Quebecor has deal for Freedom Mobile, aimed at clearing Rogers/Shaw combo

Quebecor headquarters in Montreal, QC, Canada.

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Rogers Communications (NYSE:RCI), Shaw Communications (NYSE:SJR) and Quebecor (OTCPK:QBCRF) have announced a deal to sell Shaw’s Freedom Mobile to Quebecor – addressing what has been a key hurdle to the C$26B deal for Rogers to acquire Shaw.

The companies have come to agreement to sell Freedom to Quebecor at a cash-free, debt-free enterprise value of C$2.85B (about $2.3B), and covers all of Freedom’s wireless and Internet customers along with infrastructure, spectrum, and retail locations.

It also includes a commitment from Rogers and Shaw to provide transport services (including backhaul and backbone) to Quebecor, along with roaming services.

That paves the way toward a “strong and sustainable fourth wireless carrier across Canada,” the companies say (hoping the deal remedies the concerns of the Commissioner of Competition and the Minister of Innovation, Science and Industry).

“Our agreement with Quebecor to divest Freedom is a critical step towards completing our proposed merger with Shaw,” says Rogers CEO Tony Staffieri. “We strongly believe the divestiture will meet the Government of Canada’s objective of a strong and sustainable fourth wireless services provider.”

The deal would close concurrently with closing the Rogers-Shaw transaction – which needs review by Canada’s Competition Bureau and the Minister of Innovation, Science and Industry but has several other approvals in hand.

Antitrust worries about the deal have centered on Shaw’s wireless business. At the end of May, Rogers and Shaw promised not to close the deal until antitrust concerns were resolved with agencies.

William Murphy

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