Rogers gets details on how Quebecor-Freedom deal harms competition

The Competition Bureau responded Monday to Rogers Communications Inc.’s request for more information on why divesting Shaw Communications Inc.’s Freedom Mobile is not enough to facilitate the merger of the two telecom giants. Rogers asked for clarification last week. Shaw is seeking to sell Freedom to Québecor Inc.’s Vidéotron division for $2.85 billion. Rogers filed a motion with the Competition Tribunal requesting that the commissioner answer the question of what difficulties Vidéotron would face along with the manner in which Vidéotron’s competitiveness will allegedly be reduced and what “other benefits” Shaw’s wireless business allegedly derives from its parent company’s wireline business. In its five-page response, the bureau says Rogers took words out of context. The bureau actually said there are “difficulties and reduced competitiveness that Vidéotron will face without wireline assets and other benefits derived by Shaw from its wireline business.” The bureau proceeded to list a dozen examples of how Vidéotron could suffer after the sale goes through. It said there are barriers to entry for the Quebec-based firm entering new markets. It pointed to the decline of Freedom since the takeover was announced. Vidéotron will face challenges with respect to devices, network equipment and spectrum, the commissioner alleges. It will also have difficulty with network deployment and expansion, including a 5G network, the bureau said. The Quebec telecom will be unable to replace competition from Shaw Mobile, the filing stated, and Vidéotron will have reduced access to wireline assets. It will not have the benefits of Freedom’s integration with Shaw. The bureau also cited additional capital requirements of a standalone wireless entity in British Columbia and Alberta. There will be incremental costs to develop a 5G network. Vidéotron can also expect incremental capital or operating costs to build out or purchase from third parties backhaul previously provided by Shaw wireline business. The company will be unable to bundle or cross-sell services as the incumbents do. It will also be reliant on Rogers and will face competitive vulnerability from contractual arrangements in the divestiture agreement. At the BMO Capital Markets Media & Telecom Conference in Toronto Tuesday, Rogers CEO Tony Staffieri said he believes it is possible to get a decision from the tribunal by the end of the year, and department of Innovation, Science, and Economic Development approval within months of that. "While we're disappointed that the government has taken quite a bit of time to approve this transaction, we welcome the opportunity for the tribunal to take a very principled and objective view on our file, and we're confident with the position that we've put forward," Staffieri told investors at the conference, referring to the deal that would see Shaw sell Freedom Mobile to Quebecor if the merger goes through. –Reporting by Paul Park at ppark@thewirereport.ca with files from Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Michael Lee-Murphy.

Rogers gets details on how Quebecor-Freedom deal harms competition

News | September 13, 2022

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