Regulator says proposed Freedom Mobile deals will not sustain wireless competition

Regulator says proposed Freedom Mobile deals will not sustain wireless competition

The Competition Bureau says it is seeking to block Rogers Communications Inc. From the proposed $26 billion acquisition of Shaw Communications Inc.Sean Kilpatrick/The Canadian Press

None of the proposed deals to sell Shaw Communications Inc.’s SJR-BT Freedom Mobile is enough to keep competition in the wireless industry, says Canada’s competition watchdog.

Toronto-based telecom giant Rogers Communications Inc. RCI-BT is looking to sell Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier, to seek regulatory approval for a proposed $26 billion purchase of Calgary-based Shaw.

However, Competition Commissioner Matthew Boswell is dealing with potential buyers that Rogers has placed before regulators, saying in documents filed with competition court that they are unlikely to provide Freedom Mobile with the same level of financial, administrative or technical support as Shaw.

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On Monday, the competition watchdog applied to the court to prevent the merger of the country’s two largest cable networks. The competition bureau to support this application said Shaw has already stopped competing for the mobile phone business since the merger deal.

The bureau is also requesting an injunction to prevent the telcos from ending the deal until the request is heard.

The move by the competition watchdog represents a major setback for the cable acquisition, which will reshape the country’s telecom landscape. Rogers and Shaw said they need more scope to move quickly in rolling out 5G wireless services and compete effectively against global broadcasting giants. The companies pledged to oppose the office’s request.

Meanwhile, the Competition Bureau argues that Shaw and Rogers are close competitors in the wireless market and that the merger, even with the sale of Freedom to a new owner, will drive up mobile phone bills.

Details of Rogers’ proposed agreements to sell Freedom Mobile have been revised in the documents, which were posted on the competition court website on Tuesday. The Globe previously reported that Stonepeak Infrastructure Partners, a New York-based private equity fund that owns rural internet provider Xplornet Communications Inc. , is among the potential buyers that Rogers presented to the regulators.

On Tuesday, The Globe reported that Rogers also made an offer to organizers from a consortium that includes British Columbia First, Central and Eastern Canada pension fund LiUNA, infrastructure investor Fengate Asset Management and the Aquilini family, which owns Vancouver Canucks. .

Other suitors who have expressed interest in the carrier include Quebecor Inc. , which owns Videotron Ltd. based in Montreal, and Freedom Mobile founder Anthony Lacavera.

The competition watchdog says that under Rogers’ proposals, Freedom will face “much greater hurdles” to expanding its network and deploying 5G than it would have faced under Shaw’s ownership.

The regulator said separating Freedom Mobile from Shaw’s network infrastructure would reduce the carrier’s ability to provide bundled services.

The regulator said the company had also exited the most recent federal auction of wireless airwaves, putting it at “a disadvantage for future expansion.” “If sold, Freedom would require substantially greater investment to successfully deploy the 5G network compared to the network required by Shaw in the absence of the merger,” Boswell said.

However, BMO analyst Tim Casey notes that Shaw has put itself up for sale because it does not want to continue investing in its wireless business. “We believe an outright rejection of this transaction would not satisfy the government’s position of a four-player market,” Casey wrote in a research note on Sunday.

Rogers and Shaw said in statements Monday that they remain committed to closing the deal and are working to sell Freedom Mobile in its entirety.

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2022-05-10 22:09:52

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