Rogers Communications says it will sell Freedom Mobile to Quebecor for $2.85B

Quebecor Inc. has agreed with Rogers Communications Inc. and Shaw Communications Inc. to buy Freedom Mobile for an enterprise value of $2.85 billion, the companies said on Friday.

Rogers attempting to allay competition concerns as it seeks takeover of Shaw Communications

The logos of Rogers Communications and Shaw Communications appear on a cellphone screen.
Rogers and Shaw applications are pictured on a cellphone in Ottawa in May. The two companies announced they are selling Freedom Mobile to Videotron, a unit of Quebecor Inc., in the hopes of getting their merger deal approved. (The Canadian Press)

Rogers Communications Inc. will sell Freedom Mobile Inc. to Quebecor Inc. for $2.85 billion in a deal it hopes will appease federal regulators opposed to its proposed takeover of Shaw Communications Inc.

The deal comes after the antitrust regulator reiterated that it opposed Rogers' plan to purchase Shaw, and is subject to approval by Canada's competition watchdog and the federal department of Innovation, Science and Economic Development, the firms said.

It covers all of Freedom's branded wireless and internet customers, infrastructure, spectrum and retail sites, they added in a statement.

Toronto-based Rogers made a $26-billion bid for Calgary-based Shaw and also offered to sell Shaw's Freedom mobile unit to allay competition concerns as part of the deal.

Deal provides 'viable and sustainable' competition, companies say

The Competition Bureau had said the sale would weaken Freedom's operations, reducing "competitive discipline" among national carriers and lead to a transfer of wealth from low- and middle-income groups to the wealthy Rogers and Shaw families.

Rogers, Shaw and Quebecor argued their agreement would effectively address those concerns and keep alive a "strong and sustainable" fourth wireless carrier in Canada, because the deal would expand Quebecor's wireless operations nationally.

"The parties strongly believe the agreement effectively addresses the concerns ... regarding viable and sustainable wireless competition in Canada," the companies said in the statement, referring to the reservations of the competition watchdog and the industry minister.

The companies will also provide transport services and roaming services to Quebecor as part of the deal.

"We look forward to securing the outstanding regulatory approvals for our merger with Shaw so that we can deliver significant long-term benefits to Canadian consumers, businesses and the economy," said Rogers' chief executive, Tony Staffieri.

Quebecor beat out several other parties to reach the deal. Globalive Capital signed a network- and spectrum-sharing agreement with Telus Corp. in May to boost its bid to purchase Freedom. Formerly known as Wind Mobile, Freedom was founded by Globalive founder and chairman Anthony Lacavera in 2008.

Lacavera said in a statement Saturday that Globalive had offered $900 million more than Quebecor did to buy Freedom. He said its bid was rejected because Globalive is "a real independent and pureplay national long-term competitor."

"Rogers is afraid to compete. They have shopped this deal to a succession of billionaire friendlies and friendly parties who won't compete with them [and] are willing to sell Freedom back to them at any time," Lacavera added.

Canadian law allows approval of mergers that harm competition if the companies can prove the mergers bring efficiency to the economy.

The Rogers-Shaw transaction announced in March 2021 already has approval from the shareholders of Shaw and the Canadian Radio-television and Telecommunications Commission. However, it remains subject to review by the Competition Bureau and the Minister of Innovation, Science and Economic Development.

A women holds an umbrella as she walks past a Freedom Mobile store in Toronto on Thursday, November 24, 2016.
A woman walks past a Freedom Mobile store in Toronto in this 2016 file photo. Rogers Communications says it will sell Freedom Mobile in a deal that it hopes will appease regulators opposed to its takeover of Shaw Communications, its closest competitor. (Nathan Denette/The Canadian Press)

The Competition Bureau expanded its opposition to Rogers' proposed takeover of Shaw in new submissions made to the Competition Tribunal on Friday.

In legal filings released after markets closed, the agency challenged Rogers' claims about efficiencies and said acquiring its closest rival is anti-competitive and would harm consumers through higher prices, lower-quality services and lost innovation.

It also argued the proposed sale of Shaw's Freedom Mobile is "not an effective remedy," because it won't replace the growing competition Shaw Mobile would deliver in Alberta and British Columbia and would make Freedom "a subsequently weaker competitor" than it would have been.

With files from CBC News's Pete Evans and The Canadian Press