Rogers has found a buyer for Shaw’s wireless carrier Freedom Mobile, a deal that the telco giant hopes will help it win regulator approval to takeover Shaw.
What happened: Quebecor, the Montreal-based company that owns Quebec’s largest telco Vidéotron, agreed to buy Freedom Mobile for $2.85 billion.
- Freedom is currently owned by Shaw, the country’s fourth-largest telco, which Rogers is attempting to buy.
- The Competition Bureau is attempting to block Rogers’ takeover of Shaw on the grounds that it would eliminate a fourth competitor in Canada’s wireless sector, leading to fewer choices and higher prices for consumers.
Why it matters: With both Vidéotron and Freedom Mobile under its belt, Quebecor claims it would be able to compete in the wireless space nationwide—but it’s not clear the arrangement will satisfy regulators who still must approve the Rogers takeover.
- In a recent filing, The Competition Bureau argued that the separation of Freedom from Shaw’s cable television service would reduce Freedom’s ability to compete with the likes of Rogers and Bell because it won’t be able to bundle different services—a problem that likely isn’t resolved with Quebecor as a buyer, since most of its customers are in a single province.
- Rogers argues that the bureau’s complaint is unfounded and that Freedom never depended on selling to Shaw’s cable customers to effectively compete.
Other potential buyers of Freedom have also criticized the Quebecor deal: the chairman of Globalive Capital, which offered to pay $3.75 billion for Freedom, said Quebecor was unlikely to compete aggressively with Rogers outside of Quebec.
What’s next: Both Quebecor’s purchase of Freedom and Rogers’ takeover of Shaw must still be approved by the Competition Bureau and the Ministry of Innovation, Science and Economic Development. If regulators continue to block the deal, the Competition Tribunal will take up the case with hearings beginning this fall.