Telus has waged an aggressive campaign to keep Rogers and Quebecor out of its home turf in British Columbia and Alberta.Fred Lum/the Globe and Mail
Is there any better evidence of the consumer-friendly competition coming to Western Canada’s telecom market than Telus Corp.’s T-T relentless opposition to takeovers that would reshape the industry?
Telus chief executive Darren Entwistle and his team have pulled out all the stops to block Rogers Communications Inc.’s RCI-B-T planned $20-billion acquisition of Shaw Communications Inc. SJR-B-T, along with the sale of Shaw’s Freedom Mobile wireless business to Quebecor Inc. subsidiary Videotron. Court filings and government hearings have pulled back the curtain on “Project Fox” – as in fox in the henhouse – Telus’s name for its aggressive campaign to keep Rogers and Quebecor out of its home turf in British Columbia and Alberta.
Let’s be clear: Mr. Entwistle is doing exactly what Telus shareholders pay him to do. He’s defending the company’s increasingly dominant position in the west. Over the past decade, Telus has steadily won customers away from Shaw and other rivals.
But let’s also be clear about something else: Telus’s attempt to kill the deals does nothing to bring down cellphone bills or boost internet services in B.C. and Alberta. This is about trying to block transactions that replace Calgary-based Shaw with two deeper-pocketed new players.
“As one national cable company we will vigorously compete with Telus in the west,” Rogers CEO Tony Staffieri said Wednesday during a hearing before the House of Commons committee on industry and technology. “Yes, the deal will increase wireless competition. But it will also increase wireline competition. And that should explain why Telus has been doing everything it can to oppose this transaction.”
Telus documents disclosed during court hearings this fall show the Vancouver-based company’s tactics ranged from writing NDP leader Jagmeet Singh’s speaking notes against the deals to considering mobilizing opposition from western alienation activists and “meme factories” such as Canada Proud.
“Project Fox is a blatant example of Telus’s toxic and Machiavellian tactics,” including its attempts to harness western separatism, Quebecor chief executive Pierre Karl Peladeau said in Wednesday’s hearing. (Pause a moment to appreciate the irony of this line on sovereignty coming from the former leader of the Parti Québécois.) “All of this is being done to thwart the rollout of competition and the government’s desire to bring favourable and innovative business conditions to Canadians.”
Telus’s documents highlight the challenge of trying to block rivals without alarming regulators and consumers. The Shaw takeover is expected to result in job cuts in Western Canada. Rogers is projecting $1-billion in annual cost savings after the deal closes. One Telus internal presentation said: “How do we kill this deal without making it about competition? Make it about jobs.”
During Wednesday’s session, rival telecom executives painted Mr. Entwistle as a puppet master, pulling the strings of executives such as Globalive Inc. chair Anthony Lacavera. In May, Telus and Globalive struck a network sharing agreement as part of Mr. Lacavera’s unsuccessful attempt to engage Rogers in talks to acquire Freedom, which he founded in 2008 and left in 2016.
“Telus conspired to replace Videotron with Globalive as the purchaser of Freedom,” Shaw president Paul McAleese said in the hearing. Mr. McAleese took over Freedom after Mr. Lacavera exited. He said his predecessor has a “dubious record” as an operator and that Mr. Lacavera, “who is clearly comfortable playing Pinocchio to Darren Entwistle’s Geppetto, is an odd choice for an operating partner.”
Mr. McAleese pointed out that the federal Competition Tribunal ruled in December that the sale of Freedom and Shaw “will enhance competition in Alberta and British Columbia, where Telus is the dominant provider. It may be obvious, but it cannot be forgotten: Telus is not interested in creating stronger competitors in Western Canada.”
The Shaw takeover has played out over almost two years. The tribunal’s decision was upheld this week by the Federal Court of Appeal, and the only remaining hurdle is approval from Industry Minister François-Philippe Champagne. On Tuesday, Mr. Champagne said promoting competition remains his priority.
In reaching a decision, the Minister may want to consider what the tribunal’s three judges said last month in their decision on this transaction: “A well-known adage in the competition law community holds that when competitors oppose a merger, it is often a good indication that the merger will be beneficial for competition.”
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