In Canada, Rogers Communications Inc., Shaw Communications Inc. and Quebecor Inc. on June 17 announced a divestiture agreement for the sale of Freedom Mobile Inc. to Quebecor, subject to regulatory approval.
According to a press release, the parties "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," and contend that transaction "will ensure the presence of a strong and sustainable fourth wireless carrier across Canada."
Under the terms of the official Divestiture Agreement, Quebecor has agreed to buy Freedom on a cash-free, debt-free basis at an enterprise value of C$2.85 billion, expanding Quebecor’s wireless operations nationally.
The agreement provides for the sale of all of Freedom branded wireless and Internet customers, 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 parties said they will "work expeditiously and in good faith to finalize definitive documentation" for the agreement.
The parties add that, as Freedom’s new owner, Quebecor "will bring a strong operational track record, a history of competing vigorously and successfully in telecommunications services, including its wireless brands in Quebec and Eastern Ontario, and significant financial and spectrum resources to enable an expedient path to the next evolution of 5G technology for Freedom."
“This is a turning point for the Canadian wireless market,” said Pierre Karl Péladeau, president and CEO of Quebecor. “Quebecor's Videotron subsidiary is the strong 4th player who, coupled with Freedom’s solid footprint in Ontario and Western Canada, can deliver concrete benefits for all Canadians. We have always believed that for there to be healthy competition in wireless services only a player with a proven track record can successfully enter the market. This is a value-added transaction for all consumers and the Canadian economy. After fifteen 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.”
Péladeau added that Quebecor and Rogers have always had a strong relationship. "This trilateral agreement with Shaw is yet another example," he added.
The Rogers-Shaw transaction, announced March 15, 2021 has already been approved by the shareholders of Shaw and the Court of Queen’s Bench of Alberta, and the Canadian Radio-television and Telecommunications Commission, and remains subject to review by the Competition Bureau and the Minister of Innovation, Science and Industry (ISED).
The Freedom Transaction is conditional, among other things, on clearance under Canada's Competition Act and the approval of ISED and would close substantially concurrently with closing of the Rogers-Shaw transaction.
Tony Staffieri, president and CEO of Rogers, commented, “Our agreement with Quebecor to divest Freedom is a critical step towards completing our proposed merger with Shaw. We strongly believe the divestiture will meet the Government of Canada’s objective of a strong and sustainable fourth wireless services provider. 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.”
Edward Rogers, chairman of Rogers Communications, added, “This is a truly Canadian-made solution that will benefit all Canadians by delivering increased competition and choice, the next generation of telecommunications services and enabling the transformative benefits of a combined Rogers and Shaw. We look forward to completing the Shaw Transaction which would make Rogers a truly national telecommunications provider."
“Today’s announcement marks an important milestone in our bold and transformative journey to join together with Rogers,” said Brad Shaw, executive chairman and CEO of Shaw. "Since Shaw entered the wireless business in 2016, we have made significant strides towards changing the Canadian wireless landscape. We made a promise to Canadians that we would increase choice and affordability and I’m proud to say we delivered on that promise. Today's announcement ensures that Freedom Mobile will remain a strong competitor.”