Rogers' C$3 billion Cogeco sweetener falls on stony ground

Canadian telco Rogers has pledged to invest C$3 billion in Quebec, including 5G spend…but only if it is able to buy broadband operator Cogeco.

Family-owned Canadian broadband provider Cogeco blocked an acquisition attempt tabled by Rogers and partner Altice USA earlier this month and does not seem predisposed to accepting Rogers’ sweetener now.

A spokesperson for the company sent an email quote to BNN Bloomberg that essentially reads like a virtual shrug, pointing out that if Rogers fails to invest in its mobile business in Quebec it will lose customers, irrespective of its relationship with Cogeco. “The company remains focused on executing its profitable growth strategy” and investing in its existing broadband footprint, the spokesman said.

To recap: Rogers Communications made an unsolicited C$10.3 billion (US$7.8 billion) cash offer for Cogeco, in which it is already a major shareholder, with a view to selling off its US broadband asset – Atlantic Broadband – to deal partner Altice USA for C$4.8 billion. The move would have left Rogers as sole owner of Cogeco, adding a further 1.8 million homes and businesses to its footprint, while enabling Altice to fill in coverage gaps in the eastern seaboard of the US. All very neat, aside from the fact that the Audet family, whose Gestion Audem holding company claims 69% of Cogeco’s voting rights, does not want to sell and turned the pair down flat.

Undeterred, Rogers and Altice said they “remain committed to pursuing this transaction,” and called for “constructive dialogue” between the various boards.

Rogers’ C$3 billion investment plan suggests there may have been some encouraging signs, but persuading a family-run firm to sell was always going to be a tough ask.

Cogeco’s reaction may have been to pick up on the impact of Rogers’ planned investment on its existing business in Quebec, but the telco itself is focusing more broadly than that, explaining that the scheme is geared towards bringing connectivity, jobs and economic growth to the province.

Half of the total would be spent on connectivity – $1.5 billion has been earmarked for network investments, that is – including rural connectivity, connected home services, and 5G; Rogers said it will commit to covering 95% of Quebec’s population with 5G in five years. Rogers also pledged to establish a tech innovation hub in Quebec, creating up to 300 jobs in artificial intelligence (AI), software engineering and digital technology. And there are a number of promises around community partnerships, sponsorship of sporting events, and supporting use of the French language.

Just for good measure, Rogers threw in that it intends to maintain the Cogeco brand in Quebec and retain its Montreal HQ, continue relationships with local suppliers, and ensure 5,000 jobs at a combined Rogers/Cogeco.

It’s tough to call whether that will be enough to sway opinion among the powers that be at Cogeco, but early indications are that it will take more to change the stance of the Audet family.