Rogers Communications Inc. RCI-B-T has closed its $20-billion takeover of Shaw Communications Inc., ending a two-year saga to combine the cable networks and transform Toronto-based Rogers into a national player.
In order to win regulatory approval for the takeover, Rogers has sold Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier, to Quebecor Inc. QBR-B-T for $2.85-billion, creating a national expansion opportunity for the Montreal-based company’s telecom subsidiary, Videotron Ltd. That deal also closed Monday.
The three-way deal faced numerous delays and regulatory setbacks, but eventually secured final approval on Friday from Industry Minister François-Philippe Champagne, whose department reviewed the transfer of Shaw’s wireless licenses to Videotron.
“We’re thrilled to come together as one company to build on a shared legacy of investment, innovation, and entrepreneurship,” Rogers Chairman Edward Rogers said of the Shaw acquisition in a news release.
“Today marks the beginning of a new era for Canadians,” said Quebecor president and chief executive Pierre Karl Péladeau. “The alliance of Freedom and Videotron will permanently transform Canada’s wireless market for the benefit of consumers and create a new competitive environment that delivers innovative products and services at better prices,” he said in a release.
Some critics have expressed skepticism that Videotron’s takeover of Freedom will lead to lower cellphone bills across the country. But the Competition Tribunal determined, after a month-long hearing, that the deal will create a “more aggressive and effective” wireless competitor.
That means that Rogers will find itself with a new rival, one that it will be helping with a series of agreements that provide Videotron with access to the Toronto-based telecom’s infrastructure.
Rogers has made a number of commitments to the federal government in connection with the deal, encoding them in written undertakings that impose penalties if the promises are not met.
Those commitments include a previously announced promise that it will spend $1-billion within five years to expand high-speed internet and 5G in areas where that connectivity is not currently available. The telecom has also pledged to create 3,000 new jobs in Western Canada within five years, to maintain a Calgary headquarters for at least 10 years, and to invest $2.5-billion to expand 5G coverage in Western Canada and $3-billion in other network service expansion projects. Rogers has agreed to pay $100-million for every year in which it fails to meet any of its commitments, up to $1-billion.