Mobile telephony | A Canadian break at 2.85 billion for Quebecor

After years of speculation, Quebecor’s Canadian breakthrough in the mobile sector could happen. The Quebec conglomerate agrees to pay 2.85 billion to buy Freedom Mobile’s operations, which would allow it to become the fourth-biggest player in the industry in the country, alongside Bell, Rogers and Telus.

Updated yesterday at 11:37pm.

Julian Arsenal

Julian Arsenal
The press

This transaction is at the heart of Rogers’ acquisition of Shaw Communications, a marriage valued at $26 billion. To persuade regulators to approve the merger, Rogers had agreed to divest Shaw’s cellular network.

“This is a pivotal moment for the Canadian wireless market,” said Pierre Karl Péladeau, President and CEO of Quebecor, Friday night after the transaction was announced.


Photo Martin Tremblay, DIE PRESS

Pierre Karl Peladeau, CEO of Quebecor

After 15 years of success in the Quebec wireless market, we have demonstrated our expertise, ability to innovate and financial strength.

Pierre Karl Peladeau, CEO of Quebecor

The conglomerate wasn’t the only contender coveting Freedom Mobile, the fourth player in the cellphone niche with 1.7 million subscribers in Ontario, Alberta and British Columbia. In Quebec, Videotron, Quebecor’s main subsidiary, had 1.6 million active lines as of March 31.

In the past, Quebecor has more than once raised the prospect of expanding into mobile telephony outside of Quebec. This time could be the right one.

Not finished yet

There are still a few steps to take before we see Quebecor expand to the rest of the country. The announced transaction with Rogers is subject to regulatory approval. Under the terms of the agreement, Quebecor would acquire all of Freedom Mobile’s customers, infrastructure, licenses and businesses.

“Our agreement with Quebecor to sell Freedom is a critical step in completing our proposed merger with Shaw,” said Tony Stafferi, President and CEO of Rogers.

Just last week, RBC Capital Markets’ Drew McReynolds, in a note to clients, indicated that Quebecor was a serious contender to get its hands on Freedom Mobile’s operations.

On several occasions we have written that Quebecor represents a logical partner that could help clear the Rogers-Shaw merger from a regulatory perspective.

Drew McReynolds, analyst at RBC Capital Markets

It remains to be seen how the Quebec conglomerate intends to finance the transaction. At the end of March, the company had 1.65 billion. It needs to find additional liquidity to fund its ambitions.


PHOTO SARAH MONGEAU-BIRKETT, La Presse archive

Videotron sued Rogers for $850 million in 2021.

The deal comes despite strained relations between Quebecor and Rogers. The Videotron subsidiary had filed an $850 million lawsuit against the Toronto-based company, alleging that Rogers “artificially created a dead end” in an agreement between the two companies to create a joint wireless network in Quebec and Ottawa.

Always fear

Rogers and Shaw’s presence in Quebec is limited. In the rest of the country, however, the marriage of the two telecom giants is causing a stir.

On Friday, the Competition Bureau reiterated its opposition to the consolidation in new submissions to the Competition Court. In documents released after the markets closed, the federal agency said the deal would harm consumers through higher prices, lower-quality services and lost innovation.

The organization also argues that the proposed sale of Shaw Communications’ Freedom Mobile service would not be an effective solution because it would not replace the growing competition Shaw Mobile would offer in Alberta and British Columbia, leaving Freedom Mobile “afterward to a weaker one.” Competitors” would do. than it would have been without the agreement.

“Profits are also paid to non-Canadian investors,” emphasizes the Board of Directors. These effects are detrimental and must be weighed against any efficiency gains. »

Five weeks of hearings regarding the Rogers-Shaw transaction are scheduled to begin the week of November 7, followed by written and oral hearings.

On the Toronto Stock Exchange, Quebecor’s Class B shares closed at $27.66 on Friday, up 14 cents, or 0.5%. Rogers stock ended the session at $59.01, up $1.08, or 1.9%.

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  • 4.55 billion
    Revenue generated by Quebecor in 2021. They had increased by 5.5% within a year.

    Source: Quebecor

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