Network sharing deal with Telus strengthens Globalive bid for Freedom: analysts

The reported network sharing deal inked between Freedom Mobile-hopeful Globalive and Telus Corp. would strengthen the former's bid to pick up Shaw Communications Inc.'s mobile assets should the Competition Bureau mandate their divestment as part of the approval of Shaw's acquisition by Rogers Communications Inc., according to telecom industry analysts. In a Friday morning note, Canaccord Genuity analyst Aravinda Galappatthige wrote that the move could "potentially add credibility" to Globalive's bid for the asset in the eyes of regulators, but also that Telus' motivations are less than clear. "Generally speaking, wireless incumbents are extremely hesitant even to discuss the idea of network share (with a non-incumbent) and Rogers’ network arrangement with which was inked a decade ago has broadly been considered a tactical blunder," he wrote. Galappatthige added that one potential reason for the agreement is that it might be an "attempt to compromise the prospect of Quebecor emerging as the eventual buyer (by promoting Globalive back up the contenders list), a likelihood that has gained traction since the recent decision by the commissioner of competition," and an attempt on the part of Telus to "pre-empt" a possible network sharing arrangement between Quebecor and Rogers as part of a wireless remedy. However, the analyst wrote that if that were the case it would be a "disproportionately aggressive move.” Alternatively Galappatthige wrote that the move could be prompted by an eye toward greater access for Telus to Shaw's spectrum assets, should those also be divested as part of the remedy, as Innovation Minister François-Philippe Champagne has indicated at least some of which will. The network sharing arrangement, first reported by the Globe and Mail, surfaced just a day after the federal court rejected a move by Telus to block Quebecor's acquisition at auction of set-aside spectrum in last summer's 3,500 MHz auction. In its Thursday announcement of the deal, Globalive said that the network sharing deal was incumbent upon Globalive's acquisition of Freedom, and "marks the first time that a Canadian carrier has entered into a network and spectrum sharing agreement with a pure-play independent wireless competitor." "The positive aspects of robust, independent competition are clear. Canada needs a truly independent fourth carrier to ensure consumers have the benefits of a competitive market and a level playing field. We're excited to bring Canadians closer to that reality with this transformational announcement," Globalive founder and chairman Anthony Lacavera said in the release. In a Thursday afternoon note, National Bank analyst Adam Shine wrote that the deal could give Telus access to cheaper set-aside spectrum reserved for regional players at auction, set-asides that Telus has consistently campaigned against. "Telus would gain access to some of Freedom's spectrum as well as less expensive set-asides that Freedom might buy in future spectrum auctions, so this could incrementally benefit the wireless service of Telus out West and reduce the telco's outlay for future spectrum purchases as well as wireless capex spending to a certain degree," Shine wrote. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

Network sharing deal with Telus strengthens Globalive bid for Freedom: analysts

News | May 20, 2022

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Network sharing deal with Telus strengthens Globalive bid for Freedom: analysts

News | May 20, 2022

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