Rogers Enters Bid Of The Year For Shaw Comms
Telecommunications giant Rogers Communications has reportedly entered a bid to acquire Shaw Communications Inc. for a whopping CA$20 billion. Should the deal be approved by local competition regulators, it could very well see the formation of the country’s second-largest mobile and cable operator.
However, since the acquisition would see Rogers trump Telus Corp in contesting current market leader BCE Inc. in what has grown to be one of the largest telecommunications industries in the world, the cable operator says it expects stiff regulatory scrutiny to be applied by the powers that be.
Possible Boost To 5G
What’s more, by acquiring the currently fourth-ranked Shaw, Rogers, whose business is central to the urban districts of the province of Ontario, would be boosted in its efforts to provide networked services to Western Canadians – not to mention in terms of its plans to roll out 5G network connectivity in a more rapid response-time across the country.
According to Rogers CEO Joseph Natale, it’s way too early to even begin to speculate about a possible regulatory outcome. Even so, said Natale, the general consensus is that the acquisition bid will be approved by local competition lawmakers.
If indeed approved and successfully completed, Rogers Communications’ take-over acquisition of Shaw would represent the largest telecommunications deal since BCE completed the spin-off of its stake previously held in Nortel Networks. That particular transaction had as far back as the year 2000 been valued at an incredible CA$88.7 billion.
Beware Market Cannibalisation
But investors and market analysts appear tentative over the possibility of full regulatory approval being handed to the parties any time soon.
One such analyst is AGF Investments portfolio manager Stephen Duench, whose company is a shareholder in both Shaw and Rogers. Since Shaw has always been regarded the big number 4 in terms of market ownership in Canada, removing such a prominent player from the equation may be regarded as problematic, said Duench. Regulatory risks are most likely afoot because of that.
The next step will for the deal to be put up for review by the independent Competitions Bureau of Canada, the Department of Innovation, Science and Economic Development, and the Canadian Radio-television and Telecommunications Commission. And according to Innovation Minister Francois-Philippe Champagne, such a review process will focus on not only competition, but also innovation in technology, and affordability.
Voters’ recent complaints about the sky-high cost of telecommunications in the country – costs they say have been driving their cellphone bill right through the roof – can be expected to play a leading role in the outcome of the review proceedings.