The biggest Canadian telecom acquisition in decades is finally going ahead after the federal government gave its blessing to Rogers Communications Inc.’s RCI-B-T takeover of Shaw Communications Inc. SJR-B-T, as well as a side deal that will see Shaw’s discount Freedom Mobile unit sold to Quebecor Inc. QBR-B-T.
Now Canadians will see whether the companies keep all the promises they made to get here, including pledges around improved services and cheaper prices.
If Rogers and Quebecor don’t meet the conditions of the deal, they both face penalties – up to a maximum of $200-million for Quebecor, and up to $1-billion for Rogers.
What does the approved acquisition mean for existing Shaw customers?
It depends where consumers live and what Shaw services they use.
The most obvious change for Shaw cable customers is that their bills will start coming from Rogers.
For Freedom Mobile’s existing 1.7 million customers who move to Quebecor’s Videotron unit, they’ll see their data allotments increase by 10 per cent.
The 450,000 existing customers of Shaw Mobile, a separate brand from Freedom that operates in Alberta and B.C., will be transferred to Rogers, who have promised to offer services at Shaw’s current prices for the next five years.
Will wireless bills go up or down?
Consumer advocates have long complained that Canadians pay disproportionately high cell phone bills, however it’s also true that they’ve been coming down. Statistics Canada’s cellular price index shows average bills have declined 35 per cent since 2017.
In its December ruling, the competition tribunal said the deal could actually boost competition in Western Canada, arguing Videotron’s takeover of Freedom “will likely ensure that competition and innovation remain robust” in Alberta and B.C., and that Rogers’ own position in those two provinces will be strengthened by owning Shaw’s assets, making Rogers a stronger rival to Telus and Bell.
Aside from the price guarantee afforded to Shaw Mobile customers, Videotron has pledged that, for the next 10 years, it will offer wireless plans that are 20 per cent lower in cost than what its big three rivals charge.
For low-income Canadians, Rogers has also promised to expand its Connected for Success program, which delivers cable high-speed internet and bundled services at a discount price, to households in Western Canada who receive certain government income supports. The company has additionally said it will roll out a new version of the program for wireless customers, making it available to 2.5 million eligible low-income Canadians.
Ultimately, the deal helps cement Freedom’s future as a national wireless competitor, which was not certain to be the case if Shaw continued to own it, say industry watchers.
“It was not in anybody’s interest to have Freedom out there as a cheap, low-value alternative that’s degrading and falling behind,” said Mark Goldberg, a telecom consultant. “Quebecor is going to ensure Canada has a viable fourth option in Ontario, B.C. and Alberta.”
What do rural Canadians get out of this deal?
To get the deal done Rogers has pledged, among other things, to invest $1-billion to improve connectivity for rural, remote and Indigenous communities, and remote highways in Western Canada. Specifically, they’ve promised internet access at speeds of at least 50/10 megabits per second.
The company also promises to invest $2.5-billion to expand and improve 5G network access to consumers and businesses in Western Canada.
Mr. Goldberg said residents of Manitoba and Saskatchewan, in particular, are likely to benefit from the deal. That’s because Shaw offers cable services there but no wireless, while Rogers sells wireless but has no cable or internet footprint.
“Now you’re going to have Rogers as a much more powerful competitor offering a really viable bundled alternative in those provinces,” he said. He noted that SaskTel last week announced its largest-ever capital expenditure plans, while Bell and Telus have accelerated their fibre-to-home construction in the provinces in anticipation of the increased competition.
What will the deal mean for jobs?
Rogers said it will create 3,000 new jobs in Western Canada and keep a headquarters in Calgary for 10 years after the deal closes.
That said, takeovers typically come with “efficiencies,” which is corporate speak for job cuts. Rogers and Shaw have never said how much money the deal is expected to save in reduced costs, or how many jobs will be lost as a result. A promise to create 3,000 jobs in one part of the country doesn’t mean 3,000 won’t be trimmed elsewhere.