Rogers commits to full divestiture of Freedom amid scrutiny on Shaw deal

Rogers Communications Inc. is getting more specific about its plans to unload Shaw Communications Inc.'s Freedom Mobile wireless operations, committing publicly for the first time to dispose of the wireless division in its entirety.

The Competition Bureau stated that there must be a continuation of a vibrant and competitive wireless market. Rogers said in a statement Monday evening that they are engaged in a process to sell Shaw's Freedom Wireless business in its entirety.

It was expected that Rogers would have to sell at least some of the wireless assets after the federal minister of innovation, science and industry said in March that the wholesale would have to be sold.

Champagne's use of the word "wholesale" sparked speculation that authorities might be satisfied with a transaction that allowed Rogers to keep some of the assets.

Rogers had a proposal to sell Freedom Mobile to a rural internet service provider and a mobile network operator, which it hoped would win government approval, according to news reports. The Aquilini family, owners of theVancouverCanucks, emerged as a suitor from the pack. Rogers has not confirmed or denied the reports, nor has the terms of any potential deal been disclosed.

National Bank analyst Adam Shine said in a note to clients Sunday that something might not have been perfect about either bidder.

The structure or terms of those deals might be an issue, Shine speculated, adding that a more open auction process would have captured more interested parties.

The competition authority's move will lead to a lower price or better terms for any buyer, including possible network-sharing arrangements with Rogers following the sale, according to other analysts.

The Toronto-based telco is selling Freedom Mobile, negotiating with the Competition Bureau, and preparing a formal response to the objections.

The stock price of both Shaw and Rogers fell Monday and Tuesday, after the Competition Bureau spelled out complaints it has filed with the Competition Tribunal, accusing the two rivals of easing competition after the merger was announced.

The Commissioner of Competition warned the companies late last week that it would oppose their merger.

The merger of Rogers and Shaw was supposed to close next month, but it has been pushed out until the end of July and could be moved again if the sale of Freedom goes well.

According to a note to clients last Monday, there was some relief that competition authorities don't seem to have a problem with Rogers and Shaw combining their substantial, though not overlap, cable operations. He noted that keeping the deal worthwhile for Rogers would be more difficult than addressing concerns over cable.

The analyst thought it was important that the competition authority did not mention Rogers' plan for Freedom Mobile.

Dubreuil wrote that the CB is opposed to the transaction in its original form, rather than the transaction including the remedy package.

The CB's concerns would be alleviated if Freedom were sold.

If Freedom Mobile is sold, the bureau's position would be harder to defend, according to the analyst.

Some observers have suggested that the Competition Bureau's problem lies with the choice of buyer for Shaw's Freedom Mobile assets.

Stonepeak Infrastructure Partners, Aquilini Investment Group, and Quebecor Inc. are understood to be among the potential suitors.

Anthony Lacavera, the founder of Wind Mobile who sold his assets to Shaw and renamed it Freedom Mobile, has been open about his interest in re-acquiring the wireless operations.

The market is pricing in a 60 to 65 per cent chance that the merger will be approved.

Shaw shareholders and the Canadian Radio-television and Telecommunications Commission have approved the merger, but the Competition Bureau and ISED need to approve it.

Email: bshecter@nationalpost.com