Industry Canada Minister Denies Rogers-Shaw . Telecommunications Merger

OTTAWA, Canada – Canada’s federal industry minister said on Tuesday he would not approve a multibillion-dollar merger between Rogers Communications Inc. and Shaw Communications, two of the country’s largest telecommunications companies.

Industry Minister Francois-Philippe Champagne left the door open for a revised agreement.

The proposed US$19.1 billion (US$26 billion) merger would mean a wholesale transfer of wireless spectrum licenses from Shaw to Rogers, which would require approval. of Champagne.

“Today, I officially decline that request,” Champagne said. “My decision officially ends that chapter of the original proposed transaction.”

Shaw’s ownership of Freedom Mobile has been seen by many as the main obstacle to approving the deal. Earlier this year, Montreal-based Videotron agreed to buy it for $2.1 billion (Cdn 2.85 billion).

Champagne said he needed two specific concessions before approving the Videotron deal.

Videotron would have to agree to keep the Freedom wireless license for at least 10 years, he said.

“We don’t want someone to get rid of these permits, we want them to stay long,” he said.

Second, Champagne said he would “expect” wireless prices in Ontario and Western Canada to drop by about 20%, in line with Videotron’s current Quebec offerings.

Karl Peladeau, CEO of Quebecor Inc., which owns Videotron, said he intends to accept Champagne’s terms.

In a statement, Peladeau said Quebecor agreed to incorporate the industry minister’s regulations in a new version of the transaction, paving the way for the Freedom sale to be made.

Champagne did not specify whether the successful sale of Freedom Mobile meant the Rogers-Shaw deal could still be approved.

As well as Champagne’s approval, the Rogers-Shaw deal needs a green light from the Competition Commissioner and the Canadian Television and Telecommunications Commission (CRTC).

The CRTC requested conditional approval for the broadcast portion of the deal in March.


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