Noah Zivitz

Managing Editor, BNN Bloomberg

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Bay Street has been buzzing over speculation that Rogers Communications Inc. will have to find a buyer for Shaw Communication Inc.'s Freedom Mobile business to win regulatory approval for the takeover of its western rival, but a former senior industry executive said regulators might have their eye on another prize in exchange for blessing the $20-billion deal.

Robert McFarlane, who served as chief financial officer of Telus Corp. from 2000 to 2012, said the Canadian Radio-television and Telecommunications Commission's conditional approval of the transaction — which was focused on Shaw's broadcast assets - was expected, and that the most daunting tests for the deal are still ahead.

"The big decisions related to the wireless side are yet to come," he said in an interview Friday.

François-Philippe Champagne, the federal minister of innovation, science and industry, is responsible for one of two remaining regulatory approvals and has recently stated that he will not allow the wholesale transfer of Shaw's wireless licences to Rogers.

"Notice the word wholesale," McFarlane said. "So that leaves the door open at least a crack that they would approve a portion of the wireless [licences going to Rogers]."

The Competition Bureau is the other regulator whose approval is still pending. McFarlane said that based on his past experience, he suspects there are ongoing negotiations between the Bureau and Rogers that would be at an advanced stage by now. He also questioned whether forcing the divestment of Shaw's Freedom Mobile business as a condition for the deal going ahead is the best outcome for Canada.

"It certainly would satisfy regulators, although I think that's missing the point here. My own view of what's in the best interest of Canada and Canadians isn't four competitors in urban areas as opposed to three — the three already have 10 brands. A fourth, which is a standalone wireless brand that's on 4G hardly changes the competitive landscape much," he said.

Instead, McFarlane said the truly impactful condition would be mandating Rogers to build out its wireless network in rural parts of the country.

"I think that's a real opportunity here for the government to make a positive difference and impose such a condition on Rogers that would make a real difference for a lot of Canadians today that don't have the quality of service and many of us in urban areas enjoy."

When Rogers announced its takeover of Shaw in March 2021, it touted pledges to enhance rural connectivity, including with a new $1-billion fund dedicated to expanding high-speed internet access in rural, remote and Indigenous communities in Western Canada. It also said it would invest $2.5 billion to deliver 5G wireless access in the region and allow for "significantly better connectivity."

However, McFarlane said the regulator could exercise its power to order more than a pledge.

"I would say there's a difference between a promise and a condition where you're required to do something. ... The Competition Bureau can impose the condition. So that's what I would do if I was the government."