Quebecor cautions regulators on Globalive bid for Freedom

Asked if the odds of Quebecor Inc. purchasing Shaw Communications Inc.'s wireless assets have become lower in the wake of Globalive Capital Inc.'s reported offer of $3.75 billion should should Shaw have to sell as part of its acquisition by Rogers Communications Inc., Quebecor chief financial officer Hugh Simard didn't exactly answer. "Yes, we are still interested" Simard said Wednesday at this year's edition of the Desjardins Industrials, TMT, Diversified and Consumer Conference. "There may be a process from what we understand, coordinated by Rogers, to which we are not participating, to which we have not been invited," he added. "It's a bit of a surprise to us, considering that we would think that certainly from the point of view of the Rogers shareholders, you would want a process put in place to maximize the value of these assets," Simard said, but added that perhaps "we shouldn't be surprised" "We stole a lot of market share from the incumbents, and certainly from Rogers, so perhaps we're the last people that Rogers would like to sell this to." Globalive was founded by Anthony Lacavera, who launched Wind Mobile in 2008 with backing from Orascom Telecom. Wind Mobile was bought by Shaw in 2016. Simard also appeared to caution the Competition Bureau in its assessment of the potential deal with Globalive, and pointed to the failure of Mobilicity in the Canadian marketplace. "The public administration are the ones that have the responsibility to create and maintain the right conditions for competition and for prices to be under control," Simard said. "If there's a process under way with private equity – for example – players who will gladly continue to play the game of the incumbents in the English Canadian market, and make their return and then exit in a few years and sell back, we'll be back to square one." Analyst reaction to the appearance of the Globalive offer, first reported Tuesday by the Globe and Mail, viewed the offer as mostly in line with expectations. RBC Capital Market analyst Drew McReynolds wrote in a Tuesday night note that the offer was "more or less in line" with the $4-4.5 billion valuation for Shaw's Freedom Mobile in RBC's analysis. For Quebecor, McReynolds wrote that the appearance of the offer was "a near-term positive given the current discounted valuation, lingering concerns around Quebecor "over-paying" as a Rogers remedy partner, and what would be optionality around its 3500 MHz set-aside spectrum outside Quebec and/or future wireless partnership/acquisition potential outside Quebec." National Bank analyst Adam Shine wrote that Rogers' desire to get the Shaw acquisition concluded quickly might see the company accept a lower offer for Freedom than it had envisioned. "While one may argue that the minimum value for Freedom and its spectrum sits closer to $4.5B, time is a factor here as Rogers would like to get the Shaw purchase closed by June. This would favour a winning bid at a lower level, but we could still see the Globalive bid getting raised," Shine wrote in a Wednesday morning note. Shine also wrote that he thought the appearance of the Globalive offer decreased the chances of Quebecor acquiring Freedom. "At this point, with Globalive in the mix, it remains to be seen if Quebecor will have any chance of picking up any piece of Freedom. More likely, it will end up exploring MVNO in a couple of test markets in 2023 to carefully assess any wireless move outside its core province of Quebec using the all-digital Fizz brand," Shine wrote. Earlier this month, Quebecor CEO Pierre Karl Péladeau said that his company is waiting on the CRTC to “hurry up” and finish determining the framework for mobile virtual network operator agreements, but at the same time said that they are not giving up on acquiring Freedom. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

Quebecor cautions regulators on Globalive bid for Freedom

News | March 16, 2022

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Quebecor cautions regulators on Globalive bid for Freedom

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