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A terrifying, terrifying wireless carrier threatened the growth of competing subscribers, so they met. If this sounds like last year’s controversial $ 58 billion deal between T-Mobile US Inc. and Sprint Corp. in the U.S., see north. On Monday, Rogers Communications Inc. has agreed to acquire its Western Canadian rival Shaw Communications Inc. with C $ 26 billion ($ 20.9 billion) including debt, the latest Megadeal in North America to launch a global race on 5G and raise eyebrows for both consumers and regulators. Investors will not complain, however.
“As the viral pressure subsides, Shaw could remain a threat to pay-back growth,” Bloomberg Intelligence analyst John Butler wrote in a December 10 report. These predictions have proved to be accurate: Rogers gives Shaw shareholders C $ 40.50 a share, 77% higher than the stock closing price 20 days ago. C $ 27.58 prior to the announcement of the agreement, according to data compiled by Bloomberg.
Shaw is primarily a provider of broadband internet, pay-TV and telecommunications services in British Columbia and Alberta, with those services offering more than four-quarters of its C $ 5.4 billion in the 12 months to November. The company acquired Freedom Mobile five years ago and launched the Shaw Mobile brand last summer during the Covid-19 epidemic to compete wirelessly in attractive ways. (Its broadband customers are eligible for a free voice and messaging system via Wi-Fi enabled, or the ability to purchase a single gigabyte of data for C $ 10 – unaffordable prices in the U.S. wireless market.)
While Shaw is in fourth place far, the transaction will provide Rogers 1.8 million wireless subscribers to the part of the country where there is little (Rogers already owns a 31% stake in the Canadian market). It will also have approximately 5.3 million cable and satellite customers, as well as an additional 5G spectrum, the fastest next generation of wireless networks. In the absence of an agreement, it is possible that Rogers has had to reduce prices and offer profits to prevent users from switching to Shaw. Rogers said the result of their combination would be “multiple choice” for consumers, though it is unclear how.
The memorandum of understanding reads as a Canadian consumer festival, highlighting C $ 2.5 billion investment in the 5G network to help close the digital world divide and the new C $ 1 billion Rogers Rural and Indigenous Connectivity Fund. Rogers also promises not to raise prices for Freedom Mobile customers for at least three years and create 3,000 jobs. However, Twitter is full of posts from unhappy residents worried that their bills will increase. Here are some examples of occupational safety:
The agreement will bring 5G service to Western Canada “much faster than the company alone can do,” read Rogers’ statement. It is the same concept T-Mobile and Sprint used to justify the slowdown in the US market from four to three major competitors. T -Mobile now has the most popular position in the industry, forcing Verizon Communications Inc. and AT&T Inc. to take billions of bills to hold.T-Mobile has also cut jobs to build mergers.
The 5G controversy has worked wonders in the U.S. Federal Communications Commission and the Department of Justice. It is unclear whether Canadian regulators will be deceived.
This column does not reflect the views of the planning board or Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Opinion journalist who covers the entertainment and telecommunications business, as well as extensive deals. He previously wrote an M&A column for Bloomberg News.