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Ottawa denies transfer of Shaw wireless spectrum, threatening Rogers merger

Click to play video: 'Rogers-Shaw deal future uncertain as feds deny spectrum transfer'
Rogers-Shaw deal future uncertain as feds deny spectrum transfer
WATCH: Ottawa denies transfer of Shaw wireless spectrum, threatening Rogers merger. – Oct 25, 2022

The federal government says it will not approve the wholesale transfer of wireless spectrum licenses from Shaw to Rogers, threatening the proposed merger of the two telecommunications giants unless new conditions are met.

Innovation and Economic Development Minister François-Philippe Champagne said Tuesday the decision, which he previously committed to earlier this year, was meant to promote competition in the sector.

“I will never waiver in my commitment to promote competition and make wireless services more affordable for all Canadians,” he told reporters at a brief press conference.

Rogers had been aiming to sell off wireless spectrum licenses owned by Shaw’s Freedom Mobile to Quebecor’s Videotron as part of its bid to buy Shaw for $26 billion. That agreement was reached in order to address competition concerns.

Read more: Rogers, Shaw reach deal to sell Freedom Mobile to Quebecor

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But Champagne said he will not approve those sales unless he receives guarantees that any spectrum licenses acquired by Videotron are kept for at least 10 years, which he said was to prevent “flipping” of those licenses for profit.

“A new service provider needs to be in it for the long run,” he said.

The minister said he also expects wireless prices in Ontario and Western Canada to be brought down to comparable levels with Quebec-based Videotron, which Champagne said are 20 per cent lower than the rest of the country.

Champagne said he would consider signing off on the proposed spectrum transfers if those conditions are met.

“I hope (the leaders of Rogers and Shaw) are watching TV tonight, because they know me by now, and what I’m telling them (is) those are my expectations and I think they better listen,” he said.

A spokesperson for Rogers declined to comment on the announcement given the ongoing proceedings surrounding the proposed merger.

Quebecor CEO Pierre Karl Peladeau said in a statement that the company intends to accept Champagne’s conditions in its takeover of Freedom Mobile, which was agreed to with Rogers and Shaw in August.

“We will work to deliver better prices for Canadians in the other provinces and to end the reign of the ‘Big 3’ by promoting competition, the public interest and the digital economy in Canada,” he said.

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Click to play video: 'Rogers extends deadline to finalize Shaw takeover, expects spending of $150M on customer credits'
Rogers extends deadline to finalize Shaw takeover, expects spending of $150M on customer credits

Rogers and Shaw are expected to appear before the Competition Tribunal in November, where they will argue in favour of the transaction. A mediation is scheduled for later this week between the Competition Commissioner and Rogers and Shaw.

Canada’s competition watchdog has been trying to block the deal, arguing that it will lessen competition substantially and lead to higher phone bills.

The Canadian Radio-television and Telecommunications Commission (CRTC) has already conditionally approved the merger of the two companies’ broadcast services, leaving the wireless division as the final hurdle for the deal.

Last month, Rogers extended the proposed deal’s closing date to Dec. 31, with the option to extend it to Jan. 31, 2023, after moving it several times.

The merger was further threatened this summer by a day-long outage of Rogers’ wireless services that impacted large parts of Canada’s economy and left millions of customers without phone or internet access.

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The Competition Tribunal later ruled the outage would be relevant to its consideration of the merger and will likely factor into this fall’s hearings.

—With files from the Canadian Press

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