The Competition Bureau is under fire for its opposition to the proposed acquisition of Shaw by Rogers.

While the Bureau argues that selling Shaw’s wireless subsidiary, Freedom Mobile, will not eliminate the threat of a substantial lessening of competition if Rogers gets its hands on Shaw, analyst Adam Shine of National Bank Financial said not so sure.

This expert does not hesitate to question several elements of the regulatory body’s argument.

Rogers revealed in March last year an agreement valued at 26 billion (including debt) to acquire Shaw.

The Competition Bureau formally challenged the transaction on Monday, seeking an order from the Competition Tribunal to stop it from happening.

“The application presents Shaw first and foremost as a wireless operator when throughout its history Shaw has been a cable company that has since acquired Wind about five years ago a small and growing player in the wireless,” Adam Shine said in a note sent to customers on Wednesday.

“Shaw is called a maverick [maverick, maverick competitor]. I’ve never heard of that although the company is naturally compelled to try new things as a new player in wireless. »

Wind – now Freedom Mobile – had a network that lacked subscribers and needed to attract customers with lower prices and larger data blocks, he said.

Shaw Mobile was an attempt to add another product for cable subscribers as Telus gained market share, argues this expert.

“I don’t believe this is necessarily the case since the previous owner of the assets had no bundles to offer and was not aggressively active beyond a few urban centers. »

He recalls that Globalive launched the ancestor of Freedom and was considered a reasonable owner of the company until it was sold to a private investment firm which then quickly sold Wind to Shaw.

Why would Globalive suddenly not be seen as a reasonable acquirer of Freedom and additionally other parties with deep pockets and a commitment to pick up the slack for continued growth in the 5G era? he asks.

About 5G, precisely, Adam Shine recalls that Shaw was not able to bet on spectrum last summer during the auction. Quebecor paid $830 million there to buy blocks of spectrum domestically (Ontario, Manitoba, Alberta, etc.) hoping to use them after having the chance to buy Freedom or possibly becoming a mobile virtual network operator in some markets.

Adam Shine also wonders how it could be in Freedom’s best interests to force the Shaw family to remain in control.

“It was always expected that Shaw would eventually be sold to another major Canadian carrier and it was universally expected that it would be Rogers. »

Why, being owned by Xplornet (Stonepeak), Quebecor or Globalive (with the backing of private capital), would Freedom’s progress automatically be halted? he asks.

The best solution for now is through a new owner, according to him.

“There is no guarantee that Shaw will continue to invest optimally in wireless or even that the company will launch a standalone 5G network. »

Reading the documents leads him to believe they were drafted while Rogers was defending its right to acquire Freedom as Rogers and Shaw indicated last weekend – after being made aware of the Competition Bureau’s intention to challenge their proposed merger – that the two companies engage in a process to sell Freedom Mobile in order to address concerns raised by the Commissioner of Competition and ISED (Innovation, Science and Economic Development Canada).

A deep-pocketed acquirer might as well invest and do it faster and more “aggressively” than Shaw, according to Adam Shine.

He adds that it’s hard to believe that a consortium led by the Aquilini family and backed by LiUNA Pension Fund and Musqueam Capital — that group has filed a bid, according to the Globe and Mail — couldn’t fill the family’s shoes. Shaw.

“This consortium and other potential acquirers should ultimately represent an acceptable alternative to the government,” says Adam Shine.


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