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Rogers closes on $26 billion acquisition of Shaw

(Photo via Wikimedia Commons)

Canadian telecom giant Rogers grew even larger this week after the company formally closed on its multi-billion dollar acquisition of once-rival Shaw Communications.

The merger, valued at C $20 billion (U.S. $14.9 billion) plus C $6 billion (U.S. $4.5 billion) in debt, cleared a key hurdle in January, paving the way for the telecoms to combine into an unrivaled Canadian operation.

As part of the deal, Shaw sold its Freedom Mobile subsidiary to Quebecor, the parent company of Videotron, for C $2.85 billion (U.S. $2.2 billion).

“This is a momentous day for our customers, who will benefit from the latest services and network technology, and for our teams, who have worked so hard to get us here,” Tony Staffieri, the president and CEO of Rogers, said in a statement on Monday. “We’re proud to bring together these two iconic companies to deliver more value, more connectivity, and more innovation for Canadians.”

“Rogers and Shaw have been connecting Canadians for more than 50 years, and we’re thrilled to come together as one company to build on a shared legacy of investment, innovation, and entrepreneurship,” Edward Rogers, the chairman of the former Rogers, said this week. “As a proud Canadian company, we’re committed to investing for Canada and Canadians for decades to come.”

Rogers and Shaw say they’ve invested more than C $40 billion (U.S. $29.8 billion) building out Canada’s vast network of telecom services. Despite this, Canadians have long complained that the price they pay for services — in particular, wireless phone — is well above what subscribers in developed countries spend per month.

A recent investigation by the CBC News program “Marketplace” found Canadians pay about 25 times more for wireless data compared to phone subscribers in Ireland and France, and 1,000 times more compared to those who live in Finland. The program said downloading a half-hour video from YouTube cost the average Ireland resident eight cents, while the average Canadian would pay $1.03.

It can be difficult for Canadians to find lower-cost alternatives because three telecoms — Rogers, Telus and Bell — essentially have a monopoly on wireless phone service in the country. Few areas are covered by all three companies, which means some Canadians only have one or two phone companies to choose from.

Canadians have urged the government to open up wireless networks in a way that could allow mobile virtual network operators, or MVNOs, to operate in Canada. Such a move would allow MVNOs to purchase airtime and wireless data from Rogers, Telus and Bell wholesale, then pass on the cost savings to consumers. A similar practice in the United States has increased competition for domestic carriers AT&T, T-Mobile and Verizon over the last decade, leading to more options for consumers and drastically lower prices.

The approval of the Rogers and Shaw merger appears to move Canadians in the other direction: The fused company brings together the two biggest 5G wireless providers in the country and allows Rogers to control a fiber network that offers land-based broadband Internet service to 70 percent of Canadian homes.

Officials at the company say coming together will allow Rogers to offer lower-cost options to Canadian customers who want wireless phone, broadband Internet and pay television.

“We plan to bring together our products and services for Canadians in a way we never have before,” Staffieri said. “This is a business of scale, and we can now deliver even more value for consumers and businesses on Canada’s largest and best national network.”

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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