The fierce battle for customers raging among Canadian telecommunications companies took another turn today, as the industry makes ready its 5G technology whose presence continues to grow as competition heats up.
Toronto-based Rogers Communications, the largest carrier in Canada, announced it was buying Calgary-based Shaw Communications in a deal valued at $26 billion, including $6 billion in debt Rogers will be taking on.
Since 2016, when it got into the wireless business, Shaw has invested billions to build it out in order to attract internet customers in Western Canada, and the deal would eliminate the fourth-largest carrier in Canada, Shaw’s Freedom Mobile, in a country that has some of the highest cell phone rates in the world.
Rogers Communications’s deal to buy Shaw Communications eliminates the fourth largest carrier in the country. (CBC/Michael Wilson)
The plan must still be approved by stockholders and government regulators.
That may not prove easy since Rogers, Montreal-based Bell and Vancouver-based Telus already control 90 per cent of the market and the government has said it wants lower prices.
Under the proposed deal, Rogers will pay $40.50 in cash for all of Shaw’s issued and outstanding class A and class B shares.
Shaw’s class B shares closed at $23.90 on the Toronto Stock Exchange on Friday.
Rogers said it plans to invest $6.5 billion in Western Canada, including $2.5 billion in the development of a 5G network over the next five years.
A $1-billion fund would also be created to connect remote regions, including indigenous communities, to a high-speed internet network.
As well, $3 billion will be devoted to developing its network, offering new services and investing in new technologies.
Rogers said the investments are expected to create 3,000 jobs in British Columbia, Alberta, Saskatchewan and Alberta.
The Rogers-Shaw deal will see Shaw collect $26 billion. (THE CANADIAN PRESS/Jeff McIntosh)
Shaw executive chair and CEO Brad Shaw and another director to be nominated by the Shaw family will be named to the Rogers board as part of the deal.
If the deal is approved, Shaw’s head office will remain in Calgary and the Shaw family would become one of the company’s largest shareholders.
It is still subject to approval by shareholders and Canadian regulators, including Innovation Canada, which said the transaction will also be reviewed by the Competition Bureau of Canada as well as the Canadian Radio-Television and Telecommunications Commission.
The companies hope to complete the deal in the first half of next year.
With files from The Canadian Press, Radio-Canada, CBC News
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