Rogers Communications is making a big play in the telecommunications world in a deal to buy Shaw Communications. The deal is worth $26 billion including debt and would jump Rogers up to the number 2 position in cellular and cable operators, past Telus who currently resides there, to face off with the Bell Canada group.
This deal will need to face shareholder approval and will be under tough scrutiny as they debate the affordability and competition that this deal would bring about.
What does this mean for Rogers & Shaw?
A deal that has perhaps been in conversation for decades, Rogers believes the merging of the companies will increase shareholder value and foster innovation as a cross-country provider. It will allow Rogers, as a mainly central and eastern operator, to reach into western Canada.
CBC quoted that as a part of this transaction, “the companies said Rogers will invest $2.5 billion in 5G networks over the next five years across Western Canada.” As well as “create a new $1 billion fund dedicated to connecting rural, remote and Indigenous communities across Western Canada to high-speed internet service.”
Part of the “Big Three” in cellular communicators (along with Bell and Telus), Rogers hopes that this play will bump their ability to reach cross-Canada users and compete with the other two.
How does this impact media?
The merging of Rogers and Shaw would be another of the Big Three taking out smaller competitors, which the board will take into consideration when assessing the deal and whether or not this takes a step closer to a monopoly on the industry.
Both Rogers and Shaw seem to believe there will be no issue in the deal going through and is expected to close in the first half of 2022.
Why should you care?
If this deal should go through, the competition at the top for communications providers could get interesting. With real competition in the top three positions, there may be a push toward more affordable options for Canadians.
Since the deal was announced there has been concern over Shaw Communication’s affordable cellphone service, Freedom Mobile and what this disappearing option may mean. Rogers has promised not to raise the prices for Freedom’s customers for three years, however a similar play happened with Fido where the discount brand has seen a huge spike in pricing after a few years of being owned by parent company, Rogers.
Another speculation is that the merged company may be forced to sell Freedom Mobile as a part of the deal going through. In either circumstance, smaller providers will be cowering under the growing top three.
Because these large communications providers are slowly eliminating smaller, discount options, the merger is likely to bring up monopoly concerns and help push regulators to impose rules on the Big Three that will allow smaller companies to thrive.
This matters as it will spark innovation across not only the communications spaces but into all media spaces. As these providers battle it out over 5G, it could create a time of technological change that will impact individuals as well as those companies who operate in a media landscape.