Quebecor’s Péladeau also sees competition rising as fourth national carrier
Author of the article: Denise Paglinawan, Barbara Shecter
Published Apr 03, 2023 • Last updated 19 hours ago • 4 minute read
The chief executives of Rogers Communications Inc. and Quebecor Inc. say they are expecting fierce but healthy competition on all fronts after Rogers’ $26-billion deal to acquire Shaw Communications Inc. formally closed on April 3.
The deal, which cleared its final regulatory hurdle on Friday, will see Shaw’s Freedom Mobile brand divested to Quebecor’s Videotron Ltd. for $2.85 billion, making the Quebec-based company Canada’s fourth national wireless carrier.
“There are certain things we work together on but most importantly, we compete with each other and we will look forward to that competition,” Rogers CEO Tony Staffieri told the Financial Post in an interview Monday.
Quebecor’s chief executive, Pierre Karl Péladeau, who met with Staffieri earlier in the day in Toronto, said in a separate interview that he too expects heavy but fair competition, including from Rogers, with which Videotron has a network sharing arrangement but which has clashed in the past with Quebecor.
“Retaliation is certainly not a very brilliant business model,” Péladeau said, rejecting suggestions that it might be difficult for the companies to work together where required after a 2021 court clash stemming from a previous stalled network-sharing arrangement.
For Rogers, the merger with Shaw will allow it to capture a new market in western Canada, which has long been dominated by its rivals, BCE Inc.’s Bell and Telus Corp.
“It’s a big day for us here at Rogers and Shaw,” Staffieri said. “This is going to be a significant combined entity and we’re almost double our size now.”
Staffieri reiterated commitments the company made, some of which were also part of the conditions laid out to secure the green light from Industry Minister François-Philippe Champagne, who approved the transfer of spectrum licences from Freedom Mobile to Vidéotron last week.
“(Our priority is) really going to be focused on what we said we were going to do all along in terms of our commitments. We are getting going starting tomorrow on the investments we said we were going to make,” Staffieri said.
Ottawa is hoping that Vidéotron, a major player in Quebec but with little presence elsewhere, will make for a “stronger” fourth competitor in Canada’s wireless market, in place of Shaw.
“I will ensure that a new fourth national player can go toe-to-toe with the Big Three and actually drive down prices,” Champagne said during the approval’s announcement.
Rogers and Vidéotron must adhere to a string of 21 conditions that include at least $6.5 billion in spending, a commitment to Western Canada and an understanding that wireless prices must come down, with financial penalties if they fail to comply.
Rogers must invest $1 billion in broadband internet access, at least $2.5 billion in its 5G network in Western Canada and $3 billion in expansion projects. It must also establish a western headquarters in Calgary, and maintain it for a minimum of 10 years, while creating 3,000 new jobs in Western Canada.
Staffieri said while the spending commitments extend over five years, some things will happen much more quickly, such as the new Western headquarters in Calgary, where it already has offices.
“Those are there as of today and we’ll continue to grow those operations as we continue to make investments,” he said. “This is a net growth story for the company.”
Péladeau, meanwhile, said the Freedom Mobile transaction was “the logical additional step” for his company, which has its roots in pulp and paper and has transformed into a telecommunications company with a quadruple play of cable, internet, and wireline and wireless telephony.
It is also a breakthrough, of sorts, for the Montreal-based company, which first tried to get into the wireless business by buying into independent operator Fido, which was ultimately purchased by Rogers in 2004.
Péladeau said Quebecor later tried to interest Shaw in some friendly cooperation when the Calgary-based cable company embarked on a wireless strategy in 2008, but was again rebuffed.
“At the end of the day, we want to be an operator. Why? Because we believe that’s the only way to be able to make significant amount of money,” Péladeau said.
Vidéotron and Freedom will have a combined total of more than 3.5 million customers for mobile services and nearly 7,500 employees, Quebecor said.
Staffieri said the two-year saga to get the deal approved in the face of opposition from the Competition Bureau and scrutiny from government was just part of the process.
“Putting together this deal has really been about being thoughtful and patient,” he said. “I would say things that are large and complex and matter take time and that’s what you saw play out here and I’m just thrilled that we are where we are today.”
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Source: Financial Post