drive down prices.”
“Under these conditions, Videotron’s acquisition of Freedom Mobile’s licences will improve affordability, competition, and innovation in the telecommunications sector.”
“As part of my decision today, I am also announcing a moratorium on large scale spectrum transfers and directing my Department to launch a comprehensive review of Canada’s spectrum transfer framework – something which has not been done in almost a decade.”
“The establishment of an effective national fourth player who can compete and drive down prices has been the goal of successive governments for decades. Today’s announcement allows for the establishment of that fourth national player for the first time in Canada’s history.”
“If Canadians do not begin to see a clear and meaningful reduction in prices within a reasonable amount of time as a result of this decision, I will have no choice but to use further legislative and regulatory powers to drive down prices.
“Canadians rightfully expect and deserve more from their telecom sector. We will continue to ensure the industry meets these standards, including improving competition, reliability and affordability,” he confirmed.
Rogers and Shaw confirmed the merger is expected to close prior to the outside date of April 7th, 2023.
“We are very pleased to move forward with this transformative merger and proudly deliver on our commitments to enhance and expand network coverage, connect underserved communities, and improve access for low-income Canadians,” said Tony Staffieri, President and CEO, Rogers. “Building on a shared legacy with Shaw, we will invest substantially to bring more choice, more value, and more connectivity to Canadians across the country.”
“Today begins an exciting new chapter for the future of connectivity in Canada,” added Brad Shaw, Executive Chair and CEO, Shaw. “In today’s telecommunications industry, we recognise that companies need even greater scale to compete and make ongoing investments for future technology. This merger will provide the scale necessary for the future success and competitiveness of the wireline business that Shaw has built over the past five decades.”
“As a proud Canadian company, we’re deeply committed to delivering on our promises and we can’t wait to get started,” affirmed Staffieri.