Rogers Won’t Get to Buy All of Shaw’s Licenses, Canada Says

(Bloomberg) -- The Canadian government says it won't allow Rogers Communications Inc. to buy all of the wireless spectrum owned by Shaw Communications Inc. if the two companies close a proposed $16 billion takeover.

“The wholesale transfer of Shaw's wireless licenses to Rogers is fundamentally incompatible with our government's policies for spectrum and mobile service competition, and I will simply not permit it,” Industry Minister Francois-Philippe Champagne said in a statement on Thursday.

The statement doesn't doom the deal. In fact, many analysts have predicted from the beginning that Rogers won't be allowed to buy all of Shaw's wireless business because it would result in less competition. If the transaction goes through, much of the country will have only three wireless providers to choose from instead of four.

But Champagne's comment underscores that Toronto-based Rogers will have to make concessions to complete its C$40.50-a-share takeover of Calgary-based Shaw. The deal is still in the midst of middle regulatory reviews, including one by Canada's antitrust body.

Spectrum Policy

The minister's statement came after markets closed in Canada. Shaw closed down 0.6% to C$38 in Toronto. Rogers rose 0.8% to C$67.80.

“We share the government's view that affordable, high-quality services should be available to every Canadian,” Rogers and Shaw said in a joint statement. “We continue to expect the transaction to close in the first half of 2022.”

Three large companies -- Rogers, BCE Inc. and Telus Corp. -- dominate the Canadian wireless industry. The federal government has tried to create more competition by allocating wireless licenses that only new players can buy, and it has the right to veto the proposed sale or transfer of licenses to the big three.

Shaw, which has about 2.2 million wireless customers to Rogers' 11.3 million, has benefited from the government's policy by acquiring some of that so-called “set-aside” spectrum.