Ottawa approves $26B Shaw takeover

The federal government has approved a key licence transfer needed for Rogers and Shaw to close their $26-billion deal, aiming to pave the way for lower telecom prices for Canadians.

Innovation Minister François-Philippe Champagne said that his department has approved the transfer of wireless licences from Shaw to Quebec-based Videotron, which has a side deal to buy Shaw’s Freedom Mobile division.

“The message I hear from Canadians is we pay way too much for telecom services and we want more options. Full stop,” Champagne said during a Friday news conference.

“The evidence is clear: Having a strong fourth competitor does lead to lower prices, as we’ve seen in Atlantic provinces, Quebec, Ontario, Alberta and British Columbia,” Champagne said in a statement.

A fourth national player will be able to go “toe-to-toe” with the Big Three telecoms, Rogers, Bell and Telus, to help drive down prices, he said. To do so, there will be 21 legally enforceable conditions and commitments for the tech giants in the transfer, which include investing $5.5 billion to extend 5G coverage and $1 billion to connect rural, remote and Indigenous communities.

In addition, Videotron will not be allowed to transfer the Freedom Mobile licences for 10 years and Rogers must establish a western headquarters in Calgary and maintain it for a minimum of 10 years, creating 3,000 new jobs.

Should either party breach these commitments, they will pay up to $200 million in Videotron’s case and up to $1 billion in the case of Rogers, he said.

The penalties offer incentive for the companies to honour these commitments, but enforcing the conditions will be difficult, said Keldon Bester, co-founder of the Canadian Anti-Monopoly Project.

“We’ve created a ton of risk that these conditions don’t pan out and they’re not monitored correctly,” he said. “What if the government changes? It’s unclear how they will enforce these conditions.”

Some of the conditions, such as extending 5G coverage or connecting rural communities, are nothing new and were part of the original proposal in 2021 from Rogers, said Laura Tribe, executive director of OpenMedia, a non-profit advocacy organization encouraging transparent communication systems within Canada.

“Champagne’s putting the nail in the coffin of competition in telecommunications in Canada,” she said in a written statement. “At this point, there’s only one thing he can do to save our downward spiralling telecom sector: full-scale competition reform in Canada. Without it, we could easily be looking at a Bell and Telus merger next.”