The chief executive of Rogers Communications Inc. RCI-B-T says the company will work with regulators to ensure that the $26-billion takeover of Shaw Communications Inc. SJR-B-T doesn’t eliminate Canada’s fourth-largest wireless carrier.
Analysts have long anticipated that Rogers will have to sell Shaw’s Freedom Mobile – which operates in Ontario, Alberta and B.C. and has been credited with lowering wireless prices – to appease regulators. The takeover is being reviewed by three federal bodies – the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Ministry of Innovation, Science and Economic Development.
Tony Staffieri, president and CEO of Rogers, said Tuesday that the Toronto-based telecom has had “healthy dialogue” with all three regulators and is on track to close the deal by the end of June.
His comments come after Innovation, Science and Industry Minister François-Philippe Champagne said last week that he won’t allow Rogers to acquire all of Shaw’s wireless licences because doing so would be at odds with Ottawa’s desire to encourage competition in the industry.
Speaking at a telecom, media and technology conference held by Bank of Nova Scotia, Mr. Staffieri said the minister’s statement was very helpful in articulating the broad view of regulators “which is, on the wireless side what they’d like to see is a continued fourth player in the marketplace.”
“This was, from the very outset, a cable acquisition for us ... so that’s 90 per cent of the transaction for us and that’s what we’re focused on. And on the wireless side, we’ll continue to work with the regulatory bodies on a solution that’s going to achieve their objective,” he added.
BCE Inc.’s chief financial officer said earlier on Tuesday that if Freedom is sold, it will have a difficult time competing against national, integrated telecoms that are able to win customers by bundling multiple services together.
“I think that a new fourth player will be weaker than what Shaw has been. It will be a wireless-only player and likely have a weaker balance sheet, competing against national integrated players,” Glen LeBlanc said during the same industry conference.
He added that although Quebecor Inc., which has publicly expressed interest in buying Freedom Mobile, has done “extraordinarily well” in its home market of Quebec, competing in Western Canada where it has no cable network “will be very different.”
“It’s going to take their attention away from their core market in Quebec,” Mr. LeBlanc said, adding, “I think we actually have an opportunity here.”
On Monday, Rogers locked in financing for the takeover by selling more than $13-billion of bonds.
Toronto-based Rogers tapped U.S. credit markets for US$7.05-billion by selling five bond issues, and raised another $4.25-billion in Canadian credit markets with four bond issues. The offerings were upsized and done at lower interest rates than Rogers initially anticipated, owing to strong investor demand.
The money, along with new term loans from banks, will replace a $19-billion bridge loan from Bank of America Corp. that Rogers struck last March, when the company announced plans to acquire Calgary-based Shaw.
Rogers opted to raise the money now, rather than after completing the Shaw takeover, because credit markets were supportive and the company was concerned that rising interest rates and uncertainty from events such as the Russian invasion of Ukraine would make it more expensive to borrow in the future, according to investment banking sources working on the financing. The Globe and Mail is not identifying the sources because they are not permitted to speak for the two companies.
Glenn Brandt, chief financial officer at Rogers, said Tuesday that the average term to maturity across all tranches is 14 years and the average interest rate for the bonds will be in the 4-per-cent range.
“We have the financing in place to close the deal, we’ve got clarity around the regulatory determination on wireless assets ... we can now continue working on the business execution,” Mr. Brandt said. “The financing is looked after.”
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