By Catherine Sbeglia
Rogers Communications has announced that it will purchase Shaw Communications Inc. in a C$20 billion (US$16 billion) deal. If the agreement is approved by regulators, the deal will shake up Canada’s wireless industry as two of the country’s largest telecom and cable providers merge into one company. “This transaction will create long-term value for both companies’ shareholders and just as important, this transaction will ensure Canada’s cable and wireless industry can support the significant capital requirements needed for 5G networks and the essential connectivity that rural Canadians desperately need,” Rogers CFO Tony Staffieri said on a conference call with analysts.
The new entity, made up of the two family-founded Canadian companies, will use its assets, capabilities and newfound ability to scale to deliver “unprecedented wireline and wireless broadband and network investments, innovation and growth in new telecommunications services.”
Further, in a press release published by Shaw, it’s stated that the combined company will invest US$2.5 billion in 5G networks over the next five years across Western Canada and will commit to establishing a new US$1 billion Rogers Rural and Indigenous Connectivity Fund dedicated to connecting rural, remote and Indigenous communities across Western Canada.
According to the companies, Shaw’s board has approved the C$40.50-per-share cash offer and the transaction isn’t conditional on financing. The plan is for Shaw CEO Brad Shaw and another director to join the Rogers board. In addition, the Shaw family would become a major shareholder in the combined company, with 60 per cent of its shares in Shaw Communications being exchanged for 23.6 million Class B shares of Rogers.
The deal, which would result in a reduction of market competition, is still awaiting approval from the Canadian government. Currently, Canadian residents have four options for mobile operators — Rogers, Shaw, Telus Corp. and BCE Inc. — but if the deal is approved, Canadians will have one fewer provider to choose from.
Because a government review of this nature could take up to a year, the companies don’t expect the deal to close until sometime in 2022.
