5G

Rogers dealmaker touts 5G plan, says Shaw merger ‘will be done’

CEO Joe Natale says he’s going to spend and spend a lot

Author of the article:

Bloomberg News

Derek Decloet

A Rogers Communications Inc. service van is parked in Toronto.A Rogers Communications Inc. service van is parked in Toronto. Photo by Brent Lewin / Bloomberg Files

Joe Natale has a clear message as he tries to control the acquisition of Shaw Communications Inc. by Rogers Communications Inc. through a maze of regulatory hurdles. You will spend and spend a lot.

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Canada’s telecommunications sector could shell out $ 26 billion (US $ 20.7 billion) by 2025 to implement 5G mobile service, Natale said in an interview. Rogers, as the nation’s largest provider, will bear a large chunk of that cost, including billions for wireless spectrum licenses.

“It’s an incredible number,” said Natale, who has been Rogers’ chief executive for four years. “I would challenge most of Canada’s industries to establish such a large number in terms of investment in Canada’s future prosperity.”

Natale’s words are not aimed at the market but at the policy makers in Ottawa who control the fate of Shaw’s $ 16 billion acquisition, a deal that would merge the largest cable providers in eastern and western Canada into one. national force.

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The transaction faces lengthy review by Canada’s antitrust body and also needs approval from the federal government. It’s not expected to close until the first half of 2022, which is one reason why Shaw’s stock price remains roughly 10 percent below the takeover offer of $ 40.50 per share.

Rogers CEO Joe Natale in 2017. Rogers CEO Joe Natale in 2017. Photo by Cole Burston for Postmedia archives

For Natale, the deal faces two potential problems. One is that high wireless costs are a political problem in Canada, so much so that Prime Minister Justin Trudeau promised before the 2019 election to force a 25 percent reduction in wireless bills. Trudeau is expected to trigger another election in a few weeks, hoping to strengthen his grip on power with a majority victory.

The other is that the deal would see Rogers swallow Shaw’s Freedom Mobile division, which offers competitive, and lower-cost wireless plans, in several major cities, including Toronto and Vancouver. In some parts of Canada, consumers would be left with three players to choose from, rather than four, when choosing a mobile phone provider.

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“I can say that whenever I talk to telecom executives, I always remind them that what I have in mind is affordability,” Industry Minister Francois-Philippe Champagne said in an interview this week.

“How is affordability achieved? It’s through competition, ”he said.

How is affordability achieved? It is through competition

Minister of Industry Francois-Philippe Champagne

But in Natale’s view, the debate should focus on what it takes to fund networks in a country that has fewer people than California but a landmass larger than the entire United States. He promises that some of Rogers’ billions in capital expenditures will go toward improving Connections in remote areas that currently lack good service.

The high cost of 5G “requires an environment with large players with strong balance sheets that they can invest in,” Natale said. “One thing Covid has taught us: it is unacceptable to have 2 million households in Canada that do not have high-speed internet.”

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Natale’s emphasis on capital spending may have caught some investors off guard. Rogers shares are on track for their worst weekly decline since January after the company reported a mixed outlook for the third quarter.

The results of a 3,500 MHz spectrum auction, expected any day, also weigh on the company and its main rivals, BCE Inc. and Telus Corp. The Globe and Mail reported last week that the auction is expected to raise $ 8 billion, more than analysts anticipated.

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“We wouldn’t be surprised if Rogers was one of the big spenders,” BMO Capital Markets analyst Tim Casey said in a report Wednesday, doubling his estimate of Rogers’ spectrum costs to $ 2.5 billion.

Most analysts believe that the Shaw acquisition will take place, but with modifications. Some expect regulators to force the merged company to sell Freedom Mobile, which has about 2 million wireless subscribers compared to Rogers’ 11 million, to preserve an alternative to the big three.

“We are committed to closing the deal and we are committed to sitting down with regulatory bodies to determine the best way forward,” Natale said. “We believe this deal will get done.”

Bloomberg.com

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Derek Decloet

Source: https://news-block.com/rogers-dealmaker-touts-5g-plan-says-shaw-merger-will-be-done/

Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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