Ottawa to block the ‘wholesale transfer’ of wireless licences in Shaw-Rogers deal

The federal government will block the wholesale transfer of wireless licences owned by Shaw Communications Inc. to Rogers Communications Inc., Industry Minister François-Philippe Champagne said Thursday.

“I am strongly committed to our policies to promote competition and ensure cellphone affordability for Canadians,” Champagne said in a news release.

“The wholesale transfer of Shaw’s wireless licences to Rogers is fundamentally incompatible with our government’s policies for spectrum and mobile service competition, and I will simply not permit it.”

Champagne said he shares many of the concerns expressed in recent months by Canadians about the $26-billion proposed takeover of Calgary-based Shaw by Toronto-based telecom giant Rogers.

The proposed deal — which was announced in 2021 — is currently under review by three federal regulators.

These include the Competition Bureau and the CRTC, two federal bodies that operate largely independent of the government; and Innovation, Science and Economic Development Canada.

Thursday’s statement from Champagne is the “most definitive to date” regarding his position on the proposed transaction, said RBC Capital Markets analyst Drew McReynolds in a note.

Still, McReynolds said it’s not unexpected, adding it’s always been likely that Rogers would be required to divest some or all of Shaw’s wireless assets in order to obtain full regulatory approval for the deal.

“Given a variety of both potential remedy partners (strategic and financial) and types of remedy packages, we continue to see a high probability of Rogers successfully consummating the Shaw transaction,” McReynolds said.

In a statement issued jointly by the two companies on Thursday, Rogers and Shaw said they “continue to work constructively with the government and regulators to close this transaction and deliver the benefits of the merger to all Canadians.”

“We share the government’s view that affordable, high-quality services should be available to every Canadian and by coming together, Rogers and Shaw will make the generational investments in networks and technology that Canada needs to create new jobs, increase competition, and bridge connectivity gaps in rural and remote areas.”

As part of the proposed transaction, the two companies have said Rogers will invest $2.5 billion in 5G networks across Western Canada.

The deal is still expected to close in the first half of 2022, Shaw and Rogers said in their statement.

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