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Rogers and Shaw agree sale of Freedom Mobile to Quebecor, subject to approval

Canadian telecoms groups Rogers Communications and Shaw Communications have announced an agreement to sell Shaw's subsidiary Freedom Mobile to Quebecor on a cash-free, debt-free basis at an enterprise value of CAD2.85 billion (USD2.19 billion), subject to regulatory approval, as the pair continue to seek clearance for their own proposed merger. Rogers and Shaw asserted in their statement on Friday that the planned divestment of Freedom to Quebecor – the parent of Quebec-based cable and mobile network operator Videotron – 'will ensure the presence of a strong and sustainable fourth wireless carrier across Canada' and that they 'strongly believe the agreement effectively addresses the concerns raised by the Commissioner of Competition and the Minister of Innovation, Science and Industry regarding viable and sustainable wireless competition in Canada.'

The agreement provides for the sale of the Freedom brand's entire mobile and fixed internet customer base, as well as all of Freedom's infrastructure, spectrum and retail locations. It also includes a long-term undertaking by Shaw and Rogers to provide Quebecor transport services (including backhaul and backbone) and roaming services. The Freedom Mobile network covers urban centres across British Columbia, Alberta and Ontario representing around 50% of the Canadian population, while Videotron's mobile network coverage is currently restricted to Quebec and Ottawa. Rogers and Shaw stated that Quebecor will have the necessary financial and spectrum resources 'to enable an expedient path to the next evolution of 5G technology for Freedom.' The wording of the announcement implied that Rogers/Shaw intend to keep customers of Shaw's secondary mobile brand, Shaw Mobile, which is focused on bundling cable and cellular services in Western Canada.

Tony Staffieri, CEO of Rogers, declared: 'This agreement between proven cable and wireless companies will ensure the continuation of a highly competitive market with robust future investments in Canada's world class networks. We look forward to securing the outstanding regulatory approvals for our merger with Shaw so that we can deliver significant long-term benefits to Canadian consumers, businesses and the economy.' Quebecor CEO Pierre Karl Peladeau added: 'After 15 years of growth in the Quebec wireless market, we have demonstrated our expertise, our ability to innovate and our financial strength. Now we are taking another step to bring the opportunities our customers already enjoy to consumers across Canada.'

The merger of Rogers and Shaw, announced in March 2021, remains subject to review by the Competition Bureau and Innovation, Science & Economic Development Canada (ISED). The Freedom transaction is conditional, among other things, on clearance under the Competition Act and the approval of ISED and would close 'substantially concurrently with closing of the Rogers-Shaw transaction' according to Friday's announcement.

Thanks to TeleGeography for this industry update.

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Tuesday, 16 August 2022

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