Shaw and Rogers announced a series of deals worth $700 million late Monday that will shake up both companies’ holdings.
The agreement includes Rogers’ acquisition of Shaw’s Mountain Cable operations and an option to purchase Shaw’s AWS spectrum licenses. Shaw will in turn acquire Rogers’ 33% stake in TVtropolis, making it the sole owner of the cable network.
The acquisition of Shaw’s AWS spectrum licenses, which are used for mobile and data services, will allow Rogers to increase its wireless coverage across British Columbia, Alberta, Saskatchewan and northern Ontario. The licenses for western Canada were initially purchased by Shaw in 2008 for nearly $200 million as part of a federal auction that was designed to open the wireless industry up to more competition.
Rogers CEO Nadir Mohamed said the acquired licenses will help the company respond to consumer demand for mobile data coverage. “The agreements will benefit businesses and consumers across the country and fit squarely within our focused, strategic game plan,” he said.
Rogers paid Shaw $50 million for the option, which is subject to approval by Industry Canada and the Competition Bureau. If approved, Rogers said the purchase is likely to take place in late 2014.
For Shaw, the agreement signals a continued shift away from the cellular business. At one time, the company had a plan to invest $1 billion in the sector, but in 2011 it decided to switch to a less expensive WiFi strategy.
Shaw said it plans to invest the money from the deal into its internet and cable business, which faces fierce competition from Telus in western Canada. According to CEO Brad Shaw, the company will invest the money from the deal into its internet and cable business by completing a Calgary data centre, continuing to digitize its network and expanding its Wifi coverage.
“The sale is strategic for both parties, and Shaw will be able to use the net proceeds from the transactions to accelerate various strategic capital investments in its core business,” Shaw said.
The $400 million purchase of the Hamilton-based Mountain Cable will expand Rogers’ presence in southern Ontario. Mountain, which offers cable, internet and phone services, currently dominates the Hamilton Mountain area.
