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A Rogers Communications store in Toronto on June 3, 2012.

Michelle Siu/The Globe and Mail

Canada's largest wireless company, Rogers Communications Inc., is in talks on two deals designed to sidestep Ottawa's restrictions on industry mergers and discourage U.S. giant Verizon Communications Inc. from entering the domestic market.

Rogers Communications Inc. is backing a Toronto-based investment firm, Birch Hill Equity Partners Management Inc., on a proposed acquisition of Wind Mobile, a financially struggling wireless company with about 600,000 customers across the country, according to five sources familiar with the matter.

The plan would see Birch Hill take a controlling ownership stake in Wind. Rogers would contribute money, but would not get an equity stake in the No. 4 national player. Instead, it would gain a network-sharing agreement with Wind, allowing it to use the smaller company's spectrum to expand its high-speed wireless service at a time when Canadians are using ever-increasing amounts of data on smartphones and tablet computers.

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Birch Hill is also looking at an acquisition of Mobilicity, the industry's No. 5 national player, say multiple sources – with Rogers as its likely partner. People close to the talks say it is the private-equity firm, not Rogers, leading the deals.

The deals, which are still being negotiated, would represent a defensive strike, taken in anticipation that Verizon is about to enter the $19-billion Canadian wireless market, as it has said it might do. The moves also underscore the high stakes Rogers faces to defend its market share and the lengths it is willing to go to possibly thwart Verizon, which recently made a $700-million initial offer to buy Wind to gain access to its spectrum, the public airwaves that cellphone companies use.

But if the government were to allow the deals, it would likely cause an outcry from rivals BCE Inc. and Telus Corp.

Ottawa has made it clear it does not want the Big Three carriers to acquire spectrum that was set aside for new players, such as Wind, in a 2008 spectrum auction. That policy underpins its goal of having at least four wireless carriers in every regional market. Wind is the fourth-largest wireless company in Ontario, British Columbia and Alberta. To avoid accusations the deals amount to end-runs around federal spectrum transfer rules, Birch Hill would have to control Wind and Mobilicity, and Rogers would have to prove that any entity controlled by the private-equity firm is not, in fact, a puppet for the cable giant.

"[Birch Hill] needs a network sharing partner to make the deal happen and they've approached Rogers," said one source who spoke on condition of anonymity. "For Rogers it's all about network sharing. Data demand is growing rapidly and they're focused on making sure they can meet future data demands."

Proving the deals do not result in diminished competition is another key hurdle. The government has already rejected Telus's $380-million proposal to buy Mobilicity in June, and earlier this year, Rogers offered more than $1-billion to buy Wind, sources say.

By safeguarding its access to valuable spectrum, Rogers would also be dealing a blow to BCE and Telus, which share a national network.

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Rogers has also made other moves this year to eventually acquire new-entrant spectrum, signing "option" deals for unused air waves with Shaw Communications Inc. and Quebecor Inc.'s Vidéotron Ltée unit – moves that raised the ire of consumer advocates. The carrier has also signed a network-sharing deal with Vidéotron, and extended an existing one with Manitoba Telecom Services Inc.

Its potential partnership with Birch Hill, however, comes at a time when the Big Three carriers have joined forces to argue that it is unfair they are prohibited from bidding for Wind and Mobilicity. Verizon is in talks to acquire both new-entrant carriers; a competing bid for those assets from Birch Hill could force Verizon to pay more or take a pass.

"We don't comment on rumours or speculation," Rogers said in an e-mailed statement. Birch Hill did not respond to messages seeking comment.

Birch Hill has a long-standing relationship with Rogers. In 2010, Birch Hill entered into a deal to sell Atria Networks to Rogers for $425-million. Michael Salamon, a deal-making veteran who previously worked at Nortel Networks, is Birch Hill's point man on the Wind and Mobilicity deals. He faces an imminent deadline to get them done.

"They've been doing their due diligence," said another source, adding Birch Hill has explored all kinds of scenarios, including how they would operate the businesses and reduce costs. It is also exploring whether it could flip subscribers to its incumbent partner over the near term. A key risk, however, is whether Ottawa would ever allow Birch Hill to sell the spectrum to Rogers or any other incumbent down the road.

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