Cogeco wireless plans ‘probably part of the equation’ for Rogers: Ouimet

As Cogeco Inc.’s CFO speculated Tuesday that a bid for his company’s Canadian division by Rogers Communications Inc. was driven in part by an attempt to take Cogeco out of the wireless equation, Rogers’ CEO indicated the company hasn’t given up on the potential acquisition. Earlier this month, New York-based Altice USA Inc. offered $10.3 billion to buy Cogeco, a deal that would then see Rogers acquire the Canadian assets from Altice for $4.9 billion. The controlling shareholder, the Audet family, issued a statement that the company would not sell, and that the refusal was “definitive.” Speaking at an investor conference organized by BMO, Cogeco CFO Patrice Ouimet said the company wasn’t surprised by the interest Altice and Rogers showed in buying Cogeco, but they were by the way the two companies went about the bid. “Proceeding with a hostile offer on a family-controlled company was something that was surprising to us,” Ouimet said. “Especially since the Audet family had indicated the night before they would not sell.” He also said that there was a “timing element” to the offer, given that the CRTC is currently deciding whether to mandate wireless network access by mobile virtual network operators, an outcome strongly opposed by incumbents. Cogeco has pitched a “hybrid” MVNO model that would position established telecoms like Cogeco to become MVNOs, a solution the CRTC could opt for as a compromise. “As you know, we are attempting to get into the wireless space. We bought spectrum over time... we’ve proposed a hybrid MNO framework to the CRTC,” Ouimet said. “Obviously, taking Cogeco out of the equation for Rogers is probably part of the equation to launch a hostile bid right now.” Earlier in the conference, Rogers CEO Joe Natale was asked about the bid. He said the timing of the offer was due to the “critical juncture” of the telecom industry, which with 5G buildouts has begun the rollout of the next generation of wireless networks. He said as the company makes its capital plans “for the medium and long term, we’re asking a very fundamental question -- do our plans include Cogeco territory or not? It’s a question that we certainly have asked over the years.” Natale said: “I’d hate to miss this technology investment cycle… that’s the dialogue we’ve had at the leadership table and with the board.” Asked whether Cogeco’s refusal to sell means Rogers will sell the stake it currently holds in Cogeco — 41 per cent of Cogeco Inc. subordinate shares -- Natale responded “it would be unfair of me to lay out our deal strategy or our plans or approach.” He added: “as you’ve heard from us, we’re patient, we’re working our way through this. This is a marathon not a sprint, as you’ve heard our partners from Altice say. So we’re just going to keep the focus here.” Also appearing at the investor conference Tuesday was BCE Inc. CEO Mirko Bibic, who reiterated the company’s position that rural broadband rollouts would be affected by the outcome of the ongoing fight over internet service wholesale rates. The CRTC is currently deciding whether to keep the lower rates it introduced last year. The Federal Court of Appeal recently dismissed an appeal of those rates brought by the incumbents. In August, the federal cabinet declined a request by the incumbents to overturn the lower rates, but Innovation Minister Navdeep Bains issued a statement expressing concern that the lower rates would affect investment. “I view the regulatory environment as quite stable and beginning to be positive in terms of encouraging significant investment in networks,” Bibic said Tuesday. He said focus has turned to quality and accessibility of networks especially in rural areas, and that “we cannot as a country deliver on those needs without a regulatory environment that fosters investment.” Bibic added: “I think there’s an appreciation of that by the regulator, by the government, by the industry, and you saw signs of that last month when minister Bains clearly signalled to the CRTC that the wholesale internet rates they had established a year ago would undermine investment in facilities.” — Reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca CORRECTION - A previous version of this story indicated that Rogers spoke at the conference after Cogeco.

Cogeco wireless plans ‘probably part of the equation’ for Rogers: Ouimet

News | September 15, 2020

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Cogeco wireless plans ‘probably part of the equation’ for Rogers: Ouimet

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