Quebecor would buy Freedom, but only with spectrum: PKP

Quebecor Inc. has indicated that, should the Competition Bureau force Rogers Communications Inc. to spin-off Shaw Communications Inc.‘s wireless assets as part of its regulatory approval of the Rogers-Shaw merger, Quebecor would be open to purchasing it, provided it came with associated spectrum and roaming agreements. 

Quebecor executives Pierre Karl Péladeau and Jean-François Pruneau made the comments Wednesday at a House of Commons Industry committee hearing into Rogers’ proposed acquisition of Shaw.

“If we were interested in 2008, we certainly are the candidate with the expertise, the experience, and the financial means when it comes to telecommunications and marketing that we would be able to meet the necessary criteria to be successful,” Péladeau told MPs in French, according to a simultaneous translation. 

Pruneau pointed to the Competition Bureau and ISED’s stipulation that Bell spin-off Manitoba Telecom Services Inc. wireless assets to Xplornet Communications Inc. as part of that deal. 

“For Xplornet, the result was not that great. Because obviously they acquired some subscribers but … but there needs to [be] some conditions to make sure that this kind of journey becomes viable. The things that we’re talking about are transfer of spectrum, transfer of roaming agreements,” Pruneau said. 

“Even though it looked like there was some competition maintained with Xplornet in that respect, I think that the result was clearly not satisfying for Xplornet because they didn’t get the right assets to make sure that their journey became viable.” 

Péladeau said that the transferral of spectrum was an essential part of maintaining the government’s long-standing policy of promoting a fourth competitor in the wireless sector. 

“If we want competition, a strong fourth player, we need to look at transferring agreements, we need to look at transferring spectrum so that clients can have high-quality service with extremely competitive rates,” Péladeau said. 

Jay Thomson, CEO of the Canadian Communication Systems Alliance which represents smaller providers, said that the merger has the “real potential to make some already bad things worse, both in broadcasting and in telecom.”

“Rogers cable and Internet subscribers will roughly double in size. That will double the guaranteed cable subscribers to Rogers’ TV services like Sportsnet at its own preferred rate. Absent the CRTC’s safeguards, Rogers could then use its expanded cable size to squeeze smaller companies for higher carriage rates for its services,” Thomson said. 

Later in the hearing, Public Interest Advocacy Centre general counsel John Lawford encouraged the committee to recommend the removal of Section 96 of the Competition Act, the so-called “efficiency defense.” 

The efficiency defense allows mergers to proceed on the basis that they will generate significant cost savings, even if the merger would hurt consumers or competition is reduced. 

“This committee cannot stop Rogers from acquiring Shaw,” Lawford said. “What this committee can do is help stop the next deal and help stall this one till some regulation that would support competition has a chance to take hold.”

He also encouraged the committee to encourage ISED and the Competition Bureau to withhold its approval of the merger until the CRTC makes a decision on mandated access for mobile virtual network operators (MVNOs) in the wireless sector, and the finalization of wholesale rates for third party Internet access on the wireline side. The former is expected sometime soon, over a year after hearings were held on the matter, while the CRTC is still assessing a review and vary application on the latter. 

TekSavvy Solutions Inc.‘s vice-president regulatory affairs Andy Kaplan-Myrth told MPs that in the wake of the merger, government efforts to support a fourth wireless player in the wireless market was “the wrong strategy.” 

“As long as we have this strategy of nurturing a fourth player to introduce some degree of competition, we’re really designing the system to fail. We’re going to be one merger away from complete collapse of competition,” Kaplan-Myrth said.

“A fourth player may be enough to influence prices to some degree, but it is not robust competition that can survive major deals like this one. This is clearly not going to be the only deal like this on the horizon.” 

— Reporting by Michael Lee-Murphy at and editing by Hannah Daley at

Rogers, Shaw execs mum on spectrum at Industry committee  

On the opening day Monday of hearings into Roger’s proposed acquisition of Shaw, MPs on the House of Commons Industry Committee sought answers from the companies’ executives on whether or not the two companies seek to hold on to Shaw’s discounted spectrum, and how the merger would affect wireless prices in Canada. 

On the spectrum question, MPs mostly got no answers, as executives from both Rogers and Shaw repeatedly declined to answer the questions on grounds of restrictions surrounding the spectrum auctions. 

NDP MP Brian Masse asked if the proposed merger plan presented to the various regulators who must approve the deal — the Competition Bureau, the department of Innovation, Science, and Economic Development (ISED), and the CRTC — included the maintenance of joint spectrum holdings, or if the companies presented a plan to spin those holdings off as part of the merger deal. 

“Unfortunately, there are very strict rules regarding what I can say regarding spectrum matters,” Natale said.  “We’re in a very specific quiet period in advance of the upcoming spectrum auction. What I can say is that we intend to engage openly and constructively with the regulators, including ISED, about every aspect of this merger, including spectrum.” 

Liberal MP Nathaniel Erskine-Smith pointed to years of government policy dedicated to establishing a fourth wireless competitor in Shaw. 

“If the government subsidizes smaller regional players like Shaw at auction, only to see those same players subsequently acquired by one of the big three, isn’t the government really subsidizing you, your shareholders, and executives as you cash out?” Erskine-Smith asked Shaw CEO Brad Shaw.  

Shaw’s vice president of government relations Chima Nkemdirim responded that Freedom Mobile, Shaw’s wireless brand, was still not cash flow positive. 

Natale said Rogers would commit to making investments announced as part of the merger, whether or not the CRTC decided to uphold its wholesale rates in an ongoing review and vary application. 

“You have my word and my commitment that we will make the investments we’ve talked about in western Canada around connectivity to rural canadians, around investment in jobs and 5G.”

In addition to spectrum policies, MPs zeroed-in on the effect the proposed merger would have on affordability in the wireless space, and whether or not the presence of Shaw as a fourth wireless competitor had driven down wireless prices in Canada. 

Conservative MP and industry critic Pierre Poilievre asserted that Shaw had previously taken credit for driving down wireless prices in Canada, to which Shaw President Paul McAleese replied that the comments were made in the “context of facilities-based carrier builds.” 

“It’s all situational,” McAleese said, adding that he thought Shaw “had a role” in the lower prices. 

When Freedom Mobile introduced its “big gig” plans back in 2017 — offering a base rate of 10 GB of data for $50 a month — it sent shockwaves through the broader wireless industry, with the incumbent providers quickly following suit. 

Just over a year later, in November of 2018, Freedom Mobile upped the ante, introducing a limited offer of 100 GB for customers already on the Big Gig plan. In the summer of 2019, Rogers launched a permanent no-overage-fee wireless plan, with BCE Inc., Telus Corp., Bragg Communications Inc.’s Eastlink, and Quebecor Inc.’s Videotron quickly offering similar limited-time promos. Shaw, too, increased from 4 GB to 5 GB the bonus it had been offering on any plan over $40 a month.  

In the summer of 2019, McAleese told financial analysts on a quarterly earnings call that  Freedom Mobile’s impact on wireless affordability is “indisputable.”  

“If [Shaw’s impact] wasn’t clear before, it certainly is clear now. So It’s nice to see the incumbents coming down and sorta chasing us in that regard,” McAleese said at the time.

But by January of 2020, Shaw was telling analysts that the market pricing across the industry during the fall of 2019 was “erratic” and that the price-cutting big three “haven’t exactly been paragons of pricing discipline during this period.”

NDP MP Brian Masse asked if the acquisition of Cogeco Inc. was still on the table for Rogers in the wake of the deal with Shaw.

Rogers CEO Joe Natale said that growth is always part of the strategy and that the company is always looking to expand. “This is a scale business with massive fixed costs. Adding Cogeco or adding Shaw brings those efficiencies — fibre, spectrum — it allows us to do things that wouldn’t have been otherwise the case,” Natale said. 

“We needed to answer the Cogeco question. We held the shares for 20 years. Quebec remains a very important market. The timing of this is not something that was anticipated. Timing happens when timing happens.” Cogeco fought off a hostile takeover bid by Rogers in September.

Industry committee hearings into the proposed merger continue Wednesday. 

— Reporting by Michael Lee-Murphy at and editing by Hannah Daley at