Rogers and Shaw, two of the country’s largest telecommunications companies, will not be able to transfer their wireless service licenses after Ottawa officially opposed it Tuesday afternoon.
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The announcement does not come as a surprise, as the Federal Minister for Innovation, Science and Economy already commented on this mega deal at the beginning of the year.
“As I have said many times, I will never abandon my commitment to promoting competition and more affordable pricing for wireless services in Canada,” François-Philippe Champagne said in a press release distributed just before 6 p.m. Tuesday.
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This decision ends the “primordial” transaction.
Originally, the two companies aimed for a full merger, with cellular services as just one component. The transaction was valued at around $26 billion at the time.
Both parties are expected to initiate arbitration proceedings before the competition office this week. The aim is to arrive at a transaction that can satisfy all authorities even if the Radio, Television and Telecommunications Commission had approved the transaction.
Terms of the Quebecor Freedom Treaty
At the same time, the minister set out his terms for Quebecor’s proposed acquisition of Freedom Mobile.
Mr. Champagne requires Quebecor to hold the licenses received from Freedom for a minimum period of 10 years – “which means that any new service provider has to make a long-term commitment,” Mr. Champagne said.
The latter also requires the Quebec conglomerate to offer its customers in the west of the province similar prices to its Quebec customers.
“In fact, prices in Quebec are now on average 20% lower than the rest of Canada,” the minister said.
Note that Freedom Mobile is currently a subsidiary of Shaw. Quebecor’s acquisition of Freedom is valued at $2.85 billion.
Quebecor President and CEO Pierre Karl Péladeau confirmed Tuesday night that his company would accept Minister Champagne’s terms.
“We intend to accept the terms set out by the Secretary and incorporate them into the already negotiated new version of the Rogers-Shaw/Quebecor-Freedom Mobile transaction. These are in line with our business philosophy, which has been successful in Quebec as it has enabled us to capture a significant market share in a very short period of time,” explained Mr. Péladeau, pleased that the minister was improving the competitive landscape in wireless services recognizes and encourages.
“We want to work to ensure that Canadians in other regions also benefit from better prices that will end the rule of the ‘Big 3’ by promoting competition, public interest and Canada’s digital economy,” he added.