(Bloomberg) — Canadian investment firm Globalive Capital Inc. says it has an agreement with Telus Corp. to share mobile networks and spectrum — a move intended to boost Globalive’s effort to buy wireless assets from Rogers Communications Inc.
The arrangement comes as Rogers tries to acquire rival Shaw Communications Inc. for about C$20 billion ($15.6 billion) in one of Canada’s biggest mergers ever. The deal has antitrust problems, and Rogers has been negotiating with potential buyers of Shaw’s Freedom Mobile division in a bid to resolve them.
Globalive wants to buy Freedom Mobile. The contract with Telus is designed to assure regulators and government officials that it will be able to offer a quality network that could compete with Canada’s larger wireless firms.
Telus was down 1.9% to C$30.81 as of 1:33 p.m. in Toronto, while Rogers fell 0.9%.
Shaw rose 0.8% to C$35.70 — still well below the takeover price of C$40.50.
Under the deal, Telus and Freedom would share networks and spectrum in the three Canadian provinces where Freedom currently operates — Ontario, Alberta and British Columbia — if Globalive is successful in acquiring the business. It could be expanded to other regions of Canada over time, Globalive Chairman Anthony Lacavera said in an interview.
“It makes us a very compelling solution” for Freedom Mobile, he said.
Globalive has publicly offered C$3.75 billion for Freedom, but its discussions with Rogers have gone nowhere and it isn’t yet clear that Canada’s Competition Bureau or the government would approve it as a buyer of country’s fourth-largest wireless player.
The bureau has sued to block the Rogers-Shaw merger, saying it’s worried that Freedom won’t be a strong competitor under new ownership. More than 85% of Canada’s wireless market is controlled by Rogers, Telus and BCE Inc. Smaller regional firms like Freedom have the rest.
Freedom Mobile is a business Lacavera knows well because he started the company, launching service in Canada in 2009 under the brand Wind Mobile. It was recapitalized in 2014 and Shaw agreed to buy it the next year. “I never wanted to sell it,” Lacavera said.
Rogers’ auction for Freedom has produced other potential buyers — including Xplornet Communications Inc., which is backed by New York-based investment firm Stonepeak Partners LP, and the Aquilini family of British Columbia, which owns the National Hockey League’s Vancouver Canucks, among other business interests.
Rogers has also opened a path to negotiations with Quebecor Inc., a Montreal-based cable company that has 1.6 million wireless subscribers in the province of Quebec. In an auction last year, Quebecor spent C$830 million to acquire wireless spectrum licenses. Some of that spectrum is in Western Canada and could potentially be used to upgrade Freedom’s service, which isn’t a 5G network.
Quebecor’s CEO and controlling shareholder, Pierre Karl Peladeau, has expressed interest in buying Freedom Mobile, under the right conditions.
Scotiabank analyst Jeff Fan said the Globalive-Telus alliance will encourage Rogers to do a deal with Quebecor in the hope of clearing up antitrust problems and closing the Shaw transaction by July 31.
It’s “unlikely” that Rogers would sell Freedom Mobile to Lacavera’s company unless it’s forced to by regulators, Fan said in a note to clients. A Rogers spokesperson declined to comment.
(Updates with Rogers comment, Scotiabank analyst note)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
