Rogers Communications Inc.’s proposed takeover of Shaw Communications Inc. will go ahead after it received the final sign-off it needed from Industry Minister Francois-Philippe Champagne.
He called the merger a “watershed moment” for the telecom sector that he claimed would drive wireless prices down for Canadians while growing the combined firm’s overall headcount.
The merger, a union between two Canadian telecom giants valued at $26 billion, including debt, has changed significantly in response to political and industry pressure since it was first announced in March 2021.
The final permutation of the merger will see Shaw sell its Freedom Mobile business and transfer wireless spectrum to Quebecor’s Videotron as the latter seeks to expand outside Quebec.
Champagne’s approval came on the companies’ March 31 deadline to close the transaction.
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Rogers, Shaw and Quebecor released a joint statement Friday morning saying they have agreed to extend that closing date to April 7 in order to give enough time to finalize the agreement and meet other closing conditions.
Shares of Shaw were up slightly in early market trading Friday on the Toronto Stock Exchange, while Rogers saw its stock start higher before dipping below the previous day’s close by mid-morning.
The industry minister said Friday his approval is subject to 21 “unprecedented and legally enforceable” conditions.
Videotron’s wireless prices in Quebec, which tend to be 20 per cent lower than other parts of the country, must be expanded out of the province and into Western Canada as part of Champagne’s stated goal of creating a fourth-national player to drive down Canadians’ phone bills.
“The way to drive down prices is through competition. Having a fourth, strong national player does lead to lower prices,” he told reporters Friday.
Rogers is also expected to keep a headquarters in Calgary and add 3,000 new jobs in Western Canada, both of which are expected to be maintained over the next 10 years. Champagne did not say whether any job protections are extended to Rogers’ operations in Eastern and Central Canada.
The newly merged telecom giant is also expected to spend $5.5 billion expanding 5G network coverage and invest $1 billion in connections for rural, remote and Indigenous communities.
Violating the conditions would come with “significant” penalties of up to $200 million in fines for Videotron and up to $1 billion in charges for Rogers, Champagne said.
He added that all of these conditions are set out in a legal undertaking he called a “contract with Canadians” and are subject to arbitration if the companies violate the agreement.
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Additionally, Champagne announced a freeze on the transfer of large amounts of spectrum from major carriers for an indeterminate period and a comprehensive review of Canada’s telecommunications space for the first time in a decade to ensure the framework is appropriate for the modern telecom landscape.
If prices do not materially lower following the completion of this deal, Champagne threatened that he might seek more legislative powers to force companies to offer Canadians better deals.
“Everything is on the table,” he said.
Champagne’s sign-off was the final regulatory hurdle needed to get the deal across the finish line.
The Competition Tribunal approved the deal on Dec. 30, 2022.
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The Competition Bureau had appealed the tribunal’s decision, citing what it claimed were legal errors in the judgment. But a Federal Court of Appeal judge ruled last month that the Bureau’s arguments did not meet the threshold needed to overturn the ruling.
The Bureau had lobbied against the merger, saying the transaction would hurt competition in the telecom industry in Canada.
The Competition Tribunal concluded that the merger was not likely to result in higher prices for wireless customers in Western Canada, and that the Tribunal was satisfied the plan to sell Shaw’s Freedom Mobile to Quebecor Inc.’s Videotron was adequate to ensure competition isn’t substantially reduced.
Rogers and Shaw also argue that the deal would enhance competition and be better for consumers.
Shaw Communications and Corus Entertainment, the parent company of Motorcycle accident toronto today, are owned by the Shaw family based in Calgary.
More coming
— with files from The Canadian Press
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