Quebecor Inc. QBR-B-T is in talks with Rogers Communications Inc. RCI-B-T about reducing the rates charged when Freedom Mobile customers roam on the Rogers network, which the two companies hope will help win the federal Industry Minister’s approval for a deal that would see Quebecor acquire Canada’s fourth-largest wireless carrier, sources say.
Quebecor’s telecom subsidiary, Videotron Ltd., is set to acquire Freedom Mobile, which is currently owned by Shaw Communications Inc., SJR-B-T for $2.85-billion as part of the larger, $20-billion takeover of Shaw by Rogers.
However, Industry Minister François-Philippe Champagne still has to sign off on the takeover by deciding on the transfer of Shaw’s wireless licences to Videotron. The Globe previously reported that Mr. Champagne has asked for firm commitments to maintain affordable wireless services, including written undertakings that impose consequences if the telecoms break their promises.
Rogers and Videotron are currently in negotiations over a number of commercial issues, including domestic roaming rates, in order to meet the government’s conditions, according to two sources with knowledge of the discussions. The Globe is not identifying the sources because they are not authorized to speak publicly about the matter.
The talks were progressing well on Friday and the sides were optimistic about finalizing an agreement, one of the sources said.
A spokesperson for Rogers declined to comment, while a representative of Quebecor could not be reached for comment.
Access to cheaper domestic roaming rates would make it easier for Videotron to meet its promise that it will reduce wireless prices if it is permitted to buy Freedom, which serves roughly 1.7 million customers in Ontario, Alberta and British Columbia. The acquisition would double Videotron’s customer base and expand it into new markets.
Canadian wireless carriers use domestic roaming agreements to fill in gaps in their coverage by allowing their customers to roam on a competitor’s cellphone towers for a fee. Those fees are a cost borne by carriers and therefore impact wireless prices.
Currently, Freedom’s customers see their mobile data throttled when they are outside of Freedom’s network. Access to lower roaming rates might allow Videotron to offer its wireless customers nationwide service without charging them overage fees, the sources said.
Rogers, Shaw and Videotron recently extended the deadline for their two-step transaction to Feb. 17.
Mr. Champagne’s approval is the final hurdle for a deal that was first announced in March, 2021, and has faced numerous delays and regulatory setbacks. Rogers initially attempted to acquire Freedom Mobile, before agreeing to sell the carrier in order to address concerns about competition.
The transfer of Shaw’s broadcasting assets to Rogers has been approved by the Canadian Radio-television and Telecommunications Commission.
Late last year, the Competition Tribunal, a quasi-judicial body, ruled that the takeover of Shaw, with the divestiture of Freedom to Quebecor, would create a “more aggressive and effective” wireless competitor. That decision was later upheld by the Federal Court of Appeal, which dismissed an application by the Competition Bureau.
The bureau, an independent law enforcement agency that seeks to protect competition among businesses in Canada, had sought to block the takeover, arguing that it would result in higher cellphone bills and poorer service.