© Reuters. FILE PHOTO: Ethernet cables are seen in front of the Rogers and Shaw Communications logos in this illustration taken July 8, 2022. REUTERS/Dado Ruvic/Illustrations//File Photo
(Reuters) – Canada on Friday gave final approval for Rogers (NYSE:) Communications Inc’s purchase of Shaw Communications (NYSE:) Inc for C$20 billion ($15 billion), authorizing the deal that will create the second telecommunications company in the country.
The green light for the deal came when the Minister of Innovation, Science and Industry, Francois-Philippe Champagne, agreed to transfer the wireless licenses for Shaw’s Freedom Mobile unit to Quebecor Inc under some conditions.
The proposed C$2.85 billion sale of Freedom Mobile to Quebecor-owned Videotron has been crucial in addressing antitrust concerns over the deal, given the overlap between Rogers’ and Shaw’s wireless divisions.
Champagne announced 21 conditions, including that Videotron must offer plans that are at least 20% cheaper than competitors and invest C$150 million to upgrade Freedom Mobile’s network over the next two years.
It also restricted the transfer of Freedom Mobile licenses for 10 years.
The Canadian government has asked Rogers to establish a western headquarters in Calgary and create 3,000 new jobs in western Canada that must be maintained for at least 10 years, while investing C$5.5 billion to improve network services.
Failure to comply with the commitments will result in a fine of up to C$200 million for Videotron and C$1 billion for Rogers, Champagne said in announcing a freeze on all major license transfers in the telecommunications sector.
The Roger-Shaw deal, reached in March 2021, will allow Ontario-focused Rogers to benefit from Shaw’s strong presence in sparsely populated western Canada and help it double down on its efforts to roll out 5G across the whole country.
The purchase faced opposition from consumer advocates, politicians and rival telecommunications companies, as it unites two major players in a market that already has some of the highest wireless bills in the world.
But efforts by Canada’s antitrust agency to block the merger were rejected by the Competition Tribunal and a Canadian court, in what was seen as a test case for the regulator’s ability to improve consumer choice in a country where a handful of companies control a large part of the business.
The deal’s closing date has been pushed back four times. It is the largest in the Canadian telecommunications industry since BCE’s (NYSE:) spin-off of its stake in Nortel Networks in a transaction valued at C$88.7 billion in 2000.
The largest telecommunications company in Canada by market value is ECB Inc. .
Shaw’s US-listed shares rose 3% in premarket trading.
