Rogers, Shaw make deal to promote Freedom Cellular to Québecor in hopes of getting merger approval

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Rogers and Shaw struck a blockbuster merger settlement final 12 months, nevertheless it has been delayed after the Competitors Bureau concluded the mixed firm would scale back wi-fi competitors and lift costs

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Rogers Communications Inc. and Shaw Communications Inc. have struck a deal to promote Shaw’s Freedom Cellular wi-fi operation to Montreal-based Québecor Inc. in a bid to push by means of their $26-billion merger, which has been held up by Competitors Bureau considerations that the mix of the 2 telecom giants will scale back wi-fi competitors and lift costs.

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The $2.85-billion transaction, announce late Friday, is topic to regulatory approval.

“The Freedom Transaction will make sure the presence of a powerful and sustainable fourth wi-fi service throughout Canada,” the businesses mentioned in a press release.

“The events strongly imagine the settlement successfully addresses the considerations raised by the Commissioner of Competitors and the Minister of Innovation, Science and Business relating to viable and sustainable wi-fi competitors in Canada.”

Beneath the phrases of the Divestiture Settlement, Québecor has agreed to purchase Freedom on a cash-free, debt-free foundation at an enterprise worth of $2.85 billion, increasing Québecor’s wi-fi operations nationally, past its stronghold in Quebec.

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The divestiture settlement consists of the sale of all of Freedom branded wi-fi and Web prospects in addition to all of Freedom’s infrastructure, spectrum and retail places. It additionally features a long-term endeavor by Shaw and Rogers to supply Québecor transport companies (together with backhaul and spine) and roaming companies.

The businesses mentioned they “will work expeditiously and in good religion to finalize definitive documentation.”

Rogers and Shaw struck their blockbuster merger settlement final 12 months, however the deliberate closing was pushed till the tip of July after the federal Competitors Bureau concluded the mix of the 2 telecom giants would scale back wi-fi competitors and lift costs, and sought a full block of the deal.

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In paperwork filed with the Competitors Tribunal, the anti-trust authority argued {that a} “treatment” Rogers had proposed within the spring to promote Shaw’s wi-fi belongings didn’t do sufficient to handle these competitors considerations. That view was reiterated Friday in a submitting made public by the tribunal, by which Competitors Bureau officers additionally argued that the claimed efficiencies of the mix aren’t sufficient to offset its anti-competitive results as a result of they’re “speculative, unproven and unlikely to be achieved in entire or partly or are grossly exaggerated.”

Freedom Cellular has been wanted by a handful of suitors since March, when it turned clear federal authorities pushing for larger competitors weren’t ready to simply accept the “wholesale switch” of Shaw’s wi-fi belongings to Rogers.

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The chief executives of Montreal-based telecom big Québecor Inc. and Toronto-based unbiased Globalive have been vocal about their curiosity in buying Shaw’s Freedom Cellular division, which analysts mentioned might fetch as a lot as $4 billion. Pierre Karl Péladeau and Anthony Lacavera have additionally been vital of the sale course of run by Rogers, which initially excluded each events.

Some telecom analysts considered Québecor, which has established a aggressive wi-fi providing in Quebec, as a transparent favorite for the federal authorities. That view gained traction when the Competitors Bureau indicated that it felt “bundling” wi-fi with different telecommunication companies reminiscent of web and residential telephone might assist guarantee well-funded corporations able to growing wi-fi competitors.

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Whereas the names of the would-be consumers within the “treatment” sale the Competitors Bureau deemed unsuitable have been blacked out in filings with the tribunal, it’s understood that Rogers had deliberate to promote Shaw’s Freedom Cellular wi-fi belongings to New Brunswick-based rural web service supplier and cellular community operator Xplornet Communications Inc and Aquilini Funding Group.

Xplornet is owned by New York-based personal fairness agency Stonepeak Infrastructure Companions, whereas the Aquilini household owns belongings together with the Vancouver Canucks and the Rogers Area in Vancouver the place the NHL crew performs.

The merger of Rogers and Shaw has been authorized by the Canadian Radio-television and Telecommunications Fee (CRTC) and Shaw shareholders, however nonetheless requires the approval of competitors authorities in addition to Innovation, Science and Financial Growth Canada.

The Competitors Tribunal has scheduled hearings to start Nov. 7 and final at the least 4 weeks, adopted by written and oral arguments.

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