Yahoo Finance Rogers (RCI), Shaw Close Arguments Ahead of Merger Ruling
Rogers Communications RCI and Shaw Communications SJR recently touted the potential benefits of their contested $26 billion merger for consumers during the final day of hearing in front of the Competition Tribunal.
Under the terms of the proposed merger, Rogers is set to acquire Shaw Mobile’s 450,000 customers in Western Canada, who receive steeply discounted wireless services that are sold in bundles with cable and internet services.
The hearings have centered largely around whether Shaw’s wireless businesses, including Freedom Mobile and Shaw Mobile, have been financially successful and competitively disruptive, and whether Videotron’s acquisition of Freedom would maintain the current level of competition.
The Competition Bureau has requested the tribunal to block the deal entirety, arguing that it would result in higher cellphone bills and poorer wireless services, particularly in Western Canada.
One of the key issues of focus was whether Freedom Mobile, which Shaw has proposed selling to Quebecor Inc.’s Videotron division to satisfy competition concerns, would weaken Canada’s fourth-largest wireless carrier, which serves customers in Ontario, Alberta and British Columbia.
In the Competition Bureau’s final arguments, it asserted that Videotron has no track record of operating in Western Canada nor a cable infrastructure, and that separating Freedom from assets, such as Shaw’s cable network and brand would hamper its competitiveness.
Proponents have argued that Shaw was struggling with the twin demands of investing in its wireline and wireless businesses, and that by splitting them apart and selling divisions to Rogers and Videotron it would create even more competition.
The closing arguments from the cable company lawyers conclude roughly four weeks of hearings that included evidence from 45 witnesses. The tribunal is aiming to release a decision by the end of the year or early January if possible, although that timeline is not guaranteed.
Rogers Communication, Inc. Price and Consensus
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Strengthening Wireless Internet Businesses to Aid Growth
Rogers Communications is expected to benefit from continuing strong demand for data by consumers and businesses. An improving Wireless penetration rate is anticipated to boost the subscriber base.
This Zacks Rank #3 (Hold) company expects the demand for broadband data to witness growth of about 30% per year. Rogers Communications currently offers 1 gigabyte speed to its user base. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The company continues to benefit from Internet subscriber additions and the shift of Internet users to higher-usage tiers. As of Sep 30, 2022, the wireless prepaid subscriber base totaled almost 1.26 million, highlighting an addition of 75K subscribers from the year-ago quarter’s levels. The postpaid wireless subscriber base totaled 9.19 million, up 493K from the year-ago quarter’s levels.
Currently, Rogers, Bell Canada Enterprise BCE and Telus TU serve about 87% of Canadian subscribers.
On Oct 27, 2022, TELUS announced an agreement to acquire WillowTree for $1.225 billion which is expected to be completed by January 2023. The acquisition will help the company to cross-sell its products to mutual customers and improve software development capabilities.
Bell Canada Enterprise had previously made an offer to buy Shaw Communications. Bell’s initial bid for Shaw valued the company at $37 per share, higher than Rogers’ initial bid of $35. However, Bell and Shaw Communications could not agree on other conditions, which allowed Rogers to seal the deal.
Lawyers representing Shaw have argued that the merger of Canada’s two largest cable companies would benefit millions of Canadians by creating a new, formidable and aggressive competitor in Western Canada’s internet and television markets.
As part of the transaction, the companies will together invest $2.5 billion in 5G networks over the next five years across Western Canada, which will enhance competitiveness.
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