Rogers-Shaw deal can be a win-win from government perspective: Former Telus CFO
Rogers Communications Inc.’s blockbuster proposed takeover of Shaw Communications Inc. could break down some barriers in expanding Canada’s broadband coverage, according to a former industry executive.
Robert McFarlane, a former Telus Corp. chief financial officer who left the company in 2012, told BNN Bloomberg the deal between Rogers and Shaw is hardly a surprise after years of speculation, and it could put the country on a faster track to expanding Canada’s high-speed telecom networks.
“It’s critically important to the country to have this infrastructure invested in … So, to the extent to which you allow an arbitrage through, say, mobile virtual networks, then you're going to reduce the [return on investment] and that means the marginal area that's not going to get coverage and services is in the rural areas. So that's contrary to public policy interest,” McFarlane explained. “I think there’s a way to turn this into a win-win from a government perspective.”
The companies announced earlier this week that they would put $2.5 billion towards building a 5G network and expand on their current infrastructure, including a $1-billion fund for high-speed Internet access across rural and Indigenous communities in Western Canadian provinces.
Rogers is also taking on the regulatory and financial risks of the deal and leveraging its balance sheet by borrowing up to $19 billion to fund the takeover while covering future spectrum and infrastructure investments.
However, analysts have chimed in with concerns surrounding potential divestitures in the face of high competitive and regulatory hurdles. Canaccord Genuity analyst Aravinda Galappatthige pointed to the BCE Inc. acquisition of Manitoba Telecom Services in 2016, which divested some assets to Telus and Xplornet to satisfy regulatory concerns.
McFarlane acknowledged that Rogers was “smart” in how it approached the deal structure, adding it could provide a solution to various Internet infrastructure issues.
“The digital infrastructure is critically important to the competiveness of Canada and one of the things we’ve learned from the pandemic in the past year is how critical broadband access is," he said. "It’s excellent in Canada in urban areas and less so in rural areas.
“I think there’s an opportunity here for the government to have some remedies or some terms and conditions associated with approving a transaction that benefit rural Canadians in particular.”
BNN Bloomberg is a division of Bell Media, which is owned by BCE.