Members of Parliament pressed top executives at Rogers Communications Inc. and Shaw Communications Inc. on Monday about the companies’ claims their proposed merger would increase competition in Canada’s telecom industry.
The deal, valued at $26-billion including debt, would combine two of the country’s largest cable operations and is expected to face intense regulatory scrutiny as it would reduce the number of wireless players from four to three in Ontario, Alberta and British Columbia.
MPs questioned how eliminating Shaw-owned Freedom Mobile, which has been credited with driving price competition in recent years, could be good for consumers. A Competition Bureau analysis found that wireless prices are 35 per cent to 40 per cent lower in markets where regional competitors have reached a market share of more than 5.5 per cent.
“I guess I’m not seeing how … eliminating a competitor is going to be advantageous for the long run for competition,” New Democrat Brian Masse said during the virtual meeting.
Liberal MP Nathaniel Erskine-Smith noted that Shaw executives have previously emphasized the importance of having independent regional players to compete against Canada’s Big Three telecoms – Rogers, BCE Inc.’s Bell Canada and Telus Corp.
“If we take your past statements … at face value, shouldn’t we expect a negative impact on affordability of telecommunication services in this country if this deal goes through?” Mr. Erskine-Smith asked.
Rogers chief executive Joe Natale told the standing committee on industry, science and technology that acquiring Shaw would allow the combined company to compete more aggressively against Telus and Bell .
“Together, Rogers and Shaw would have strong capability in both residential and wireless businesses. We’d be a far better match to compete head on with Telus in terms of the consumer market,” Mr. Natale said.
Mr. Natale described the Canadian telecom market as intensely competitive, with 4.2 million customers changing wireless providers last year. “Every week, people are fighting hammer and tong[s] for that next customer,” he said.
He also noted that Rogers and Shaw are at a “competitive disadvantage” when it comes to serving governments and medium-to-large businesses. “That market belongs pretty much entirely to Bell Canada or to Telus. We’ve been out of that market because we don’t have a national footprint,” Mr. Natale said.
Combining forces would give both companies access to national infrastructure, allowing them to compete in the business market and to accelerate their rollout of fifth-generation wireless technology by leveraging each other’s fibre-optic networks instead of duplicating them, the companies said. (The 5G build-out will require telecoms to build new cellphone towers and connect them to fibre-optic cables.)
“Competition will intensify, with Shaw and Rogers now able to leverage a national platform,” Shaw CEO Brad Shaw said Monday. “In fact, in recent days we have already seen certain of our competitors going to capital markets to raise money to accelerate investment in broadband and 5G,” he added. Telus Corp. last week announced a $1.3-billion stock sale to speed up the expansion of its fibre-optic broadband network and its deployment of 5G wireless technology.
The deal is subject to approval by the Competition Bureau, the Ministry of Innovation, Science and Economic Development and the Canadian Radio-television and Telecommunications Commission.
Rogers has vowed to make substantial investments if the deal goes through, including creating up to 3,000 new jobs in Alberta, British Columbia, Manitoba and Saskatchewan. The company has also said it would spend $2.5-billion to roll out 5G networks in those provinces and create a $1-billion fund to connect rural, remote and Indigenous communities in Western Canada to high-speed internet.
Mr. Natale said Monday that the 3,000 positions are net new jobs and that the $1-billion rural broadband fund is an incremental investment, on top of what the company was already planning to spend.
Asked whether Rogers would agree to sell Freedom Mobile to satisfy regulators, Mr. Natale said he is “open and flexible” to resolving any issues that the Competition Bureau may have, but said it’s premature to get into specifics because that process has not yet begun.
“It’s hard for me to sit here and speculate a few weeks into the announcement … it will take the better part of nine to 12 months to get to [a] conclusion,” Mr. Natale said.
The committee will hear from Pierre Karl Péladeau, president and CEO of Quebecor Media Inc., as well as consumer advocate groups OpenMedia and the Public Interest Advocacy Centre on Wednesday.
With files from The Canadian Press
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