Rogers CEO pledges reduced prices as company finalizes $26-billion merger with Shaw

TORONTO — The head of Rogers Communications Inc. pledged to lower costs for customers and brushed aside competition concerns after the company closed its $26-billion purchase of Shaw Communications Inc. on Monday.

“What we want to make sure we get right is all the things for our customers, and in particular, affordability,” Rogers CEO Tony Staffieri said in an interview.

“One of the key pluses of this is that competition is going up, especially in the west, and prices are going to come down.”

The deal, which was first announced in March 2021, cleared its final regulatory hurdle last week after Industry Minister François-Philippe Champagne agreed to the transfer of Shaw-owned Freedom Mobile’s wireless licences to Quebecor Inc.’s Videotron.

But though he signed off on the deal, Champagne issued a stern warning to the companies involved as he announced 21 “enforceable” conditions that Rogers and Videotron must adhere to, aimed at bolstering competition and reducing costs for customers.

Staffieri noted that the conditions formalized many of the commitments Rogers had made in the two years leading up to Ottawa’s approval, including the establishment of a second headquarters in Calgary and adding 3,000 new jobs based in Western Canada.

Rogers must also spend $5.5 billion to expand 5G coverage and additional network services, as well as a further $1 billion to connect rural, remote and Indigenous communities.

In addition to the creation of digital and technology positions focused on “building networks,” Staffieri said Rogers also plans to add more “customer-facing” jobs. He said those should be expected “rather quickly,” though when pressed on a timeline he pointed to the five-year timeline set out in the agreement.

The CEO said he planned to fly to Western Canada on Tuesday morning, where he will make stops in Vancouver and Calgary, to get the ball rolling.

“We fully expect Canadians to hold us accountable to do all the things we said we were going to do and we’re very proud to do it,” Staffieri said.

In an attempt to ease competition concerns raised by the original proposal, Rogers and Shaw agreed in June 2022 to sell Shaw’s Freedom Mobile business to Videotron for $2.85 billion. Freedom’s sale was also finalized on Monday.

As part of Videotron’s conditions, the company must offer plans that are at least 20 per cent lower than its competitors and spend $150 million over the next two years to upgrade Freedom Mobile’s network.

If Rogers breaches its conditions, it must pay up to $1 billion in damages. Videotron would potentially be subject to $200 million in penalties if it fails to meet its commitments.

“We are very pleased to be closing the acquisition of Freedom Mobile today, bringing its Canadian footprint as well as the expertise and experience of its employees into our fold,” said Quebecor president and CEO Pierre Karl Péladeau in a news release.

“The alliance of Freedom and Videotron will permanently transform Canada’s wireless market for the benefit of consumers and create a new competitive environment that delivers innovative products and services at better prices.”

Champagne also announced his department would not allow any further transfers of wireless spectrum until it completes a review of Canada’s spectrum transfer framework.

Staffieri disputed some critics’ characterization that the takeover would harm competition in Canada’s telecommunications sector. He said Rogers looks forward to competing with the revamped Videotron.

“This whole transaction has always been about increasing competition and ultimately, that’s what the federal courts found — that the series of transactions, namely us buying Shaw and Quebecor buying Freedom, was going to increase competition in the marketplace,” he said.

“If we were to look to south of the border, there you’ll see a market size 10 times that of Canada, and they have three players. So in fact, we have even more players in the telecom space than you would see in the U.S., and if you compare it to others in the world, we have amongst the most competition in all of our markets.”

This report by The Canadian Press was first published April 3, 2023.

Companies in this story: (TSX:RCI.B, TSX:SJR.B, TSX:QBR.B)

Sammy Hudes, The Canadian Press