Talk of 'betrayal' as Canada OKs Rogers-Shaw merger

Rogers Communications has finally received government approval for its multi-billion-dollar takeover of rival Shaw, subject to a raft of remedies designed to protect competition.

But while that’s good news for the telcos themselves, there are many in Canada who still remain vehemently opposed to the tie-up.

Rogers and Shaw on Friday issued a joint statement noting they had received final regulatory approval for the deal and confirming that as a result the transaction will close by their 7 April internal deadline. This moment has been a long time coming, and that deadline has been pushed back a number of times in recent months, with Ottawa declining to be rushed into making a decision.

It’s more than two years since Rogers unveiled its C$26 billion plan to buy Shaw. At the time, the companies acknowledged the need for various regulatory approvals, but nonetheless believed they would be able to complete the deal in the first half of 2022. That prediction turned out to be pretty wide of the mark, with pushback from regulators and strong opposition to the deal from many consumers and consumer groups in Canada.

Last summer the telcos brokered a C$2.85 billion deal to sell Shaw’s Freedom Mobile unit to telecoms and media company Quebecor, the thinking essentially being to create a fourth mobile network operator in Canada, but it took the authorities some time to accept that such a move would suffice from a competition perspective.

It fell to François-Philippe Champagne, Minister of Innovation, Science and Industry, to make a call. And on Friday he finally did just that, approving the deal, but with a list of conditions designed to ensure the efficacy of that fourth mobile player as well as formalising a number of commitments from the merged Rogers-Shaw on investment, job creation, and low-cost pricing plans.

Videotron, Quebecor’s telecoms unit, is required to offer plans that are comparable to those currently available in Quebec, and offer options at least 20% cheaper than those available from the major players, as well as giving Freedom Mobile customers a data boost as a short-term bonus, “while it invests to bring down prices overall,” the ministry said. Videotron is also required to hold onto the Freedom Mobile licences for at least 10 years; must roll out 5G to Freedom’s existing footprint within two years; and must expand mobile services to Manitoba via and MVNO deal or other means.

The conditions “will ensure that this new national fourth player will be in it for the long haul, be able to go toe-to-toe with the big three, and actually drive down prices across Canada,” Champagne declared. That’s what Canadians wanted to hear. But whether they actually believe the merger – plus conditions – will have a positive impact is a different matter entirely.

Canadian consumer group OpenMedia certainly does not. And it did not mince its words on the matter. “This is a dark day for the Internet in Canada. Today’s decision is the largest blow to telecommunications competition and affordability we’ve ever seen,” the group’s executive director Laura Tribe said in a statement on Friday, in which she accused Champagne of turning his back on Canadians and making Rogers ‘king’ of the Internet.

“It’s hard to reconcile this week’s federal budget filled with promises of affordability measures, with such a direct assault on choice and affordability for Internet connectivity,” Tribe said. “It’s a massive betrayal that’s only made worse coming from a government that has long-promised improved telecom affordability.”

Naturally, Rogers and Shaw still insist the deal will be beneficial for Canadians. Rogers’ chief executive Tony Staffieri repeated some oft-heard pledges from the companies about boosting network coverage, connecting underserved communities and improving access for low-income users.

“Building on a shared legacy with Shaw, we will invest substantially to bring more choice, more value, and more connectivity to Canadians across the country,” Staffieri said. But experience suggests a consumer backlash is imminent.

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