The Competition Bureau’s argument that selling Freedom Mobile would not effectively address competitive concerns about the proposed merger of Rogers RCI-A-T and Shaw SJR-B-T is “incomprehensible,” Quebecor Inc.’s QBR-A-T chief executive officer says.
The Commissioner of Competition is attempting to block Rogers Communications Inc.’s $26-billion takeover of Shaw Communications Inc., arguing that the deal would result in poorer service and higher prices for wireless customers.
To address those concerns, Rogers has agreed to sell Shaw’s Freedom Mobile, Canada’s fourth-largest carrier, to Quebecor for $2.85-billion. However, the competition watchdog has said separating Freedom from Shaw’s cable network would make it a weaker competitor. The Quebecor president and CEO disagrees.
“It is incomprehensible to us that the Competition Bureau believes that the level of competition in telecom in Canada will be higher if the Shaw-Rogers transaction is rejected,” Pierre Karl Péladeau said on Thursday during a conference call to discuss the Montreal-based company’s quarterly results with analysts.
The company reported $1.12-billion in revenue during its second quarter, down 1.4 per cent from the same period last year. Its profit for the three-month period ended June 30 came to $156.3-million, up from $124.7-million a year ago.
Mr. Péladeau said Freedom Mobile will be “much weaker” if Shaw continues to run it, given that the wireless carrier has competed less aggressively since the merger with Rogers was announced in March, 2021, and that it sat out a crucial auction for 5G airwaves.
Acquiring Freedom Mobile, which has about 1.7 million customers in Ontario, Alberta and B.C., would present an opportunity for Quebecor, which owns telecom Videotron Ltd., to expand outside its home province of Quebec. The company spent $830-million in last year’s federal auction for 5G wireless airwaves, with more than half of that investment going to Ontario, Alberta, Manitoba and B.C.
During Thursday’s call, Mr. Péladeau reiterated his company’s commitment to expanding beyond Quebec. Quebecor recently acquired independent internet and television provider VMedia for an undisclosed amount, a move that analysts have said underscores the company’s plans to expand geographically. VMedia’s customers are primarily in Ontario, as well as in Quebec and Western Canada.
If the Rogers-Shaw merger is rejected, Quebecor could use the telecom regulator’s new wireless policy to expand to other provinces. In April, 2021, the Canadian Radio-television and Telecommunications Commission ruled that the Big Three national wireless carriers – Rogers, BCE Inc. and Telus Corp. – and SaskTel must sell network access to eligible regional competitors.
Mr. Péladeau called on the regulator to finish reviewing the prices, terms and conditions associated with that.
“We respectfully think that the Competition Bureau and the CRTC should realize that the longer they wait to act, either by approving the sale of Freedom or by finally establishing a competitive [mobile virtual network operator] framework, the longer they encourage the current oligopoly that is actively limiting competition outside Quebec,” Mr. Péladeau said.
He added that if the approval process for the merger drags on, it could affect Freedom Mobile’s subscriber base. In the meantime, if Calgary-based Shaw prioritizes its Shaw Mobile business, which Rogers is planning to acquire, over Freedom, that could send the wrong message to the Competition Bureau.
“Shaw and Rogers should conduct their business as usual,” Mr. Péladeau said.
Rogers has said it hopes to reach a settlement with the competition watchdog and avoid a lengthy hearing at the Competition Tribunal.
The Competition Bureau has said in documents filed with the tribunal that divesting Freedom would not resolve competitive concerns surrounding the Rogers-Shaw merger.
“Such a divestiture will not replace the significant and growing competition Shaw Mobile was delivering and would continue to deliver in Alberta and British Columbia, and it would make Freedom Mobile a substantially weaker competitor than it would have been but for the proposed transaction,” the bureau wrote. “The substantial growth in Freedom’s competitive significance under Shaw’s ownership amply demonstrates the significant benefits Freedom received from Shaw.”
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