Shares of Rogers Communications (TSE:RCI.B) rose over 2 percent today as an Ontario court approved the telecom and media giant’s acquisition of wireless service provider Mobilicity for C$440 million.
The official purchase price is $440 million will be “offset by tax losses valued at approximately $175 million which Rogers will acquire.”
In a statement, Rogers said that the Court’s decision also completes a previously announced acquisition of Shaw’s AWS-1 spectrum for C$100 million. In 2014, Rogers bypassed the 700 Mhz spectrum auction of 2013 by buying additional coverage, gaining first rights to purchase Shaw’s unused AWS spectrum licenses in 2014.
As part of the deal, Rogers will sell some ‘AWS-1 spectrum’ to Wind Mobile, which has emerged as one of the main competitors for Canada’s largest telecoms. Rogers said Industry Canada has also given its green light for the takeover. Now, all that is needed to formalize the deal is assent from the Competition Bureau.
“We’re basically adding multiple lanes on our wireless highway in three key markets overnight. This means faster speeds and better quality for our customers as they use more and more mobile video….We’re pleased to have worked with the government to put this unused valuable resource to work. We got the spectrum we needed where we needed it for our customers and this keeps Rogers in the leading competitive position across the country,” said Rogers’ president and CEO, Guy Laurence.
Mobilicity was pleased with the deal, noting that Rogers has assured Mobilicity customers continued and uninterrupted service as well a nationwide coverage while offering its employees an opportunity to work for Rogers.
Mobilicity has been active in five urban markets: Ottawa, Toronto, Calgary, Edmonton and Vancouver.
Wind Mobile is also present in these cities and has about 800 000 customers currently, about one tenth of the consumer base of any of the three industry giants - Rogers, Telus and Bell.
In May, after an 18 month long review of roaming and network access fees charged by Canada’s main wireless providers, the Canadian Radio-Television and Telecommunications Commission (CRTC) has announced that it will regulate the roaming rates offered by Bell, Rogers, Telus to smaller wireless service providers.
The CRTC described the level of competition between these three national companies as "inadequate", adding that these companies “can maintain rates and impose terms that should not exist in a competitive market."
The CRTC wants more competition, but it was also careful to ensure that the ‘big three’ get a fair return on their investment, to encourage them to upgrade their wireless networks. Accordingly, the agency chose to base the roaming charges on an analysis of voice, data and texting costs.